U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-KSB

(Mark One)

For the fiscal year ended December 31, 2000

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: 000-31479

BIOGAN INTERNATIONAL, INC.

|Delaware(State or other jurisdiction of incorporation or
    organization)                                    | 58-1832055(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------------------------------------------- | ----------------------------------------------
|150 King Street West
    Suite 2315
    Toronto, Ontario, Canada
    (Address of principal executive offices) | M5H 1J9
    (Zip Code)                        
|Issuer's telephone number, including area code: (416)
214-3270                                               

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





|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                | None                                     



Securities registered under 12(g) of the Exchange Act:Common Stock, $0.001 par value
(Title of class)



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

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

For the twelve months ended December 31, 2000, Biogan
International, Inc. reported no revenues.

As of December 31,
2000, the aggregate market value (based upon
the market price in limited trading in the over-the-counter market) of the
voting stock held by nonaffiliates was approximately $3,166,986. The number of
shares outstanding of the registrant's only class of common stock was
105,566,199 on December 31, 2000.  The information provided shall in no way be
construed as an admission that any person whose holdings are excluded from the
figure is an affiliate or that any person whose holdings are included is not an
affiliate, and any such admission is hereby disclaimed. The information provided
is solely for record keeping purposes of the Securities and Exchange Commission.

DOCUMENTS INCORPORATED BY REFERENCE: None.

Transitional Small Business Disclosure Format. Yes |  | No |X|.

Private Securities Litigation Reform Act Safe Harbor
Statement

When used in this Annual Report on Form 10-KSB and in other public statements
by the company and company officers, the words "expect," "estimate," "project,"
"intend," and similar expressions are intended to identify forward-looking
statements regarding events and financial trends which may affect the company's
future operating results and financial condition. Such statements are subject to
risks and uncertainties that could cause the company's actual results and
financial condition to differ materially. Such factors include, among others,
the risk factors described under Item 6 in this Annual Report. Additional
factors are described in the company's other public reports filed with the
Securities and Exchange Commission. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
made. Except as required by law, the company undertakes no obligation to
publicly release the result of any revision of these forward-looking statements
to reflect events or circumstances after the date they are made or to reflect
the occurrence of unanticipated events.

Part I

Item 1.     Description of Business

Company Overview

We are a Delaware corporation that was incorporated on
February 5, 1988 under the name H.W. Ronney and Company. In March 1989, H.W.
Ronney was merged with Biogan Medical International, Inc., with the resulting
company maintaining the Biogan Medical International, Inc. name. Biogan had been
engaged in various medical and related enterprises prior to the merger and the
merged company continued with those enterprises following the merger. Prior to
1995, either directly or indirectly, through subsidiaries or other affiliates,
we also engaged in business operations in a variety of other industries,
undergoing several corporate restructurings during that time.

In 1995, we began development of a new concept for electrical
motors known as the IntorCorp Motor. In order to promote the development of the
IntorCorp Motor, we entered into a consulting agreement with Technical
Development Consultants, Inc., or TDC, an independent electrical engineering
consulting firm. As part of the research and development process, TDC formed a
company named Collective Technologies, LLC, which acquired all intellectual
property rights held by TDC with respect to the IntorCorp Motor concept. We then
changed our name to Biogan International, Inc. in September 1997 to avoid any
confusion that could have resulted from the use of the word "medical" in our
name, in light of our corporate focus having shifted to the development of the
IntorCorp Motor. Effective February 1998, we entered into a joint venture
agreement with Collective Technologies, LLC to continue the development of the
IntorCorp Motor, and established IntorCorp, Inc. for that purpose. IntorCorp
Inc. was established as an Idaho corporation in which we held a 50% ownership
interest. In August 1999, we transferred all of our rights and interest in
IntorCorp, Inc., including all of our interest in the IntorCorp Motor and
related patent applications, to R-Tec Engineering Corporation. Under the terms
of the agreement, the parties created an Idaho corporation, R-Tec Holding, Inc.,
into which we transferred our 50% ownership interest in IntorCorp, Inc. in
exchange for 4,266,797 shares of common stock of R-Tec Holding, Inc. In
September 1999, we distributed these shares to our stockholders. Following our
transaction with R-Tec Holding, and having divested ourselves of certain assets
related to the electrical motor industry and disposed of all of our subsidiaries
and other interests in other affiliates and other entities, we began to focus
our attention, experience and resources on developing a base metal mining and
smelting operation in the People's Republic of China, or PRC, because management
believed that given the economic climate in China and the growth potential of
both existing and undeveloped mines in the Hechi region, significant
opportunities existed in the base metal industry in China.

During 1999, we did not engage in any significant business
activities other than divesting ourselves of assets and interests related to the
IntorCorp Motor and negotiating an acquisition agreement relating to certain
assets of Hechi Industrial Co., Ltd., or Hechi. The transaction with Hechi
related to the formation of Guangxi Guanghe Metals Company Limited, or GGM,
structured as a Cooperative Joint Venture Company under the laws of the PRC.
Pursuant to the agreement, GGM was formed on January 27, 2000 for the purpose of
operating a copper smelter to produce blister copper and engaging in the mining
and processing of non-ferrous metals in the Guangxi Province of China, and was
to be owned by the company and Hechi. In anticipation of the completion of the
acquisition, in November 1999 Rulon Tolman and L. William Glazier resigned as
Vice President and as President and Chief Executive Officer of the company,
respectively, and Gilles Laverdiere, an experienced geologist in the mining
industry, was appointed as our Chief Executive Officer and President. Mr.
Laverdiere became a director of the company in November 1999 and also served as
our Acting Chief Financial Officer from November 1999 until the appointment of
Kerry D. Smith as our Chief Financial Officer in January 2001. Mr. Laverdiere
served as Chairman of our Board of Directors from November 1999 until March 2000
when he became a director and the Vice-Chairman of the Board of the company.
Kuang Yihuai, the Chief Executive Officer of Hechi, became Chairman of the Board
of the Company in March 2000. Kerry D. Smith acted as Chief Financial Officer
until November 2001, when he became President and Chief Operating Officer of the
company, at which point Rob Doyle joined the company as Executive Vice-President
and Chief Financial Officer.

Hechi's business was established in 1977 by the Hechi
Prefecture Government through Hechi Prefecture Mining Company, or HPMC. Hechi
came under private ownership in June, 1998 when the employees of HPMC purchased
all of the assets of HPMC, and assumed certain liabilities. The employees of
HPMC subsequently contributed HPMC's business to Hechi and became Hechi's
shareholders. Hechi has become one of the largest enterprises in the regional
mining community in the Guangxi Province, which is located in southeastern China
approximately 500 kilometers northwest of Hong Kong, and was one of the first
privately-owned mining enterprises in the Guangxi region.

Effective July 1, 2000, we entered into an asset purchase
agreement with Hechi. The Asset Purchase Agreement provided for our acquisition
of certain of Hechi's assets, including Hechi's 9% interest in Gaofeng Mining
Company Limited (which owns and operates the Gaofeng mine and processing
facilities), 100% interest in the Wuxu Mine and ore processing facilities and
100% interest in the Hechi copper smelter, in exchange for 16,800,000 shares of
our common stock and 31,300 shares of our Series A preferred stock. Under this
agreement we were to hold a 92% equity interest and a 95% profits interest in
GGM.

On July 27, 2001, we were advised that the transactions
contemplated under the original agreements were not in compliance with certain
laws of the PRC and, therefore, void. Between the effective date of the
acquisition agreement and prior to the determination that the transaction was
void under the laws of the PRC, we believed that we had properly consummated the
transactions with Hechi and, therefore, had focused corporate resources entirely
upon managing the mining operations of Hechi and did not engage in any other
business operations.



Employees

At December 31, 2000
the company had 3 full time employees.

Item 2.    Description of Property

We operate from approximately  250 square feet of office
space at 55 University, Suite 1210, Toronto, Ontario, Canada and
approximately 250 square feet of office space at 813 Beriault, Suite 203,
Longueuil, Quebec, Canada. Both office spaces in Canada are under month-to-month
tenancies.

Item 3.    Legal Proceedings

We are not a party to any pending legal proceedings.

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

No matters were
submitted to a vote of our security holders during the fourth quarter of the
fiscal year ended December 31, 2000.

Part II

Item 5.    Market for Common Equity and Related Stockholders Matters

Market Price

The following table sets forth the high and low closing bid
prices of our common stock during each quarter of the fiscal years ended
December 31, 1999, and December 31, 2000, as reported on the OTC Electronic Bulletin
Board.  OTC Market Quotations reflect interdealer prices,
without mark-up, mark-down or commission and may not represent actual
transactions:



|                              | High  | Low  
|----------------------------- | ----- | -----
|Year Ended December 31, 1999: |       |      
|First Quarter                 | 0.045 | 0.020
|Second Quarter                | 0.070 | 0.021
|Third Quarter                 | 0.330 | 0.130
|Fourth Quarter                | 0.850 | 0.210
|Year Ended December 31, 2000: |       |      
|First Quarter                 | 0.780 | 0.438
|Second Quarter                | 0.550 | 0.150
|Third Quarter                 | 0.351 | 0.125
|Fourth
    Quarter            | 0.141 | 0.019
|                             
|                             



As of December 31,
2000, we had approximately 635 holders of
record of our common stock. Within the holders of record of our common stock are
depositories such as Cede & Co. that hold shares of stock for brokerage firms
that, in turn, hold shares of stock for beneficial owners.

Dividend Policy

We have never paid any dividends on our common stock. The
declaration and payments by us of dividends will be subject to the discretion of
our board of directors. The amount of any such dividend and the board's policy
with respect to the payment of dividends will depend on our results of
operations, financial condition, capital requirements, contractual restrictions
and other factors deemed relevant by our board of directors.

Recent Sales of Unregistered Securities

On June 10, 1999, we issued 235,080 shares of common stock to
Wadsworth and Smith CPAs for non-audit related accounting services. On August
21, 1999, we issued 78,746 shares of common stock to Robert Montgomery, our
Secretary, for legal services. On August 21, 1999 we issued 100,000 shares of
common stock to Wadsworth and Smith, CPAs for non-audit related accounting
services. The total fair market value of the above services was approximately
$16,502, and we made each of the above issuances of shares pursuant to Section
4(2) of the Securities Act.

In March 2000, we completed an offering of 8% secured
convertible debentures in the aggregate amount of $2,035,000 to two investors
pursuant to Section 4(2) of the Securities Act. We issued a $2,000,000 debenture
to CALP II, LLC, a Bermuda limited liability company, and a $35,000 debenture to
Carbon Mesa Partners, LLC, a Nevada limited liability company. The $2,000,000
debenture was subsequently transferred to Thomson Kernaghan & Co., Limited, or
TK. In connection with the issuance of the debentures, we issued immediately
exercisable warrants for the purchase of up to an aggregate of 489,000 shares of
our common stock. The warrants have an initial exercise price of $0.60 per share
of common stock and have cashless exercise provisions. The warrants expire on
February 28, 2003. The shares of common stock underlying the debentures and the
warrants are subject to piggyback and demand registration rights under the terms
of a registration rights agreement.

On August 1, 2000, we issued 1,100 shares of our Series A
Convertible Preferred Stock to TK, pursuant to Section 4(2) of the Securities
Act, in consideration for investment banking services with a fair market value
of $1,848,000.

We did not engage underwriters in connection with any of the
above issuances. Each of the purchasers was in a position to insist upon the
issuer providing it with information as or more extensive than that contained in
a registration statement. Each of the purchasers had access to all material
information regarding the company prior to the offer or sale. These offers and
sales of common stock are believed to have been exempt from the registration
requirements of Section 5 of the Securities Act of 1933 pursuant to either
Section 4(2) or Regulation S or Regulation D, as the case may be, by available
provisions of similar applicable state securities laws and by provisions of
applicable Canadian securities laws as the case may be, exempting from
registration or qualification the offer and sale of our securities. Services
described above as being rendered in exchange for the issuances of shares were
valued based upon the billing rates of the service providers.

Description of Securities

Our authorized capital stock consists of 300,000,000 shares
of common stock, $0.001 par value per share, and 10,000,000 shares of preferred
stock, $0.001 par value per share. Of the 10,000,000 shares of preferred stock,
31,300 shares have been designated as Series A Convertible Preferred Stock  and the remaining
9,968,700 shares are undesignated.
As of December 31, 2000, there were 105,566,199 shares of common stock outstanding
held by approximately 635 holders of record, 31,300 shares of Series A
Convertible Preferred Stock outstanding held by one holder of record. We also have outstanding two debentures which are convertible
into shares of common stock. The following is a summary description of our
capital stock and the debentures.

Common Stock

The holders of outstanding shares of our common stock are
entitled to receive dividends out of assets legally available at times and in
amounts as the board of directors may from time to time determine. Holders of
common stock are entitled to one vote per share on all matters to be voted upon
generally by the stockholders.

The common stock is not entitled to preemptive or
preferential rights. There are no redemption or sinking fund provisions
applicable to our common stock. Upon liquidation, dissolution or winding up of
the company, the assets legally available for distribution to our stockholders
are divided among the holders of the common stock in proportion to the number of
shares of common stock held by each of them, following payment of all of our
debts and liabilities and fulfillment of the rights of any outstanding class or
series of preferred stock that has priority to distributed assets. The rights of
holders of common stock are subordinate to those of holders of any series of
preferred stock.

Preferred Stock

Our board of directors is authorized to issue from time to
time, without stockholder authorization, in one or more designated series, any
or all of our authorized but unissued shares of preferred stock with any
dividend, redemption, conversion and exchange provision as may be provided in
that particular series.

The rights of the holders of our common stock will be subject
to, and may be adversely affected by, the rights of the holders of any preferred
stock. Issuance of a new series of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of entrenching our board of directors and making
it more difficult for a third-party to acquire, or discouraging a third-party
from acquiring, a majority of our outstanding voting stock.

Below is a summary of the terms of our Series A Convertible
Preferred Stock. Copies of the full
text of the various documents comprising our certificate of incorporation are
filed as exhibits to this document.

Series A ConvertiblePreferred Stock

We filed an Amended Certificate of Designations of Series A
Convertible Preferred Stock with the Delaware Secretary of State on August 1,
2000, which certificate fixed, altered and amended the rights, preferences,
privileges and restrictions relating to our Series A Convertible Preferred
Stock. Each share of Series A Convertible Preferred Stock is convertible, at the
option of the holder, into 12,000 shares of our common stock. TK is the only
holder of Series A Convertible Preferred Stock, holding 1,100 shares, which
entitle TK to acquire 13,200,000 shares of common stock. However, we have agreed
with TK that it may not convert shares of Series A Convertible Preferred Stock
to the extent that such conversion would result in the holder, together with its
affiliates, beneficially owning in excess of 9.99% of our outstanding shares of
common stock.

Holders of Series A Convertible Preferred Stock are entitled
to vote on all matters submitted to a vote of the holders of our common stock,
and each share of Series A Convertible Preferred Stock is entitled to one vote
for each full share of common stock into which each share of Series A
Convertible Preferred Stock is convertible on the record date for the vote.
Shares of Series A Convertible Preferred Stock are not entitled to any
dividends.

In the event of any liquidation, dissolution or winding up of
our affairs, either voluntary or involuntary, the holders of shares of Series A
Convertible Preferred Stock are entitled to receive for each share of Series A
Convertible Preferred Stock then held, out of our assets available for
distribution to stockholders and prior and in preference to any distribution of
any of our assets to the holders of our common stock, an amount equal to $1.00
plus an amount equal to the amount that the holders would have received had the
holders converted their shares of Series A Convertible Preferred Stock to shares
of common stock immediately prior to the liquidation, dissolution or winding up.
The holders of Series A Convertible Preferred Stock are not entitled to any
redemption, nor are there any sinking fund provisions with respect to the
shares. In addition, there are no preemptive rights applicable to our Series A
Convertible Preferred Stock.

Convertible Debentures

We issued the TK and Carbon Mesa debentures on March 29, 2000
for aggregate proceeds of $2,035,000 to assist us in financing our required
contributions to GGM. Out
of the net proceeds of $1,800,000 from the sale of the debentures, we
contributed $1,500,000 to GGM, which was used primarily to purchase metal
concentrates, with $300,000 being retained for working capital purposes.

Subject to beneficial ownership limitations described below,
a debenture holder is entitled, at its option, to convert $10,000 or more of the
balance of its debenture into shares of our common stock at any time until the
maturity date. A debenture holder may not during any consecutive 30 day period
convert more than one-third of the original principal amount of its debenture or
sell more than a number of shares of our common stock equal to $208,000, in the
case of the TK debenture, or $35,000, in the case of the Carbon Mesa debenture,
divided by the applicable conversion rate. In addition, except with respect to
an automatic conversion or while there is outstanding a tender offer for any or
all of the shares of our common stock, a holder may not convert a debenture to
the extent that, after the conversion, the holder and its affiliates would
beneficially own more than 9.99% of our outstanding common stock. Debentures not
converted as of the maturity date will be automatically converted at the
then-applicable conversion rate.

Subject to adjustment for stock splits, stock dividends,
capital reorganizations or similar occurrences, the conversion rate for the
debentures is equal to the lower of the per share price of $0.4166 or 80% of the
average of the closing bid prices of our common stock as reported on the
over-the-counter market for the five trading days immediately prior to the
conversion date.

A debenture holder may declare the entire unpaid principal
balance and all accrued but unpaid interest immediately due and payable upon an
event of default under its debenture. Events of default include:

·     an uncured failure to make payments due under the debentures
or to perform or observe any obligation under either of the debentures or
related agreements;

·

·     the institution of voluntary or involuntary bankruptcy,
reorganization, insolvency or liquidation proceedings against us that are not
dismissed within 60 days;

·     the entry of a judgment or writ of attachment in excess of
$200,000 that remains unpaid, unvacated, unbonded or unstayed for 60 days or
during the five days prior to the date of any proposed sale under the judgment
or writ; or

·     the suspension of trading or delisting from an exchange or
the NASD's OTC Electronic Bulletin Board of our common stock for more than five
trading days after our common stock is relisted on an exchange or on the NASD's
OTC Electronic Bulletin Board.

As of  December 31, 2000, we had a total of 105,566,199 shares of
common stock outstanding, and debentures convertible, if contractual limitations
on conversion were disregarded, into approximately 174,000,000 shares of our
common stock at an assumed conversion price of $0.025. The number of shares that
the debentures ultimately may be converted into or exercised for could prove to
be greater than this estimate if the market price of our common stock declines.
Further, to the extent the holders convert those debentures and then sell the
underlying shares of common stock into the market, the price of our common stock
may decline due to the additional shares available in the market. This decline
could allow the holders to convert their remaining debentures into a greater
number of shares of common stock, the sale of which would further depress the
stock price. Our stockholders could, therefore, experience substantial dilution
and a decline in the value of their investment as a result of the conversion of
the debentures and the sale of the shares of common stock issuable upon
conversion of the debentures.

If we are limited in our ability to issue shares upon the
conversion of the debentures, due either to a limitation on our number of
authorized shares or the applicable rules of the principal securities market on
which our shares of common stock are listed or traded, and if we are unable to
remedy this situation, then the debenture holders will have the option to elect
one or both of the following remedies with respect to the unconverted portions
of the debentures:

·     require us to issue shares of our common stock in accordance
with the holder's notice of conversion at a conversion price equal to the
average of the closing bid prices per share of our common stock for any five
consecutive trading days during the sixty trading days immediately preceding the
date of the holder's notice of conversion; or

·     require us to redeem each unconverted debenture for an
amount, payable in cash, equal to the outstanding principal balance plus accrued
interest, divided by the conversion rate in effect on the date of redemption,
multiplied by the highest closing ask price during the period beginning on the
date of redemption and ending on the date of payment of the redemption amount.

Upon a merger, consolidation or sale or transfer of all or
substantially all of our assets pursuant to which our stockholders are entitled
to receive securities or property in exchange for shares of our common stock,
each debenture holder may convert their debenture and be entitled to such
securities or property as if the conversion had taken place prior to the merger,
consolidation, sale or transfer. In the event of any proposed merger,
consolidation, sale or transfer, the debenture holders have the right to convert
their debentures by delivering a notice of conversion to us within 15 days of
receipt of notice of such sale. If a holder elects not to convert, then we may
prepay the outstanding principal balance and accrued interest on the debenture
by paying a redemption price equal to the conversion rate applicable on that
date, less all amounts required by law to be deducted. If we spin off or
otherwise divest a part or all of our business or operations in a transaction in
which securities of another entity are issued to our stockholders, then any
unconverted debentures will be deemed converted for the purpose of determining
security holders entitled to such securities, with such securities to be paid
upon conversion of the debentures.

We may, at our option, prepay all or part of the outstanding
principal and interest balance of the debentures. Any redemption is to be in an
aggregate principal amount of at least $100,000 and made pro rata among all of
the holders of the debentures based on the then-outstanding balances due under
the debentures. Redemptions under the TK debenture and Carbon Mesa debenture are
to be made at a redemption price equal to 100% or 125%, respectively, of the
amount to be redeemed. If we serve a redemption notice, TK and Carbon Mesa will
retain conversion rights, up to a maximum of 50% of the amount subject to the
redemption, for two business days following receipt of the redemption notice. We
may not serve any redemption notice without having the necessary cash or credit
facilities immediately available to cover the redemption price.

In connection with the issuance of the debentures, we also
issued warrants. The warrants have an initial exercise price of $0.60 per share
and also have cashless exercise provisions. The warrants expire on February 28,
2003. In addition, the warrants contain piggyback and demand registration
rights, which rights are discussed further below.

The debentures are
secured by a standby letter of credit in the amount of $1,200,000 issued by the
Bank of India. The TK and Carbon Mesa
debentures also continue to be secured by 28,800,000 shares of common stock
pledged by the company. The pledged shares are held in escrow under the terms of
a pledge agreement dated March 8, 2000. The pledge agreement provides that,
unless and until an event of default occurs, the pledged shares shall be deemed
unissued shares for the purpose of voting and other powers of ownership. Any
dividends, whether in cash or stock, paid with respect to the pledged shares
will be added to the pledged shares as additional collateral.

Under the pledge agreement, an event of default includes a
false or misleading representation or warranty made in the pledge agreement, our
failure to observe or perform any covenant in the pledge agreement or to cure
such failure within five days after discovery or notice of such failure, and the
occurrence of any event of default under the debentures. Upon the occurrence of
an event of default under the pledge agreement, a pledgee will have the sole and
exclusive right to exercise all voting powers and other powers of ownership
related to the pledged shares and any other collateral. Notwithstanding anything
in the pledge agreement, no pledgee may beneficially own in excess of 9.99% of
the outstanding shares of our common stock, as provided in the debentures. In
addition, upon an event of default, but subject to repayments of the TK
debenture, a pledgee may sell the pledged shares and any other collateral. The
pledge agreement terminates upon satisfaction of all of our obligations under
the debentures, the registration rights agreement and the warrants.

The registration rights agreement obligated us to file a
registration statement under the Securities Act within 30 days following the
sale of the debentures for the purpose of registering for resale shares of our
common stock issuable upon conversion of the debentures and upon exercise of the
warrants. In order to ensure that the registration statement covers all of the
shares issuable upon conversion of the debentures and exercise of the warrants,
we were required to register no less than 200% of the aggregate number of shares
into which the debentures are convertible and the warrants are exercisable at
the time of filing the registration statement. Penalties for failure to timely
file and obtain effectiveness of the registration statement included our monthly
payment to the debenture holders of 2%of the value of the debenture on
the 31st day following the sale of the debentures and 3% of the value
of the debenture on the first day of each subsequent month until such time as
the registration statement is filed, as well as the right of the debenture
holders to cause us to fully redeem the debentures in cash within three days.

On August 18, 2000 and December 5, 2000, TK converted an
aggregate of $530,000 of the principal balance of its debenture plus related
interest into 3,379,489 shares of our common stock. In 2000 we repaid $5,000 of
the $35,000 principal amount of the Carbon Mesa Debenture.

Item 6.    Management's Discussion and Analysis and Plan of Operation

The following discussion and analysis should be read in
conjunction with our financial statements and notes to financial statements
included elsewhere in this Annual Report on Form 10-KSB. This report and our
financial statements and notes to financial statements contain forward-looking
statements, which generally include the plans and objectives of management for
future operations, including plans and objectives relating to our future
economic performance and our current beliefs regarding capital we might need and
revenues we might earn pursuant to the revised joint venture and implementation
of our business strategies. The forward-looking statements and associated risks
may include, relate to or be qualified by other important factors including,
without limitation, anticipated trends in our financial condition and results of
operations.

Any of the factors described above or in the "Risk Factors"
section below could cause our financial results, including our net income (loss)
or growth in net income (loss) to differ materially from prior results, which in
turn could, among other things, cause the price of our common stock to fluctuate
substantially.

Overview

We were incorporated on February 5, 1988 under the laws of
the State of Delaware. Historically, we had been engaged in medical and medical
related enterprises and subsequently the development of electrical motors. In
1999, we entered into certain transactions with R-Tec Corporation through which
we divested ourselves of assets related to the electrical motor industry.

In the year 2000, we entered into a Cooperative Joint Venture
agreement with Hechi, in anticipation of changing the focus of our business to
the smelting and mining of non-ferrous metals in the Guangxi Province of China.
However, we subsequently learned that the transactions were not in
compliance with and thus void under, the laws of the PRC.

Results of Operations

Year Ended December 31, 2000 Compared to the Year Ended
  December 31, 1999

We had no significant revenues in the two-year period ended
December 31, 2000. For the year ended December 31, 2000, we had a net loss of
$3,221,058, compared to a net loss of $238,263 for the year ended December 31,
1999. Our loss in 2000 reflects a charge of $1,848,000 related to the issuance
of Series A Preferred Stock as part of the consummation of our transaction with Hechi under its original terms, as well as a charge of $500,000 related to the
beneficial conversion features of the convertible debentures. These charges in 2000, when combined with legal, accounting and other
related costs, account for the increased loss in 2000 relative to 1999.

Effective July 1, 2000, we entered into an asset purchase
agreement with Hechi. The Asset Purchase Agreement provided for our acquisition
of certain of Hechi's assets, including a 9% interest in Gaofeng Mining Company
Limited (which owns and operates the Gaofeng mine and processing facilities) a
100% interest in the Wuxu Mine and ore processing facilities and a 100% interest
in the Hechi copper smelter. We subsequently learned that the
transactions contemplated under the original agreements were not in compliance
with certain laws of the PRC and, therefore, void. Between the effective date of
the acquisition agreement and prior to the determination that the transaction
was void under the laws of the PRC, we believed that we had properly consummated
the transactions with Hechi and, therefore, had focused corporate resources
entirely upon managing the mining operations of Hechi and did not engage in any
other business operations. The Company is attempting to restructure the
transaction. Since July 27, 2001 we have focused our resources on
restructuring the transaction with Hechi. In effecting the transaction in its
original form and subsequently restructuring it, we incurred substantial
expenses in 2000 which contributed significantly to
our losses for this year. In addition, because the original transaction was
deemed void we did not benefit from revenue generated by Hechi during 2000.

Employees

At December 31, 2000
the company currently has 3 full time employees.

Liquidity and Capital Resources

During and since 1999, we have funded our activities
primarily from loans from private parties in exchange for promissory notes, and
capital contributions from Gilles Laverdiere, our current Vice Chairman and
Chief Executive Officer. In March 2000, we completed an offering of two
debentures in the initial principal amounts of $2,000,000 and $35,000,
respectively. From the net proceeds of $1,800,000 from the sale of the
debentures, we contributed $1,500,000 to GGM, which was used primarily to
purchase metal concentrates, and we retained $300,000 for working capital
purposes.

On August 18, 2000 and December 5, 2000, TK
converted an aggregate of $530,000 of the principal balance of its debenture
plus related interest into 3,379,489 shares of our common stock. In 2000 we
repaid $5,000 of the $35,000 principal amount of the Carbon Mesa Debenture. We remain in default of
the Carbon Mesa Debenture.

In addition, we agreed that on or before November 30, 2001,
we would file with the SEC all securities filings that are required to be filed
prior to that date and secure and maintain the listing of our common stock on an
exchange or on the NASD's OTC Electronic Bulletin Board. In addition, we agreed
to file by January 31, 2002 a registration statement covering, among other
things, the shares of common stock issued or issuable upon conversion of the
debentures and exercise of the warrants. Penalty for failure to comply with the
filing or relisting requirements, was that the principal amount of the TK
debenture would increase by $50,000 for each 30-day period of non-compliance,
with a maximum aggregate increase of $350,000.

The execution and success of our strategy is largely
dependent on our ability to restructure our purchase of Hechi. To the extent we
cannot restructure our acquisition of Hechi it is unclear whether we can
continue to operate our business.  In addition, if we can successfully restructure our
acquisition of Hechi our continued success will be dependent on our raising
adequate funds to contribute to the operation of our business.  If adequate funds
are not available, we may be required to delay, scale back or eliminate portions
of our planned operations or to obtain funds through arrangements with partners
or others that may require us to relinquish rights to some of our assets.
Accordingly, the inability to obtain financing could result in a significant
loss of ownership and/or control of our assets and could also adversely affect
our ability to fund our planned operations.

Risk Factors

An investment in our securities involves a high degree of
risk. You should consider, among other things, the following factors carefully
before deciding to purchase or hold any of our securities.

We have a history of losses that may continue in the future
and that may adversely impact our business and our stockholders.

We have incurred substantial additional losses since our
inception. We incurred significant net operating losses in each of the years
ended December 31, 2000 and 1999 and had a stockholders' deficit of $231,954
at December 31, 2000. We have incurred substantial additional losses since
December 31, 2000. Our recurring losses raise substantial doubt about our
ability to continue as a going concern and led our independent certified public
accountant to include in his unqualified opinion covering our 2000 financial
statements an explanatory paragraph related to our ability to continue as a
going concern. If we are unable to attain or
maintain profitable operations in the future, there may be a material adverse
effect on our cash flows, which could cause us to violate other covenants under
the debentures and could impede our ability to raise capital through debt or
equity financing to the extent we may need it for our continued operations or
for planned expansion. Consequently, future losses may have a material adverse
effect on our business, prospects, financial condition, results of operations
and cash flows.

We will need additional capital in the future and adequate
financing may not be available to us on acceptable terms or at all. If we obtain
financing through the issuance of equity securities, further dilution to
existing stockholders may result. We may be required to obtain financing through
arrangements that may require us to relinquish rights to or control of our
assets.

Since 1999, we have funded our activities primarily from
loans from private parties in exchange for promissory notes, capital
contributions from Gilles Laverdiere, our current Vice Chairman and Chief
Executive Officer and private placement financing. We have not been successful
in generating cash from our development stage activities in the past and cannot
assure you that we will be able to do so in the future. Funds raised by the
company will be used to restructure our transaction with Hechi and to increase the capacity and profitability of the mining
and smelting assets and interests to the extent we are successful in such
restructuring transaction with Hechi. If we raise additional funds by issuing equity or convertible debt
securities, options or warrants, further dilution to our existing stockholders
may result. In addition, any debt financing or other financing of securities
senior to common stock will likely include financial and other covenants that
will restrict our flexibility. Any failure to comply with these covenants would
have a material adverse effect on our business, prospects, financial condition
and results of operations.

If adequate funds are not available, we may be required to
delay, scale back or eliminate portions of our planned operations or to obtain
funds through arrangements with partners or others that may require us to
relinquish rights to some of our assets. Accordingly, the inability to obtain
financing could result in a significant loss of ownership and/or control of our
assets and could also adversely affect our ability to fund our planned
operations.

Extraction and processing risks and potential inadequacy of insurance
coverage

The business of extraction and processing of minerals is subject to many
risks and hazards, including environmental hazards, industrial accidents,
periodic interruptions due to inclement weather conditions, labor disputes,
critical equipment failures, fires, unusual or unexpected geological or mining
conditions and flooding. Such risks could result in damage to, or destruction
of, extraction or processing facilities, personal injury, environmental damage,
delays in extraction or production, monetary loss and possible legal liability.
Although we will maintain insurance within ranges of coverage consistent with
industry practice, it cannot be certain that such insurance will be adequate to
cover losses or continue to be available at economically acceptable rates in the
future. We may become subject to liability for pollution, accidents or other
hazards against which we are uninsured.

People's Republic of China political and economic considerations

Biogan continues to
focus its business planning in China. Accordingly, the Company's business, financial condition and results of
operations could be significantly and adversely affected by economic, political
and social changes in the PRC.

The economy of the PRC has traditionally been a planned economy, subject to
five-year and annual plans adopted by the State, which set down national
economic development goals. Since 1978, the State has been moving the economy
from a planned economy to a more open, market-oriented system. The PRC's
economic development is following a model of market economy under socialism.
Under this direction, it is expected that the PRC will continue to strengthen
its economic and trading relationships with foreign countries and business
development in the PRC will follow market forces. However, there is no guarantee
that a major turnover of senior political decision-makers will not occur, or
that the existing economic policy of the PRC will not be changed. A change in
policies by the State could adversely affect our investment in GGM by changes in
laws, regulations, or the interpretation thereof, confiscatory taxation,
restrictions on currency conversion, imports and sources of supplies, or the
expropriation of private enterprises.

Conversion of our outstanding convertible debentures could
substantially dilute your investment and cause the price of our common stock to
decline because the conversion price of the debentures is determined by the
market price of our common stock, with no ceiling on the number of shares of our
common stock that are issuable upon conversion of those debentures.

The TK and Carbon Mesa debentures are convertible into shares
of our common stock at a price equal to the lesser of a fixed price and a
variable price that is based upon a discount on the market price of our common
stock. To the extent the holders convert the debentures and then sell the
underlying shares of common stock into the market, the price of our common stock
may decline due to the additional shares available in the market. This decline
could allow the holders to convert their remaining debentures into a greater
number of shares of common stock, the sale of which would further depress the
stock price. You could, therefore, experience substantial dilution and a decline
in the value of your investment as a result of the conversion of the debentures.

If the holders of our outstanding securities or others engage
in short sales of our common stock, including sales of shares to be issued upon
conversion of convertible securities, the price of our common stock may decline.

Selling short is a technique used by a stockholder to take
advantage of an anticipated decline in the price of a security. A significant
number of short sales can create a downward pressure on the price of the
security. If the holders of our debentures or Series A Convertible Preferred
Stock or others sell large volumes of our common stock within a relatively short
period of time, the market price of our common stock may decrease. The decrease
in market price would allow holders of the debentures that have a conversion
price based upon a discount on the market price of our common stock to convert
their debentures into an increased number of shares of our common stock. Further
sales of common stock issued upon conversion of debentures could cause even
greater declines in the price of our common stock. The downward pressure on the
market price caused by conversion of debentures, and the sale of the underlying
shares of common stock, could encourage short sales by the debenture holders and
others and could further undermine the value of our common stock.

The unpredictability of our quarterly operating results may
cause the price of our common stock to fluctuate or decline.

Our quarterly operating results have varied significantly in
the past and will likely continue to do so in the future due to a variety of
factors, many of which are beyond our control and which include the following:





·     the level of demand for base metal products;
  ·     the prices that the company will be able to charge for
  mineral products;
  ·     costs related to possible acquisitions of new mines or
  technologies to modernize mining operations;
  ·     regulatory changes affecting the Chinese mining community
  generally or our operation of mines; and
  ·     the amount and timing of capital expenditures and other
  costs relating to the expansion of  operations.

Due to these factors
and other factors, including changes in general economic conditions, we believe
that period-to-period comparisons of our operating results will not necessarily
be meaningful in predicting future performance. We plan to increase our
expenditures for our marketing operations and to restructure our transaction
with Hechi. We cannot assure you that our revenues will
increase in proportion to our expenses. We may be unable to adjust spending
quickly enough to offset any unexpected revenues shortfall. This could lead to a
shortfall in revenues in relation to our expenses. If our operating results do
not consistently meet the expectations of securities analysts or investors, our
stock price may fluctuate or decline.

Our stock price has been volatile, which could result in
substantial losses for investors purchasing shares of our common stock.

The market price of our common stock has fluctuated
significantly in the past. The market price of our common stock may continue to
exhibit significant fluctuations in response to the following or other factors,
many of which are beyond our control.

|· | variations in our quarterly operating results;                                                                                              
|- | --------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                             
|· | material announcements by us or our competitors of mining
      developments, strategic partnerships, joint ventures or capital commitments;
|  |                                                                                                                                             
|· | general economic and political conditions in China and in
      the mining industry; and                                                    
|  |                                                                                                                                             
|  | regulatory developments.                                                                                                                    

The price at which you purchase shares of our common stock
may not be indicative of the price of our common stock that will prevail in the
trading market. You may be unable to sell your shares of common stock at or
above your purchase price, which may result in substantial losses to you.
Moreover, in the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Such
litigation could result in substantial costs and a diversion of management's
attention and resources.

Because we are subject to the "penny stock" rules, the level
of trading activity in our stock may be reduced.

Broker-dealer practices in connection with transactions in
"penny stocks" are regulated by penny stock rules adopted by the SEC. Penny
stocks, which shares of our common stock qualify as, are generally equity
securities with a price of less than $5.00 (other than securities registered on
some national securities exchanges or quoted on NASDAQ). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, broker-dealers who sell these securities to persons other than
established customers and "accredited investors" must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. Consequently,
these requirements may have the effect of reducing the level of trading
activity, if any, in the secondary market for a security subject to the penny
stock rules, and investors in our common stock may find it difficult to sell
their shares.

Because our common stock is not listed on a national
securities exchange, you may find it difficult to dispose of or obtain
quotations for our common stock.

There is currently an
extremely limited trading market for our common stock. There can be no assurance that any regular trading market
for our common stock will develop or, if developed, will be sustained.
Consequently, you may find it difficult to either dispose of, or to obtain
quotations as to the price of, our common stock.

Our preferred stock may cause or prevent a takeover of the
company, possibly preventing you from obtaining higher stock prices for your
shares.

Our board of
directors has the authority to issue up to 10,000,000 shares of preferred stock
and to fix the rights, preferences, privileges and restrictions, including
voting rights, of those shares without any further vote or action by our
stockholders. As of December 31, 2000 a total of 31,300 shares of our Series A
Convertible Preferred Stock, each convertible into 12,000 shares of our common
stock, were outstanding. The rights of the holders of our common stock are
subject to the rights of the holders of our currently outstanding preferred
stock and will be subject to, and could be adversely affected by, the rights of
the holders of any preferred stock that we may issue in the future. The issuance
of preferred stock provides desired flexibility in connection with possible
acquisitions and other corporate purposes. The issuance of preferred stock could also have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock, which would delay, defer or prevent a change in control of the company
even if a change in control would be beneficial to our stockholders.
Furthermore, preferred stock may have other rights, including economic rights
senior to the common stock and, as a result, the issuance of preferred stock
could adversely affect the market value of our common stock.

The anti-takeover effects of Delaware law could adversely
affect the performance of our stock.

Section 203 of the General Corporation Law of Delaware
prohibits us from engaging in business combinations with interested
stockholders, as defined by statute. These provisions may have the effect of
delaying or preventing a change in control of the company without action by our
stockholders, even if a change in control would be beneficial to our
stockholders. Consequently, these provisions could adversely affect the price of
our common stock.

Item 7.    Financial Statements

Our audited financial statements for the years ended December
31, 2000 and the quarters ended June 30, 2000 and September 30,
2000 are submitted as a separate section of this Annual Report on Form
10-KSB beginning at page F-1.

Item 8.    Changes in and Disagreements With Accountants On Accounting and
      Financial Disclosure

On August 10, 2000, we filed a Current Report on Form 8-K to
report the resignation of George Brenner, C.P.A. and the engagement of Bersch
Accounting as our independent accountants, effective as of August 7, 2000. In
our two most recent fiscal years and subsequent interim period preceding Mr.
Brenner's resignation, there were no disagreements between the company and Mr.
Brenner on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Mr. Brenner, would have caused Mr. Brenner to make
reference to the subject matter of the disagreement in connection with his
reports. Mr. Brenner's reports on our financial statements for the prior two
fiscal years contained no adverse opinion and no disclaimer of opinion, nor were
such reports qualified or modified as to uncertainty, audit scope or accounting
principles, except that the report of Mr. Brenner dated May 13, 1999 appearing
in our Annual Report on Form 10-KSB for the year ended December 1998 and the
report of Mr. Brenner contained in this Annual Report on Form 10-KSB include an
explanatory paragraph regarding substantial doubt about our ability to continue
as a going concern. Our decision to accept the resignation of Mr. Brenner and to
engage Bersch Accounting was approved by our board of directors.

Item 9.    Directors, Executive Officers, Promoters and Control Persons;
      Compliance With Section 16(a) of the Exchange Act

Set forth below is information with respect to our directors
and executive officers as of December 31, 2000:





Name
    Age
    TitlesKuang Yihuai
    50
    Chairman of the BoardGilles Laverdiere
    48
    Vice Chairman, Chief Executive
    Officer and DirectorRon Tolman
    49
    Director, Vice-PresidentRobert Montgomery
    49
    SecretaryPierre O'Dowd
    45
    DirectorKuang Zhong
    27
    Director






















































Business Experience

Kuang Yihuai has served as a director and Chairman of the
Board of Directors since March 2000. Mr. Yihuai has served as the Chief
Executive Officer of Hechi since March 2000 and as Chairman of the Board of
Directors of Hechi from March 2000 until May 2001. Mr. Yihuai also served as
President of HPMC from 1988 until its privatization in June 1998, and as
President of Hechi since June 1998. Mr. Kuang Yihuai is the uncle of Mr. Kuang
Zhong.

Gilles Laverdiere has served as our Vice Chairman and
Chief Executive Officer since November 23, 2001. Mr. Laverdiere served as Chief
Executive Officer and President of the company from November 1999 until November
2001. Mr. Laverdiere has been a director of the company since November 1999, and
served as Chairman of the Board of Directors from November 1999 until March
2000. In addition, he served as our Acting Chief Financial Officer from November
1999 until January 2001. Prior to joining the company, Mr. Laverdiere served as
Chief Executive Officer and Chairman of the Board of Directors of Tiaro Bay
Resources Inc. since 1996. Mr. Laverdiere continues to serve as a director of
Tiaro Bay Resources. Since January 2002 Mr. Laverdiere has served as a director
of Roland Virtual Business Systems, Inc. Since 1985, he has served as President
and Chief Executive Officer of Giminex, Inc., a mining and exploration
consulting firm, and since 1998, he has served as President and a director of
Exploration Mirandor Inc., an exploration junior mining company that was
publicly traded on the Montreal Exchange under the symbol "MIQ" until May 17,
2001. As a consultant to mining and exploration ventures, Mr. Laverdiere
evaluated mining prospects and negotiated and structured financing for various
mining companies. Mr. Laverdiere received a B.S. in geology in 1978 from the
University of Montreal and a license in ecology in 1996 from the University du
Quebec in Abitibi-Temiscamingue. Mr. Laverdiere devotes substantially all of his
professional time to the business of the company.
        Ronald J. Tolman.Mr.
Tolman has served as Vice President of the Company since December, 1994. 
Mr. Tolman was National Training and Marketing Director for Weather Master
Architectural Coatings, from 1988 to 1994.

Robert C.
Montgomery.Mr. Montgomery is Secretary/Treasurer and house legal
counsel for the Company.  Mr. Montgomery received his J.D. degree from the
University of Idaho in 1974.  Mr. Montgomery is a member of the bar in
Idaho, Oregon and Washington.  He was a former adjunct professor of
Business Law and Ethics at Boise State University, and has practiced law in
Idaho since 1974.

Pierre O'Dowd has served as a director of the company
since March 2000. In addition, from 1995 to October 1999, Mr. O'Dowd served as a
consulting geologist and Vice President of Exploration for Noveder, Inc., a
junior mining exploration company in Canada. Since October 1999, Mr. O'Dowd has
served as a director and President of Noveder, Inc., now called Atlantis
Exploration Inc. From 1979 to 1992, Mr. O'Dowd worked as an exploration and mine
geologist in Canada and South America. He received a B.S. in geology in 1978
from Universitè du Montreal.

Kuang Zhong has served as a member of our Board of
Directors since March 2000. In addition, Mr. Zhong has served as a director of
Hechi since March 2000. From June 1995 to June 1998, he served as a director of
Fengshan Gold Mine in Guangxi, China. Mr. Kuang Zhong is the nephew of Mr. Kuang
Yihuai. He received a degree in base metal metallurgy from Zhong Nan Industrial
University in China in 1995.

All directors hold office until the next annual stockholders'
meeting or until their respective successors are elected or until their earlier
death, resignation or removal. Each officer serves at the discretion of the
board of directors. Currently other than the Audit Committee and the Executive
Committee there are no committees of the board of directors. Steven Yishyun Chi
resigned as a director in February 2001, Gerald Sneddon resigned as a director
in March 2001, and Ron Tolman resigned as a director in May 2002.

Item 10. Executive Compensation

Summary Compensation Table

The following table
sets forth information concerning compensation accrued but not paid to our Chief
Executive Officer for services rendered to us during the fiscal years ended
December 31, 2000, and 1999.
No other executive officer received an annual salary and bonus of more than
$100,000 for services rendered to us during this period of time nor did any
other executive officer provide services valued at more than $100,000.

|Name andPosition                                                        | Year          | Annual Compensation
    Salary($)
|----------------------------------------------------------------------- | ------------- | ---------------------------------
|Gilles Laverdiere 
     Vice-Chairman and Chief
      Executive Officer | 2000
    1999 | $60,000
    NIL                  

We have not granted any stock appreciation rights to any of
our executive officers. Under an employment agreement Kerry D. Smith is entitled to 500,000 options to purchase shares of common stock,
priced at the same price as the company's  public offering, as well as,
an additional 100,000 options to purchase shares of common stock, priced at the
same price as the company's  public offering, upon successful completion
of a public offering of $5,000,000 or more. Under an employment agreement Gilles Laverdiere is entitled to 500,000 options to purchase shares of common stock,
priced at the same price as the company's  public offering. Under a
letter agreement John Cullen is paid $3,000 per month by the company for
consulting services rendered. Mr. Cullen consults with the company on financial
and capital markets matters. The company's agreement with Mr. Cullen is
terminable at will by either party. Except for these employment agreements, the
company has not entered into any other employment agreements. Directors are not
compensated for any services they may provide as directors on our board of
directors.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information regarding
the beneficial ownership of each of our classes of stock as of December 31, 2000,
by:

|· | each person known by us to own beneficially 5% or more of the outstanding
    shares of any class of voting stock issued by the company;
|- | ----------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                         
|· | each of our directors;                                                                                                                  
|  |                                                                                                                                         
|· | each of our executive officers named in the summary compensation table
    above; and                                                   
|  |                                                                                                                                         
| ̧ | all of our directors and executive officers as a group.                                                                                 



The following calculations of the percent of outstanding
common shares are based on 105,566,199 shares of our common stock and 31,300 shares
of our Series A Convertible Preferred Stock issued and outstanding as of the date of the table.
Beneficial ownership and, accordingly, percent of class ownership, is calculated
in accordance with Rule 13d-3 of the Securities Act.

Each of the natural persons listed in the table beneficially
owns only outstanding shares of common stock or Series A Convertible Preferred
Stock and Series B Convertible Preferred Stock. TK holds, as agent for two other
entities, outstanding shares of common stock and shares of Series A Convertible
Preferred Stock, the TK debenture and the warrants. Each share of Series A
Convertible Preferred Stock is convertible into 12,000 shares of common stock.
The terms of the TK debenture and warrants held by TK,
as amended, prohibit in any 30 consecutive day period conversion of more than
one-third of the original principal amount of the TK debenture or sales of more
than a number of shares of our common stock equal to $208,000 divided by the
applicable conversion rate, and prohibit conversion of shares of Series A
Convertible Preferred Stock, conversion of the TK debenture or exercise of the
warrants to the extent that such conversion or exercise would result in the
debenture holder, together with its affiliates, beneficially owning in excess of
9.99% of our outstanding shares of common stock.

These limitations do not, however, preclude the holder from
converting or exercising and selling shares of common stock underlying its
shares of Series A Convertible Preferred Stock, debenture and warrants in stages
over time where each stage does not cause the debenture holder to beneficially
own in excess of the limitation amounts. As a result of the conversion
limitations described above and the number of shares of common stock that were
held by TK or that could have been acquired by TK upon conversion of shares of
Series A Convertible Preferred Stock or upon conversion of the TK debenture or
exercise of its warrant as of the date of the table, the number of shares of
common stock shown in the table as beneficially owned by TK has been limited to
9.99% of the shares of common stock outstanding as of the date of the table



|Name and Address ofBeneficial Owner(1)                          |  | Title of
    
    Class            |  | Amount and Nature
    of BeneficialOwnership |  | Percent ofClass
|--------------------------------------------------------------- |  | ---------------------------------- |  | -------------------------------------------- |  | ---------------
|Kuang Yihuai                                                    |  | Common                             |  |                                              |  | -              
|Gilles Laverdiere                                               |  | Common                             |  | 3,339,488                                    |  | 3.16%          
|Kerry D. Smith                                                  |  | Common                             |  | -                                            |  | -              
|Robert C. Montgomery                                            |  | Common                             |  | 1,754,959                                    |  | 1.66%          
|Ron Tolman                                                      |  | Common                             |  | 4,027,473                                    |  | 3.82%          
|Pierre O'Dowd                                                   |  | Common                             |  | 25,000                                       |  | *              
|Kuang Zhong                                                     |  | Common                             |  |                                              |  | -              
|Thomson Kernaghan & Co., Limited                                |  | Common                             |  | 10,555,564(3)                                |  | 9.99%          
|Rulon L. Tolman                                                 |  | Common                             |  | 6,879,284                                    |  | 6.52%          
|All directors and executive
    officers as a group (8 persons) |  | Common                             |  | 9,146,920                                    |  |                
|Thomson Kernaghan & Co., Limited                                |  | Series A Convertible Preferred     |  | 1,100(2)                                     |  | 3.5%           
|Kuang Yihuai                                                    |  | Series A
    Convertible Preferred |  | 2,421                                        |  | 7.7%           
|Gilles Laverdiere                                               |  | Series A
    Convertible Preferred |  | -                                            |  | -              
|Kerry D. Smith                                                  |  | Series A
    Convertible Preferred |  | -                                            |  | -              
|Pierre O'Dowd                                                   |  | Series A
    Convertible Preferred |  | -                                            |  | -              
|Kuang Zhong                                                     |  | Series A
    Convertible Preferred |  | 1,904                                        |  | 6.1%           
|All directors and
    executive officers as a group (8 persons) |  | Series A
    Convertible Preferred |  | 4,325                                        |  | 13.8%          

_________________________

* Represents less than 1%.

|(1) | Unless otherwise indicated, the address of each
    person in this table is c/o Biogan International, Inc. 55 University,
    Suite1210, Toronto, OntarioM5H 1J9. Kuang Yihuai, Gilles Laverdiere,
    Kerry D. Smith, Pierre O'Dowd, and Kuang
    Zhong, are directors of the Company. Gilles Laverdiere, Kerry D. Smith, and
    Ron Tolman are executive officers of the company.                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(2) | TK holds the securities shown in the table as agent
    for Canadian Advantage Limited Partnership ("CALP II") and Advantage
    (Bermuda) Fund Ltd. ("ABFL"). VMH Management Ltd. is the general partner of
    CALP II, and VMH International is the investment manager of ABFL. Mr. Mark
    Valentine is the sole director and president of VMH Management Ltd. and is
    the president of VMH International. In those capacities, Mr. Valentine holds
    the power to vote or dispose of the shares of common stock that are listed
    as owned by TK. The address for Mr. Valentine is c/o Thomson Kernaghan &
    Co., Limited, 120 Adelaide Street West, Suite 1600, Toronto, Ontario, Canada
    M5H 1T1.
|(3) | Represents 3,379,489 shares of common stock issued
    and outstanding and an aggregate of 7,760,075 shares of common stock
    currently issuable upon conversion of a debenture, preferred stock and/or
    upon exercise of a warrant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Item 12.    Certain Relationships and Related Transactions

On August 18, 2000 and December 5, 2000, TK
converted an aggregate of $530,000 of the principal balance of its debenture
plus related interest into 3,379,489 shares of our common stock. In 2000 we
repaid $5,000 of the $35,000 principal amount of the Carbon Mesa Debenture. Further detail can be found in Item 5 of this report.

To satisfy the terms of the company's  transaction
with Hechi, Biogan was likely to undertake an equity financing for the purpose
of contributing capital to GGM. With the goal of minimizing the dilution that
would occur to existing company stockholders upon consummation of any such
financing, a group of the company's stockholders, including former company
officers Ron Tolman, Rulon Tolman and William Glazier, orally agreed to reduce
the numbers of their own shares of our common stock by placing up to 8,739,488
of their own shares in the hands of Gilles Laverdiere and an entity controlled
by Mr. Laverdiere. Mr. Laverdiere, who later became an officer of the company,
sold a portion of the shares, of which 3,339,488 remain held by him, and
contributed the proceeds from that sale to the company for use in satisfying
certain outstanding liabilities of the company and coordinating the consummation
of the transaction with Hechi. The capital contributions made by Mr. Laverdiere
during 1999 and 2000 totaled $772,590 which included both proceeds from the sale
of the shares transferred to him and contributions he made personally to the
company.

Item 13.    Exhibits and Reports On Form 8-K

(a)    Exhibits

Exhibits are numbered in accordance with Item 601 of Regulation S-B.

|Exhibit No. | Description of Exhibits                                                                                                                                                                                                                                                                            
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                                                                                                    
|2.1         | Asset Purchase Agreement dated effective July 1, 2000 by and
    between the Registrant and Hechi (incorporated herein by reference to the
    Registrant's Form 8-K filed with the Securities and Exchange Commission on
    August 15, 2000).                                                    
|            |                                                                                                                                                                                                                                                                                                    
|3.1         | Certificate of Incorporation of the Registrant filed with the
    Delaware Secretary of State on February 5, 1988 (incorporated herein by
    reference to the registrant's Form 8-A filed with the Securities and
    Exchange Commission on September 6, 2000).                                  
|            |                                                                                                                                                                                                                                                                                                    
|3.2         | Certificate of Amendment of Certificate of Incorporation of the
    Registrant filed with the Delaware Secretary of State on March 31, 1989
    (incorporated herein by reference to the registrant's Form 8-A filed with
    the Securities and Exchange Commission on September 6, 2000).        
|            |                                                                                                                                                                                                                                                                                                    
|3.3         | Certificate of Amendment of Certificate of Incorporation of the
    Registrant filed with the Delaware Secretary of State on June 29, 1989
    (incorporated herein by reference to the registrant's Form 8-A filed with
    the Securities and Exchange Commission on September 6, 2000).         
|            |                                                                                                                                                                                                                                                                                                    
|3.4         | Certificate for Renewal and Revival of Charter of the Registrant
    filed with the Delaware Secretary of State on May 2, 1990 (incorporated
    herein by reference to the registrant's Form 8-A filed with the Securities
    and Exchange Commission on September 6, 2000).                     
|            |                                                                                                                                                                                                                                                                                                    
|3.5         | Certificate for Renewal and Revival of Charter of the Registrant
    filed with the Delaware Secretary of State on August 29, 1994 (incorporated
    herein by reference to the registrant's Form 8-A filed with the Securities
    and Exchange Commission on September 6, 2000).                 
|            |                                                                                                                                                                                                                                                                                                    
|3.6         | Certificate of Amendment of Certificate of Incorporation of the
    Registrant filed with the Delaware Secretary of State on September 5, 1997
    (incorporated herein by reference to the registrant's Form 8-A filed with
    the Securities and Exchange Commission on September 6, 2000).     
|            |                                                                                                                                                                                                                                                                                                    
|3.8         | Amended and restated bylaws of Registrant (incorporated herein by
    reference to the registrant's Form 8-A filed with the Securities and
    Exchange Commission on September 6, 2000).                                                                                                          
|            |                                                                                                                                                                                                                                                                                                    
|4.2         | 8% Secured Convertible Debenture due February 28, 2002 issued by the
    Registrant to CALP II, LLC (incorporated herein by reference to the
    registrant's Form 8-A filed with the Securities and Exchange Commission on
    September 6, 2000).                                                
|            |                                                                                                                                                                                                                                                                                                    
|4.3         | 8% Secured Convertible Debenture due February 28, 2002 issued by the
    Registrant to Carbon Mesa Partners, LLC (incorporated herein by reference to
    the registrant's Form 8-A filed with the Securities and Exchange Commission
    on September 6, 2000).                                   
|            |                                                                                                                                                                                                                                                                                                    
|4.4         | Common Stock Purchase Warrant dated March 29, 2000 issued by the
    Registrant to CALP II, LLC (incorporated herein by reference to the
    registrant's Form 8-A filed with the Securities and Exchange Commission on
    September 6, 2000).                                                    
|            |                                                                                                                                                                                                                                                                                                    
|4.5         | Common Stock Purchase Warrant dated March 29, 2000 issued by the
    Registrant to Carbon Mesa Partners, LLC (incorporated herein by reference to
    the registrant's Form 8-A filed with the Securities and Exchange Commission
    on September 6, 2000).                                       
|            |                                                                                                                                                                                                                                                                                                    
|4.6         | Registration Rights Agreement dated as of March 8, 2000 between the
    Registrant, CALP II, LLC and Carbon Mesa Partners,LLC (incorporated herein
    by reference to the registrant's Form 8-A filed with the Securities and
    Exchange Commission on September 6, 2000).                      
|            |                                                                                                                                                                                                                                                                                                    
|4.7         | Securities Purchase Agreement dated as of March 8, 2000 by and
    between the Registrant and CALP II, LLC and Carbon Mesa Partners, LLC
    (incorporated herein by reference to the registrant's Form 8-A filed with
    the Securities and Exchange Commission on September 6, 2000).           
|            |                                                                                                                                                                                                                                                                                                    
|4.8         | Pledge Agreement, dated March 8, 2000, by and among the Registrant, CALP II, LLC, Carbon Mesa Partners, LLC and Law Offices of Michael S.
    Rosenblum (incorporated herein by reference to the registrant's Form 8-A
    filed with the Securities and Exchange Commission on September 6, 2000).
|            |                                                                                                                                                                                                                                                                                                    
|4.13        | Certificate of Designation, Preferences and Rights of Series A Convertible
Preferred Stock of the company (incorporated herein by reference to the
registrant's Form 8-A filed with the Securities and Exchange Commission on
September 6, 2000).                                                  
|            |                                                                                                                                                                                                                                                                                                    
|10.1        | Co-operative Joint Venture contract for Guangxi Metals Co. Ltd dated January 27,
2000, by and between the Registrant and Hechi (Incorporated herein by reference
to the Registrant's Form 8-K filed with the Securities and Exchange Commission
on August 15, 2000).                               
|            |                                                                                                                                                                                                                                                                                                    
|10.2        | Employment agreement by and between the Registrant and Gilles Laverdiere effective as of January 1, 2000.
(Incorporated herein by reference to the Registrant's Form 10-KSB filed with the
Securities and Exchange Commission on August 2, 2002).                                                  
|            |                                                                                                                                                                                                                                                                                                    
|10.3        | Employment agreement by and between the Registrant and Kerry D. Smith
effective as of August 1, 2000. (Incorporated herein by reference to the
Registrant's Form 10-KSB filed with the Securities and Exchange Commission on
August 2, 2002).                                                      
|            |                                                                                                                                                                                                                                                                                                    
|23.1        | Consent of Independent Auditor George Brenner, C.P.A.                                                                                                                                                                                                                                              
|            |                                                                                                                                                                                                                                                                                                    
|99.1        | Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                    
|99.2        | Articles of Association of Guanxi Guanghe Metals
    Co., Ltd. (Incorporated herein by reference to the Registrant's Form 8-K
    filed with the Securities and Exchange Commission on August 15, 2002).                                                                                           
|            |                                                                                                                                                                                                                                                                                                    

(b) Reports on Form 8-K

On August 10, 2000, we filed a Current Report on Form 8-K
concerning the resignation of the George Brenner, CPA, as the company's
auditors.

On August 15, 2000, we filed a Current Report on Form 8-K
announcing that effective as of January 27, 200, we entered into a Cooperative
Joint Venture Contract with Hechi Industrial Co., Ltd., a private mining company
organized under the laws of the People's Republic of China, to provide for the
formation of a Chinese cooperative joint venture called Guanghe Metals Co., Ltd.

On October 13, 2000, we filed on Form 8-K/A, Amendment No. 1
to the Current Report on Form 8-K filed August 15, 2000 in connection with our
transaction with Hechi Industrial Co. Ltd., to include certain financial
statements required to be filed in connection with such joint venture.

On October 24, 2000, we filed on Form 8-K/A, Amendment No. 2
to the Current Report on Form 8-K filed August 15, 2000 in connection with our
transaction with Hechi Industrial Co. Ltd., to include financial statements of
Hechi Industrial, Co. Ltd. to be filed in connection with such joint venture.

Signatures

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

|BIOGAN
                                INTERNATIONAL, INC. (REGISTRANT)                                                                                             
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                    
|/s/ Gilles Laverdiere                                                                                                                                               
|By:  Gilles Laverdiere,
                                Vice Chairman, Chief Executive Officer, Chief
                                Financial Officer and Director

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

|Signature                                             |  | Title                                                                            | Date             
|----------------------------------------------------- |  | -------------------------------------------------------------------------------- | -----------------
|/s/
                            Gilles
    Laverdiere |  | Vice Chairman,
    Chief Executive Officer, Chief Financial Officer and Director | February 27, 2003
|Gilles
    Laverdiere                                 |  |                                                                                  |                  
|                                                      |  |                                                                                  |                  
|/s/ Kerry D. Smith                                    |  | President, Chief Operating Officer                                               | February 27, 2003
|Kerry D. Smith                                        |  |                                                                                  |                  
|                                                      |  |                                                                                  |                  
|/s/ Pierre O'Dowd                                     |  | Director                                                                         | February 27, 2003
|Pierre O'Dowd                                         |  |                                                                                  |                  



CERTIFICATION PURSUANT TO SECTION 302 of the SARBANES-OXLEY
ACT OF 2002

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

I, Gilles Laverdiere, Vice Chairman, Chief Executive Officer and Director of
Biogan International, Inc., hereby certify that:

1.     I have reviewed this annual report on Form 10-KSB of
Biogan International, Inc.

2.    Based on my knowledge, this annual 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 annual report;

3.    Based on my knowledge, the financial statements, and other
financial information included in this annual 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 annual report;

4.    I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and I have:

(a)     designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those entities,
particularly during the period in which this annual report is being prepared;

(b)     evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and

(c)     presented in this annual report my conclusions about
the effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date;

5.    I have disclosed, based on my most recent evaluation, to
the registrant's auditors and to the audit committee of registrant's board of
directors (or persons performing the equivalent function):

(a)    all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

(b)    any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and

6.        I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of my most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: February 27, 2003

/s/ Gilles Laverdiere
By: Gilles Laverdiere 
Vice Chairman, Chief Executive Officer, Chief Financial Officer and Director

BIOGAN INTERNATIONAL, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 2000



TABLE OF CONTENTS

|Independent Auditor's Report                                                                                                                                                                                                                                | 1   
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                                                                                                            |     
|Balance Sheet as of December 31, 2000                                                                                                                                                                                                                       | 2   
|                                                                                                                                                                                                                                                            |     
|Statement of Operations for the Years Ended
    December 31, 2000 and 1999,
    and from Inception through December 31, 2000                                                                                                                                | 3   
|                                                                                                                                                                                                                                                            |     
|Statement of Changes in Stockholders' Equity
    (Deficiency) for the Period
    from Inception through December 31, 2000                                                                                                                                   | 4   
|                                                                                                                                                                                                                                                            |     
|Statement of Cash Flows for the Years Ended
    December 31, 2000 and 1999,
    and from Inception through December 31, 2000                                                                                                                                | 5   
|                                                                                                                                                                                                                                                            |     
|Notes to Financial Statements                                                                                                                                                                                                                               | 6-14
|                                                                                                                                                                                                                                                            |     
|Supplemental Financial Information (Unaudited)                                                                                                                                                                                                              | 15  
|Balance Sheets as of March 31, June 30, and
    September 30, 2000                                                                                                                                                                                          | 16  
|                                                                                                                                                                                                                                                            |     
|Statement of Operations for the three month
    period Ended March 31, 2000 and 1999,
    for the three month and six month periods ended June 30, 2000 and 1999, and
    for the 
    three month and nine month periods ended September 30, 2000 and 1999 | 17  
|                                                                                                                                                                                                                                                            |     
|Statement of Changes in Stockholders' Equity
    (Deficiency) for the Period
    from Inception through September 30, 2000                                                                                                                                  | 18  
|                                                                                                                                                                                                                                                            |     
|Statement of Cash Flows for the three month
    period Ended March 31, 2000 and 1999,
    six month periods ended June 30, 2000 and 1999, nine month periods ended 
    September 30, 2000 and 1999, and from Inception through September 30, 2000          | 19  
|                                                                                                                                                                                                                                                            |     



George Brenner





REPORT OF INDEPENDENT AUDITOR

Board of Directors
Biogan International, Inc. (A Development-Stage Company)
Toronto, Canada

I have audited the accompanying balance sheet of Biogan International, Inc.,
(A Development-Stage Company) as of December 31, 2000 and the related statements
of operations, stockholders' equity (deficiency) and cash flows for the years
ended December 31, 2000 and 1999 and from inception (February 5, 1998) through
December 31, 2000. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.

I conducted my audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audits provide a reasonable
basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial condition of Biogan International, Inc. as
of December 31, 2000 and the results of its operations, stockholders' equity
(deficiency) and cash flows for the years ended December 31, 2000 and 1999 and
from inception (February 5, 1998) through December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As more fully described in Note 2C to the
financial statements, the Company's recurring losses from development stage
activities raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments to reflect the
possible effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern. Management's plans in
this regard are discussed in Notes 1 and 11 "Cooperative Joint Venture" and
"Subsequent Events," respectively. Should the Company not be successful in its
Joint Venture the $1,700,000 (Note 2B) will be written off increasing the
stockholders' deficit from approximately $232,000 to $1,932,000.

The supplemental information (Pages 15 through 19) has not been audited (Note
12).



George Brenner, C.P.A.

Los Angeles, California
June 17, 2002

|BIOGAN INTERNATIONAL, INC.
                                                      
    (A DEVELOPMENT STAGE COMPANY)
                                                      
    BALANCE SHEET
                                                      
    DECEMBER 31, 2000                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                               
|ASSETS
    CASH                                                                                                                                                                                                                                                                                                                
|TOTAL CURRENT ASSETS                                                                                                                                                                                                                                                                                                           
|FIXED ASSETS, NET OF
    ACCUMULATED DEPRECIATION OF $25,505                                                                                                                                                                                                                                                                   
|COOPERATIVE JOINT
    VENTURE INVESTMENT                                                                                                                                                                                                                                                                                       
|TOTAL ASSETS                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                               
|LIABILITIES &
    STOCKHOLDERS' DEFICIT
    ACCOUNTS PAYABLE
    NOTES PAYABLE 
    ACCRUED EXPENSES                                                                                                                                                                                                                           
|TOTAL CURRENT LIABILITIES                                                                                                                                                                                                                                                                                                      
|NON-CURRENT LIABILITIES
    CONVERTIBLE DEBENTURES
     - NET OF UNAMORTIZED
    ISSUANCE COSTS OF $340,583                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                               
|TOTAL LIABILITIES                                                                                                                                                                                                                                                                                                              
|COMMITMENTS                                                                                                                                                                                                                                                                                                                    
|STOCKHOLDERS' DEFICIT
     SERIES A CONVERTIBLE
    PREFERRED STOCK $.001 PAR VALUE,
          10,000,000 SHARES
    AUTHORIZED 1,100 SHARES ISSUED
     COMMON STOCK $.001
    PAR VALUE 300,000,000
          SHARES AUTHORIZED,
    88,766,199 ISSUED AND OUTSTANDING
    ADDITIONAL PAID IN CAPITAL
    ACCUMULATED DEFICIT
|TOTAL STOCKHOLDERS' DEFICIT                                                                                                                                                                                                                                                                                                    
|TOTAL LIABILITIES &
    STOCKHOLDERS' DEFICIT                                                                                                                                                                                                                                                                                  









|BIOGAN INTERNATIONAL, INC.
    (A DEVELOPMENT-STAGE COMPANY)
    STATEMENT OF OPERATIONS                                                                                                                                                                                                                                                               
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                       
|SALES
    REVENUE                                                                                                                                                                                                                                                                                                                                      
|TOTAL SALES                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                       
|EXPENSES
    WAGES
    STOCK SUBSCRIPTION LOSS
    DEPRECIATION EXPENSE
    AMORTIZATION
    STOCK BASED EXPENSE
    INTEREST EXPENSES
    INTEREST EXPENSE - 
    BENEFICIAL CONVERSION
    INCENTIVE BONUS
    LEGAL & ACCOUNTING FEES 
    RENT
    START UP COSTS
    RESEARCH AND DEVELOPMENT
    SUBSIDIARIES LOSSES
    OTHER OPERATING EXPENSES
|                                                                                                                                                                                                                                                                                                                                                       
|TOTAL EXPENSES                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                       
|NET OPERATING INCOME (LOSS)                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                       
|STOCK RESTITUTION LOSS
    INTEREST INCOME
    OTHER INCOME
    MISCELLANEOUS EXPENSE                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                       
|TOTAL OTHER                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                       
|NET INCOME (LOSS)                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                       
|PRIMARY INCOME 
    (LOSS) PER SHARE                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                       
|WEIGHTED AVERAGE SHARES OUTSTANDING                                                                                                                                                                                                                                                                                                                    



|BIOGAN
    INTERNATIONAL, INC.
    (A
    DEVELOPMENT-STAGE COMPANY)
    STATEMENT OF
    STOCKHOLDERS' DEFICIT
    FOR THE PERIOD FROM
    FEBRUARY 5, 1988 (INCEPTION)
    THROUGH DECEMBER
    31, 2000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|COMMON STOCK                                                                                                                                                                                              
|ISSUED:                                                                                                                                                                                                   
|                                                                                                                                                                                                          
|1988                                                                                                                                                                                                      
|1989                                                                                                                                                                                                      
|1995                                                                                                                                                                                                      
|1996                                                                                                                                                                                                      
|1997                                                                                                                                                                                                      
|1998                                                                                                                                                                                                      
|                                                                                                                                                                                                          
|JULY 1, 1999                                                                                                                                                                                              
|JULY 31, 1999                                                                                                                                                                                             
|AUGUST 20, 1999                                                                                                                                                                                           
|SEPTEMBER 20, 1999                                                                                                                                                                                        
|DECEMBER 7, 1999                                                                                                                                                                                          
|DECEMBER 31, 1999                                                                                                                                                                                         
|NET LOSS                                                                                                                                                                                                  
|DECEMBER 31, 1999                                                                                                                                                                                         
|                                                                                                                                                                                                          
|MARCH 8, 2000                                                                                                                                                                                             
|BENEFICIAL CONVERSION
    
     FEATURE                                                                                                                                                                   
|MARCH 31, 2000                                                                                                                                                                                            
|CONTRIBUTED CAPITAL                                                                                                                                                                                       
|FORGIVEN OFFICERS WAGES                                                                                                                                                                                   
|JUNE 30, 2000                                                                                                                                                                                             
|CONTRIBUTED CAPITAL                                                                                                                                                                                       
|AUGUST 18, 2000                                                                                                                                                                                           
|CONTRIBUTED CAPITAL                                                                                                                                                                                       
|$500,000 DEBENTURE CONVERSION
     PLUS INTEREST OF $15,122                                                                                                                                               
|2,712,387                                                                                                                                                                                                 
|OCTOBER 8, 2000                                                                                                                                                                                           
|PREFERRED STOCK ISSUED                                                                                                                                                                                    
|STOCK BASED COMPENSATION                                                                                                                                                                                  
|DECEMBER 5, 2000                                                                                                                                                                                          
|CONTRIBUTED CAPITAL                                                                                                                                                                                       
|$30,000 DEBENTURE CONVERSION
     PLUS INTEREST OF $400                                                                                                                                                   
|667,102                                                                                                                                                                                                   
|NET LOSS                                                                                                                                                                                                  
|                                                                                                                                                                                                          
|DECEMBER 31, 2000                                                                                                                                                                                         
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          
|                                                                                                                                                                                                          

SEE ACCOMPANYING NOTES AND REPORT OF
INDEPENDENT AUDITOR



|BIOGAN INTERNATIONAL, INC.
    (A DEVELOPMENT-STAGE COMPANY)
    STATEMENT OF CASH FLOWS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|CASH FLOWS FROM OPERATIONS
    NET INCOME (LOSS)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|ADJUSTMENTS TO
    RECONCILE NET LOSS TO
    NET CASH USED BY
    OPERATING ACTIVITIES:
    ADD BACK STOCK ISSUED FOR:
    MANAGEMENT
    CONTRACT LABOR,
    INCENTIVE BONUSES,
     PROFESSIONAL SERVICES, AND
    RESEARCH 
     AND DEVELOPMENT
    IMPUTED EXECUTIVE COMPENSATION
    STOCK BASED COMPENSATION
    RESTITUTION
    INTEREST EXPENSE
    INTEREST EXPENSE -
    BENEFICIAL CONVERSION
    DISPUTE SETTLEMENTS
    STOCK CANCELLATION
    OTHER ADJUSTMENTS:
    SUBSIDIARIES LOSSES
    STOCK SUBSCRIPTION LOSS
    FIRST DEVELOPMENT STAGE LOSS
    AMORTIZATION
    DEPRECIATION
    TOTAL ADJUSTMENTS
|ADVANCES
    ACCOUNTS RECEIVABLE
    ACCOUNTS PAYABLE
    ACCRUED LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|NET CASH (USED)
    BY OPERATING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|CASH FLOWS FROM
    INVESTING ACTIVITIES
    PURCHASE FURNITURE/EQUIPMENT
    DISPOSAL FURNITURE/EQUIPMENT
    ADVANCE ON BUSINESS COMBINATION
    INVESTMENT IN SUBSIDIARIES                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|NET CASH (USED)
    BY INVESTING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|CASH FLOWS FROM
    FINANCING ACTIVITIES
    NOTE
    PAYABLE-STOCKHOLDER RECEIVED
    NOTES PAYABLE - OTHER RECEIVED
    PAYMENT OF NOTES
    PAYABLE - OTHER
    CONVERTIBLE DEBENTURES
    ISSUANCE OF COMMON STOCK
    BOND ISSUANCE COST CAPITALIZED
    CONTRIBUTED CAPITAL
    OTHER                                                                                                                                                                                                                                                                                                                                 
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|NET CASH PROVIDED (USED)
    BY FINANCING ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
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|NET INCREASE (DECREASE) IN CASH                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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|BEGINNING CASH BALANCE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
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|SUPPLEMENTAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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|CASH PAYMENTS FOR
    INTEREST EXPENSE
    CASH PAYMENTS FOR INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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|NONMONETARY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|STOCK ISSUED FOR:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|DEBT REDUCTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|CONTRACT LABOR,
    INCENTIVE BONUSES,     
     PROFESSIONAL
    SERVICES, AND
    RESEARCH AND
     DEVELOPMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|IMPUTED EXECUTIVE COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|RESTITUTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|INTEREST EXPENSE -
    BOND CONVERSION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|INTEREST EXPENSE -
    BENEFICIAL CONVERSION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|DISPUTE SETTLEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|STOCK CANCELLATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|BOND ISSUANCE COSTS CAPITALIZED                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|BOND CONVERSION INTO
    COMMON STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|STOCK BASED COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

SEE ACCOMPANYING NOTES AND REPORT OF
INDEPENDENT AUDITOR

BIOGAN INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2000

1.        
HISTORY

Background

Biogan International, Inc. ("Biogan" or the "Company") was incorporated
    under the laws of the State of Delaware on February 5, 1988 under the name
    H.W. Ronney and Company and has been a development stage company since its
    inception. The Company changed its name to Biogan Medical International,
    Inc. in March 1989 after merging with a company of that name, and then
    engaged in various medical-related enterprises under the Company's new name.
    Prior to 1995, either directly or indirectly, through subsidiaries or other
    affiliates, the Company also engaged in business operations in a variety of
    other industries, undergoing several corporate restructurings during that
    time.

In 1995, the Company began development of a new concept in electrical
    motors called the IntorCorp Motor. To assist in the development of the
    Company's electrical motor concept, the Company entered into a consulting
    agreement with Technical Development Consultants, Inc. ("TDC"), an
    independent electrical engineering consulting firm. As part of the research
    and development process, the Company's consultants formed a company called
    Collective Technologies, LLC, which company acquired any intellectual
    property rights held by TDC with respect to the IntorCorp Motor concept. The
    Company changed its name to Biogan International, Inc. in September 1997 to
    avoid any confusion that could result from the use of the word "medical" in
    the Company's name when the Company's emphasis at that time was to promote
    the development of the IntorCorp Motor.

Effective February 1998, the Company entered into a joint venture
    agreement with Collective Technologies, LLC to continue the development of
    the IntorCorp Motor through an Idaho corporation, IntorCorp, Inc., in which
    the Company held a 50% ownership interest. In August 1999, the Company
    transferred all of its rights and interest in IntorCorp, Inc., including the
    Company's interest in the IntorCorp Motor and the patent application to the
    electromagnetic motor, in connection with an agreement with R-Tec
    Engineering Corporation. Under the terms of the agreement, the parties
    created an Idaho corporation, R-Tec Holding, Inc., into which the Company
    transferred its 50% ownership interest in IntorCorp, Inc. in exchange for
    4,266,797 shares of common stock of R-Tec Holding, Inc. In September 1999,
    the Company distributed these shares to its stockholders. Following this
    transaction, and having divested itself of certain assets related to the
    electrical motor industry and disposed of all of its subsidiaries and other
    interests in other affiliates and other entities, the Company began to focus
    its attention, experience and resources on developing a base metal mining
    and smelting operation in China.

Cooperative Joint VentureEffective July 1, 2000 the Company entered into a Joint Venture
    Agreement with Hechi Industrial Co., Ltd. (Hechi) under the laws of the
    Peoples' Republic of China. A Cooperative Joint Venture, Guangxi Guanghe
    Metals Co., Ltd. (GGM), was formed for the purpose of engaging in the mining
    and milling of non-ferrous metals and for the purpose of operating a copper
    smelter to produce blister copper in the Guangxi Province of China.



Pursuant to the transaction, the company paid $1,700,000
    and issued 16,800,000 shares of the company's common stock and 30,200 shares
    of Series A preferred stock to Hechi in exchange for certain assets held by
    GGM.



On July 27, 2001, the Company was advised that the
    transactions contemplated under the original Joint Venture agreement and
    related Asset Purchase agreement were not in compliance with certain laws of
    the People's Republic of China.



Following discussions with Hechi and our U.S., Chinese
    and Canadian legal counsel, the company implemented the transactions on a
    restructured basis, in compliance with Chinese legal requirements, more
    fully described in Note 11 "Subsequent Events."



As a result of the above transactions, Biogan acquired,
    as intended under the original structure of the joint venture, a 92% equity
    interest and a 95% profits and loss interest in the Joint Venture in
    exchange for 80.6% interest in Biogan's voting capital stock. For accounting
    purposes only, the transaction will be treated as a reverse takeover, with
    Hechi treated as having acquired Biogan.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. PRESENTATION

The accompanying financial statements have been prepared in
        accordance with the Statement of Financial Accounting Standards No. 7
        "Accounting and Reporting by Development-Stage Enterprises". A
        development stage enterprise is one in which planned principal
        operations have not commenced or if its operations have commenced there
        has been no significant revenue there from. Development-stage companies
        report cumulative costs from the enterprise's inception.

B.
        COOPERATIVE JOINT VENTURE INVESTMENT



The $1,700,000 referred to in Note 1 above will not be refunded
        should the Chinese transaction not be consummated. The common and
        preferred shares previously issued were canceled. The common shares will
        be reissued along with a new Series B Preferred Stock in connection with
        the re-structuring as outlined in Note 11.

Should the Joint Venture not be consummated, the $1,700,000 will be
        written off in which case the stockholders' deficit of $231,954 at
        December 31, 2000 will become $1,931,954. See next caption "Continued
        Existence."



C. CONTINUED EXISTENCE

The Company has had recurring losses from development
        stage activities, negative working capital of $778,667 and a
        stockholders' deficit of $231,954. In addition, there is also an
        uncertainty in connection with the Company meeting its $7,300,000
        funding requirement (Note 11).



Following the transactions outlined in Note 11, the
        Company's business will be completely concentrated in its Cooperative
        Joint Venture in the People's Republic of China. Consequently its
        continued existence depends on the success of the Joint Venture. Because
        the Joint Venture conducts its principal operations in China, it is
        subject to significant risks not typically associated with investments
        in equity securities of the United States and Western European
        companies. These include risks associated with, among others, the
        political, economic and legal environment, influence of the State
        Council over substantially all aspects of its operations and competition
        in the mining and refining industry.



The above financial factors and risk concentration
        raise a substantial doubt about the Company's ability to continue as a
        going concern. The financial statements do not include any adjustments
        to reflect the possible effects on the recoverability and classification
        of assets or amounts and classifications of liabilities that may result
        from the possible inability of the Company to continue as a going
        concern. Management plans to continue in existence are set forth in Note
        1 "Cooperative Joint Venture" and Note 11 "Subsequent Events". There can
        be no assurance that the Joint Venture will be successful.





D. DEFERRED BOND ISSUED COSTS, DISCOUNT AND BENEFICIAL
         CONVERSION FEATURE



The Company issued secured convertible debentures totaling $2,035,000
        on March 30, 2000, as discussed in Note 10. The costs ($300,000)
        associated with the issuance of such debentures and their discount
        ($235,000) are amortized over the life of the debentures. The
        convertible debenture contains a beneficial conversion feature. The
        Company accounted for the beneficial conversion feature in accordance
        with Emerging Issues Task Force Issue No. 98-5, Accounting for
        Convertible Securities with Beneficial Conversion Features or
        Contingently Adjustable Conversion Ratios. EITF 98-5 requires the
        Beneficial Conversion Feature be calculated and amortized from the date
        of closing of the agreement until the earliest date on which investors
        have the right to convert the debt to common shares. The Beneficial
        Conversion Feature was computed at $508,750, all of which was expensed
        in 2000. In addition, 1,100 Series A preferred shares were issued in
        connection with the debenture financing. See Note 2.1. "Stock Based
        Expenses."



E. FURNITURE AND EQUIPMENT



Furniture and equipment are carried at cost. Depreciation of furniture
    and equipment is provided using the
    straight-line method of depreciation and the accelerated cost recovery
    method for federal income tax
    purposes. Depreciation is calculated over useful life ranging from 5 to
    10 years.



F. CASH AND CASH EQUIVALENTS



For purposes of the statement of cash flows, the Company considers all
    short-term investments in interest
    bearing accounts, securities and other instruments with an original
    maturity of three months or less, to be
    equivalent to cash.

G. INCOME TAXES

Deferred taxes are provided on the asset and liability method whereby
        deferred tax assets are recognized for deductible temporary differences
        and operating loss and tax credit carryforwards and deferred tax
        liabilities are recognized for taxable temporary differences. Temporary
        differences are the differences between the reported amounts of asset
        and liabilities and their tax bases. Deferred tax assets are reduced by
        a valuation allowance when, in the opinion of management, it is more
        likely than not that some portion or all of the deferred tax assets will
        not be realized. Deferred tax assets and liabilities are adjusted for
        the effects of changes in tax laws and rates on the date of enactment.

At December 31, 2000 and 1999 there were temporary differences
        between books and tax, principally stock based expenses. The operating
        loss carryforwards were fully reserved. (Note 8 "Income Taxes")

H. LOSS PER SHARE



Basic income (loss) per share is based on the weighted-average number
        of outstanding common shares during the applicable period. Of the
        88,766,199 shares outstanding 49,016,648 are restricted and 39,749,551
        shares are unrestricted. The 28,800,000 shares that are being held in
        escrow and are pledged as collateral for the convertible debentures
        (Note 10) are not included in the weighted-average computation. No
        potential conversion of the debentures and Series A preferred stock to
        common stock was included in computing loss per share because the effect
        would be anti-dilutive.



I. STOCK BASED EXPENSES

Conversion of 1,100 shares of Series A Preferred Stock converted at
        12,000 shares of common for each share of preferred would, if converted,
        result in the issuance of 13,200,000 shares of common stock. These
        shares calculated at an average price per share around the October 8,
        2000 issued date and discounted 20% for the shares being restricted,
        results in a charge to operations of $1,470,480 for the year ended
        December 31, 2000.

The 2,500,000 shares of common stock issued in connection with the
        debenture settlement (Note 10) on September 30, 2001 was calculated
        similar to the procedure in the above paragraph resulting in a charge to
        operations of $30,000 for the year ended December 31, 2001.

3.                NOTES PAYABLE:

| | Notes Payable as of December 31, 2000 consist of the following:                                                                                                                                                         |          
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------
| | Notes payable to Hechi Industrial Company Limited with interest 
      at 10% per annum from January 3, 2001. Note is unsecured and 
      is payable on demand. Payments are applied first to any unpaid interest.     | 50,000   
| | Notes payable to Ronald J. Tolman, Stockholder, with
      interest at 10% per annum from November 13, 1996. Note is unsecured
      and is payable on demand. Payments are applied first to any unpaid
      interest. | 40,000   
| | Notes payable to Ronald J. Tolman, Stockholder, with interest
      at 10% per annum from September 7, 1999. Note is unsecured
      and is payable on demand.                                                          | 5,000    
| | Notes payable to Rulon L. Tolman, Stockholder, with
      interest at 10% per annum from November 13, 1996. Note is
      unsecured and is payable on demand. Payments are applied first
      to any unpaid interest.  | 40,000   
| | Notes payable to Rulon L. Tolman, Stockholder, with
      interest at 10% per annum from April 29, 1999. Note is unsecured
      and is payable on demand. Payments are applied first to any
      unpaid interest.     | 10,000   
| | Total Notes Payable                                                                                                                                                                                                     | $ 145,000

4.         STOCKHOLDERS' DEFICIT

COMMON STOCK - There are 117,566,199 shares of common stock issued and
    outstanding, of which 28,800,000 are held in escrow as collateral for the
    convertible debentures, resulting in net shares outstanding of 88,766,199.

PREFERRED STOCK - There are 1,100 shares of Series A convertible
    preferred stock issued and outstanding, which are convertible into
    13,200,000 common shares.

See Note 2. I, "Stock Based Expenses" in connection with the Series A
    preferred shares.

ADDITIONAL PAID IN CAPITAL - Included in additional paid in capital for
    which no stock was issued are cash received from Mr. Gilles Laverdiere,
    President, $1,001,600 and $171,200 of accrued salaries forgiven by former
    corporate officers.





5.                 ACCRUED EXPENSES



Accrued expenses consist of the following:

|Accrued interest on convertible debentures | $ 92,857
|------------------------------------------ | --------
|Accrued interest on notes payable          | 34,319  
|Accrued salaries - officer/stockholders    | 172,800 
|Expenses advanced by Hechi                 | 19,214  
|                                           | $319,190
|                                           |         

6.         USE OF ESTIMATES

The preparation of financial statements in conformity with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect the reported amounts of assets and liabilities and
    disclosures 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.



7.       STOCK OPTIONS



On December 8, 1988, the board of directors of Biogan allocated 2,000,000
    shares of the Company's authorized common stock shares for a stock incentive
    plan to be issued as determined by the board at an option price of not less
    than placement offering of any private placement offering of the Company's
    common stock. No options have been granted under this stock incentive plan.



8.       INCOME TAXES



At December 31, 2000, Biogan had net operating losses (NOL) carryforwards
    and research & development tax credit as follows:

|YEAR | NOL        | YEAR EXPIRES | TAX CREDIT | YEAR EXPIRES
|---- | ---------- | ------------ | ---------- | ------------
|1995 | 2,887,130  | 2010         |            |             
|1996 | 1,122,539  | 2011         | 12,197     | 2011        
|1997 | 736,051    | 2017         | 9,665      | 2012        
|1999 | 141,273    | 2019         |            |             
|2000 | 1,798,073  | 2020         |            |             
|     | $6,685,066 |              | $21,862    |             
|     |            |              |            |             







No deferred asset will be recognized on the tax benefit resulting from the NOL until the Company becomes 
  profitable. While management believes the loss recorded due to the stock
  restitution loss in prior years
  ($2,676,409) is a tax-deductible expense; it could be subject to an IRS
  disallowance. If the transaction described



in Note 1 takes place, there will be a significant change in ownership,
    and the net operating losses carried forward will be significantly reduced.
    Stock based expenses (Note 2.I.) are not included in the above NOL
    calculations.



9.      RECENTLY ISSUED ACCOUNTING STATEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
    Instruments and Hedging Activities." This statement establishes accounting
    and reporting standards for derivatives as assets or liabilities in the
    statement of financial position and measurement of those instruments at fair
    value. In June 1999, the FASB issued SFAS No. 137 "Accounting for Derivative
    Instruments and Hedging Activities - Deferral of the Effective Date of FASB
    Statement No. 133" which delays the effective date of SFAS No. 133 to fiscal
    years beginning after June 15, 2000. In June 2000 the FASB issued SFAS
    No.138 "Accounting for Certain Derivative Instruments and Certain Hedging
    Activities" which amends some of the provisions of FASB 133. The Company
    believes that the adoption of these accounting standards will not have any
    material effect on the financial statements of the Company.

> 10.    CONVERTIBLE DEBENTURES



As a result of the letter of credit expiring, which secured the
    debenture, the Company issued 28,800,000 shares of its common stock into an
    escrow to be used as collateral for the debenture. As of December 31, 2000
    accrued interest aggregated $92,857.

The primary debenture holder of $2,000,000 debentures, Thomson Kernaghan
    & Co. Limited (TK), a Canadian Limited Liability Company, beneficially
    owned, as of December 31, 2000, approximately 4% of the Company's
    outstanding common stock

Subject to beneficial ownership limitations described below, a debenture
    holder is entitled, at its option, to convert $10,000 or more of the balance
    of its debenture into shares of Biogan's common stock at any time until the
    maturity date. A debenture holder may not convert more than one-third of the
    original principal amount of its debenture during any 30 consecutive days or
    sell more than a number of shares of Biogan's common stock equal to
    $208,000, in the case of the TK debenture, or $35,000, in the case of the
    other debenture, divided by the applicable conversion rate. In addition,
    except with respect to an automatic conversion or while there is outstanding
    a tender offer for any or all of the shares of Biogan's common stock, a
    holder may not convert a debenture to the extent that, after the conversion,
    the holder and its affiliates would beneficially own more than 9.99% of
    Biogan's outstanding common stock. However, the debenture holders may
    convert and sell into the market to avoid exceeding this ownership
    limitation. Any debentures not previously converted as of the maturity date
    automatically will be converted at the then-applicable conversion rate.

A debenture holder may declare the entire unpaid principal balance and
    all accrued but unpaid interest immediately due and payable upon an event of
    default under its debenture. Events of default include:

• an uncured failure to make payments due under the debentures or to
        perform or observe any obligation under either of the debentures or
        related agreements,

• Biogan's written admission that it is insolvent, Biogan's making an
        assignment for the benefit of creditors or commencing proceedings for
        dissolution, or Biogan's application for the appointment of a trustee,
        liquidator or receiver;

• the institution of voluntary or involuntary bankruptcy,
        reorganization, insolvency or liquidation proceedings against Biogan
        that are not dismissed within 60 days;

• the entry of a judgment or writ of attachment in excess of $200,000
        that remains unpaid, unvacated, unbonded or unstayed for 60 days or
        during the five days prior to the date of any proposed sale under the
        judgment or writ; or

• the suspension of trading or delisting from an exchange or the
        NASD's OTC Electronic Bulletin Board of Biogan's common stock for more
        than five trading days after Biogan's common stock is relisted on an
        exchange or on the NASD's OTC Electronic Bulletin Board.

Subject to adjustment for stock splits, stock dividends, capital
    reorganizations or similar occurrences, the conversion rate for the
    debentures is equal to the lower of the per share price of $0.4166 or 80% of
    the average of the closing bid prices of Biogan's common stock as reported
    on the over-the-counter market for the five trading days immediately prior
    to the conversion date.

As of December 31, 2000, Biogan had a total of 88,766,199 shares of
    common stock outstanding, and the debentures were convertible into
    approximately 61,250,000 shares of Biogan common stock on the principal and
    accrued interest if contractual limitations on conversion were disregarded.
    The number of shares that the debentures ultimately may be converted into or
    exercised for could prove to be greater than this estimate if the market
    price of Biogan's common stock declines.

If Biogan is limited in its ability to issue shares upon the conversion
    of the convertible debentures, due either to a limitation on Biogan's number
    of authorized shares or the applicable rules of the principal securities
    market on which Biogan's shares of common stock are listed or traded, and if
    Biogan is unable to remedy this situation, then the debenture holders will
    have the option to elect one or both of the following remedies with respect
    to the unconverted portions of the convertible debentures:

• require Biogan to issue shares of Biogan's common stock in
        accordance with the holder's notice of conversion at a conversion price
        equal to the average of the closing bid prices per share of Biogan's
        common stock for any five consecutive trading days during the sixty
        trading days immediately preceding the date of the holder's notice of
        conversion; or

• require Biogan to redeem each unconverted debenture for an amount,
        payable in cash, equal to the outstanding principal balance plus accrued
        interest, divided by the conversion rate in effect on the date of
        redemption, multiplied by the highest closing ask price during the
        period beginning on the date of redemption and ending on the date of
        payment of the redemption amount.

Upon a merger, consolidation or sale or transfer of all or substantially
    all of Biogan's assets pursuant to which Biogan's stockholders are entitled
    to receive securities or property in exchange for shares of Biogan's common
    stock, each debenture holder may convert their convertible debenture and be
    entitled to such securities or property as if the conversion had taken place
    prior to the merger, consolidation, sale or transfer. In the event of any
    proposed merger, consolidation, sale or transfer, the debenture holders have
    the right to convert their convertible debentures by delivering a notice of
    conversion to Biogan within 15 days of receipt of notice of such sale. If a
    holder elects not to convert, then Biogan may prepay the outstanding
    principal balance and accrued interest on the debenture by paying a
    redemption price equal to the conversion rate applicable on that date, less
    all amounts required by law to be deducted. If Biogan spins off or otherwise
    divest a part or all of Biogan's business or operations in a transaction in
    which securities of another entity are issued to Biogan's stockholders, then
    any unconverted debentures will be deemed converted for the purpose of
    determining security holders entitled to such securities, with such
    securities to be paid upon conversion of the debentures.

Biogan may, at its option, prepay all or part of the outstanding
    principal and interest balance of the debentures. Any redemption is to be in
    an aggregate principal amount of at least $100,000 and made pro rata among
    all of the holders of the convertible debentures based on the
    then-outstanding balances due under the debentures. Redemption of the TK or
    other debenture is to be made at a redemption price equal to 100% or 125%,
    respectively, of the amount to be redeemed.

In connection with the issuance of the debentures, Biogan issued
    immediately exercisable warrants for the purchase of up to an aggregate of
    489,000 shares of Biogan's common stock. The warrants have an initial
    exercise price of $0.60 per share and also have cashless exercise
    provisions. The warrants expire on February 28, 2003. In addition, the
    warrants contain piggyback and demand registration rights.





11.     SUBSEQUENT EVENTS

The Company has incurred penalties of $950,000 related to its convertible
    debentures subsequent to December 31, 2000.

The Company announced on May 3, 2002, that it had completed a
    non-brokered private placement of 15,816,664 special warrants and 150,000
    restricted common shares at a price of U.S. $0.03 per special warrant or
    common share, for proceeds of U.S. $479,000. The proceeds of the offering
    will be used for working capital purposes. The special warrants, which were
    offered outside of the U.S., entitle holders to acquire, at no additional
    cost, one common share for each special warrant held, at any time before the
    earlier of five days after the issuance of a receipt for a final prospectus
    from the Ontario Securities Commission and two years from closing. The
    common shares issued in the U.S. are subject to restrictions on resale
    imposed by the U.S. Securities Act of 1933.

On July 19, 2002 Hechi and the company implemented the revised structure
    by completing the following steps:

| | a) | the Hechi shareholders established a wholly-owned British Virgin
      Islands corporation, Fushan Industrial Co., Ltd. (Fushan);                                                                                                                                                      
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | Fushan established a British Virgin Islands corporation, Biogan
      International (BVI) Inc.;                                                                                                                                                                                        
| | c) | The Company and Hechi terminated the original Asset Purchase Agreement;                                                                                                                                                                                                                
| | d) | The Company assigned its interest in Guangxi Guanghe Metals Co., Ltd. to
        Biogan International (BVI) Inc. in exchange for a non-interest bearing
        promissory note in the principal amount of $1.7 million;                                                               
| | e) | Hechi and the Company amended and restated the Joint Venture agreement
        to provide for the replacement of the Company by Biogan (BVI) Inc. and                                                                                                                                  
| | f) | Fushan and the Company entered into a share exchange agreement pursuant
        to which the Company acquired 100% of Biogan International (BVI) Inc. in
        exchange for 16,800,000 shares of the Company's common stock and
        3,624,000 shares of Series B Preferred stock.



The Series B Preferred Stock is convertible into 362,400,000 shares of
    common stock following shareholder authorization of additional issuable
    stock at Biogan's next meeting of shareholders.



In order for the Company to earn its 92% equity interest
    in GGM, it must contribute additional capital of $7,300,000 to GGM by
    September 2003. Should the Company not contribute the $7,300,000 or
    contribute only a partial amount, its ownership equity will be reduced
    proportionately. Regardless of any additional capital contributed, the
    profit and loss sharing remains at 95%.



It is the Company's management belief that the events outlined above,
    along with its plans to raise at least $7,300,000 for modernizing the
    properties of GGM will allow the Company to continue in existence. As set
    forth in Note 2.C. "Continued Existence" there can be no assurance that
    these plans will be successfully effected and the Company will operate as a
    going concern.



12.     UNAUDITED FINANCIAL STATEMENTS

The Company failed to file its quarterly 10Q's for March 31, June 30 and
    September 30, 2000. These unaudited reports are attached and should be read
    along with the notes to the December 31, 2000 audited financial statements.

13.  RELATED PARTY TRANSACTIONS

|a) | Thomson Kernaghan & Co. Limited (TK) owned
          approximately 4% of the Company's common stock at December 31, 2000
          (Note 10.) Disregarding beneficial ownership limitations, the
          remaining debentures convert into approximately 61,250,000 shares of
          common stock and the Series A preferred stock (Note 4) converts into
          13,200,000 shares of common stock.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|b) | The Company's President and three former
          officers/stockholders contributed capital of $1,172,800 for which no
          shares of stock were issued (Note 4. "Stockholders Deficit").                                                                                                                                                                                                            
|c) | There is one 10% unsecured demand note ($50,000) due Hechi Industrial
      Company Limited (Note 3), a co-owner in the Joint Venture. In addition,
      Hechi advanced $19,214 on behalf of Biogan.                                                                                                                                                                                                      

|BIOGAN
    INTERNATIONAL, INC.
    (A DEVELOPMENT STAGE
    COMPANY)
    BALANCE SHEETS
    UNAUDITED
    As of
|---------------------------------------------------------------------------------------------------------------
|                                                                                                               
|                                                                                                               
|                                                                                                               
|ASSETS                                                                                                         
|CASH                                                                                                           
|PREPAID EXPENSES                                                                                               
|                                                                                                               
|TOTAL CURRENT ASSETS                                                                                           
|                                                                                                               
|                                                                                                               
|FURNITURE/EQUIPMENT                                                                                            
|ACCUMULATED DEPRECIATION                                                                                       
|                                                                                                               
|TOTAL FIXED ASSETS                                                                                             
|                                                                                                               
|COOPERATIVE JOINT
    VENTURE INVESTMENT                                                                       
|                                                                                                               
|TOTAL OTHER ASSETS                                                                                             
|                                                                                                               
|TOTAL ASSETS                                                                                                   
|                                                                                                               
|                                                                                                               
|LIABILITIES &
    STOCKHOLDERS' DEFICIT                                                                        
|ACCOUNTS PAYABLE                                                                                               
|NOTES PAYABLE                                                                                                  
|ACCRUED EXPENSES                                                                                               
|                                                                                                               
|TOTAL CURRENT LIABILITIES                                                                                      
|                                                                                                               
|NON-CURRENT LIABILITIES                                                                                        
|CONVERTIBLE DEBENTURES                                                                                         
|- NET OF DEFERRED
    DEBENTURE ISSUE COSTS                                                                    
|                                                                                                               
|TOTAL LIABILITIES                                                                                              
|                                                                                                               
|STOCKHOLDERS' DEFICIT                                                                                          
|COMMON STOCK $.001
    PAR VALUE 300,000,000 SHARES AUTHORIZED                                                 
|ADDITIONAL PAID IN CAPITAL                                                                                     
|ACCUMULATED DEFICIT                                                                                            
|                                                                                                               
|TOTAL STOCKHOLDERS' DEFICIT                                                                                    
|                                                                                                               
|TOTAL LIABILITIES &
    STOCKHOLDERS' DEFICIT                                                                  

SEE ACCOMPANYING NOTES AND REPORT OF
INDEPENDENT AUDITOR

BIOGAN INTERNATIONAL, INC.
    (A DEVELOPMENT-STAGE COMPANY)
    STATEMENT OF OPERATIONS
    UNAUDITED



|                                             | FOR THE THREE
    MONTH PERIOD
    ENDED
    MARCH 31, 2000 | FOR THE THREE
    MONTH PERIOD
    ENDED
    MARCH 31, 1999 | FOR THE THREE
    MONTH PERIOD
    ENDED
    JUNE 30, 2000 | FOR THE THREE
    MONTH PERIOD
    ENDED
    JUNE 30, 1999 | FOR THE SIX
    MONTH PERIOD
    ENDED 
    JUNE 30 ,2000 | FOR THE SIX
    MONTH PERIOD
    ENDED 
    JUNE 30 ,1999 | FOR THE
    THREE
    MONTH PERIOD
    ENDED
    SEPTEMBER 30, 2000 | FOR THE THREE
    MONTH PERIOD
    ENDED
    SEPTEMBER 30, 1999 | FOR THE NINE
    MONTH PERIOD
    ENDED 
    SEPTEMBER 30, 2000 | FOR THE NINE
    MONTH PERIOD
    ENDED 
    SEPTEMBER 30, 1999 | FROM
    INCEPTION FEBRUARY 5, 1988 
    THROUGH 
    SEPTEMBER 30, 2000
|-------------------------------------------- | ----------------------------------------------------------- | ----------------------------------------------------------- | ---------------------------------------------------------- | ---------------------------------------------------------- | --------------------------------------------------------- | --------------------------------------------------------- | ------------------------------------------------------------------- | --------------------------------------------------------------- | --------------------------------------------------------------- | --------------------------------------------------------------- | ------------------------------------------------------------------------
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|SALES                                        |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|REVENUE                                      | $                      -                                    | $                      -                                    | $                      -                                   | $                 360                                      | $                   -                                     | $                 360                                     | $                    
      -                                       | $                          -                                    | $                            -                                  | $                  
    360                                     | $                  8,620                                                
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|TOTAL SALES                                  | -                                                           | -                                                           | -                                                          | 360                                                        | -                                                         | 360                                                       | -                                                                   | -                                                               | -                                                               | 360                                                             | 8,620                                                                   
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|EXPENSES                                     |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|WAGES                                        | 43,200                                                      | 792                                                         | 43,200                                                     | -                                                          | 86,400                                                    | 792                                                       | 43,200                                                              | -                                                               | 129,600                                                         | 792                                                             | 741,189                                                                 
|STOCK SUBSCRIPTION LOSS                      | -                                                           | -                                                           | -                                                          | -                                                          | -                                                         | -                                                         | -                                                                   | -                                                               | -                                                               | -                                                               | 101,006                                                                 
|DEPRECIATION EXPENSE                         | 1,831                                                       | 1,473                                                       | 1,353                                                      | 1,473                                                      | 3,185                                                     | 2,945                                                     | 1,371                                                               | 1,472                                                           | 4,555                                                           | 4,418                                                           | 24,207                                                                  
|AMORTIZATION                                 | -                                                           | -                                                           | 64,605                                                     | -                                                          | 64,563                                                    | -                                                         | 64,476                                                              | 3,994                                                           | 129,040                                                         | 9,846                                                           | 129,040                                                                 
|INTEREST EXPENSE                             | 7,229                                                       | 2,909                                                       | 42,450                                                     | 2,942                                                      | 49,679                                                    | 5,852                                                     | 37,942                                                              | 52,710                                                          | 87,621                                                          | 66,041                                                          | 139,465                                                                 
|INTEREST EXPENSE - BENEFICIAL
    CONVERSION | 508,750                                                     | -                                                           | -                                                          | -                                                          | 508,750                                                   | -                                                         | -                                                                   | -                                                               | 508,750                                                         | -                                                               | 508,750                                                                 
|LEGAL & ACCOUNTING FEES                      | 98,350                                                      | 934                                                         | 99,478                                                     | 12,397                                                     | 197,828                                                   | 13,331                                                    | 190,235                                                             | -                                                               | 388,064                                                         | 2,611                                                           | 754,332                                                                 
|RENT                                         | -                                                           | 2,000                                                       | -                                                          | 611                                                        | -                                                         | 2,611                                                     | -                                                                   | -                                                               | (400)                                                           | -                                                               | 37,287                                                                  
|START UP COSTS                               | -                                                           | -                                                           | -                                                          | -                                                          | -                                                         | -                                                         | -                                                                   | (22)                                                            | -                                                               | (22)                                                            | 180,941                                                                 
|RESEARCH AND DEVELOPMENT                     | -                                                           | -                                                           | -                                                          | -                                                          | -                                                         | -                                                         | -                                                                   | -                                                               | -                                                               | -                                                               | 343,681                                                                 
|SUBSIDIARIES LOSSES                          | -                                                           | -                                                           | -                                                          | -                                                          | -                                                         | -                                                         | -                                                                   | -                                                               | -                                                               | -                                                               | 158,380                                                                 
|OTHER OPERATING EXPENSES                     | 7,190                                                       | 2,645                                                       | 11,073                                                     | 4,611                                                      | 18,304                                                    | 7,257                                                     | 12,229                                                              | (52,025)                                                        | 30,932                                                          | (44,769)                                                        | 516,324                                                                 
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|TOTAL EXPENSES                               | 666,550                                                     | 10,753                                                      | 262,159                                                    | 22,034                                                     | 928,709                                                   | 32,788                                                    | 349,453                                                             | 6,129                                                           | 1,278,162                                                       | 38,917                                                          | 3,634,602                                                               
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|NET OPERATING INCOME (LOSS)                  | (666,550)                                                   | (10,753)                                                    | (262,159)                                                  | (21,674)                                                   | (928,709)                                                 | (32,428)                                                  | (349,453)                                                           | (6,129)                                                         | (1,278,162)                                                     | (38,557)                                                        | (3,625,982)                                                             
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|STOCK RECOVERY INCOME                        | -                                                           | -                                                           | -                                                          | -                                                          | -                                                         | -                                                         | -                                                                   | -                                                               | -                                                               | -                                                               | (2,676,409)                                                             
|INTEREST INCOME                              | -                                                           | -                                                           | 1,930                                                      | 15                                                         | 1,930                                                     | 15                                                        | 24                                                                  | -                                                               | 1,954                                                           | 15                                                              | 7,417                                                                   
|OTHER INCOME                                 | -                                                           | -                                                           | -                                                          | -                                                          | -                                                         | -                                                         | -                                                                   | -                                                               | -                                                               | -                                                               | 248                                                                     
|MISCELLANEOUS EXPENSE                        | (88)                                                        | -                                                           | -                                                          | (84)                                                       | (88)                                                      | (84)                                                      | -                                                                   | (212)                                                           | (88)                                                            | (296)                                                           | (5,581)                                                                 
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|TOTAL OTHER                                  | (88)                                                        | -                                                           | 1,930                                                      | (69)                                                       | 1,842                                                     | (69)                                                      | 24                                                                  | (212)                                                           | 1,866                                                           | (281)                                                           | (2,674,325)                                                             
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|NET INCOME (LOSS)                            | $         (666,638)                                         | $         (10,753)                                          | $         (260,229)                                        | $         (21,743)                                         | $         (926,867)                                       | $          (32,497)                                       | $      (349,429)                                                    | $       (6,341)                                                 | $         (1,276,296)                                           | $          (38,838)                                             | $          (6,300,307)                                                  
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|PRIMARY INCOME (LOSS) PER SHARE              | ($0.01)                                                     | ($0.00)                                                     | (0.00)                                                     | (0.00)                                                     | (0.01)                                                    | (0.00)                                                    | (0.00)                                                              | (0.00)                                                          | (0.01)                                                          | (0.00)                                                          | (0.14)                                                                  
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         
|WEIGHTED AVERAGE SHARES OUTSTANDING          | 85,368,710                                                  | 85,122,884                                                  | 85,368,710                                                 | 85,122,884                                                 | 85,368,710                                                | 85,386,710                                                | 85,368,710                                                          | 85,122,884                                                      | 85,386,710                                                      | 85,386,710                                                      | 43,522,267                                                              
|                                             |                                                             |                                                             |                                                            |                                                            |                                                           |                                                           |                                                                     |                                                                 |                                                                 |                                                                 |                                                                         

BIOGAN INTERNATIONAL, INC.
(A DEVELOPMENT-STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD FROM INCEPTION (FEBRUARY 5, 1988)
THROUGH SEPTEMBER 30, 2000
UNAUDITED

|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|----------------------------- | ------------ | - | ------ | - | ----------------------------- |  | -------------------------------------- | - | ------------------------------------------------------------------------ | - | --------- | -
|                              |              |   |        |   |                               |  |                                        |   | ACCUMULATED
      DEFICIT
      DURING THE
      DEVELOPMENT
      STAGE |   |           |  
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |          
|                              |              |   |        |   | AMOUNT
      PER 
      SHARE |  | ADDITIONAL
      PAID-IN
      CAPITAL |   |                                                                          |   |          
|COMMON STOCK                  | COMMON STOCK |   |        |   | STOCKHOLDERS'EQUITY (DEFICIT) | 
|ISSUED:                       | SHARES       |   | AMOUNT |   |                               | 
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|1988                          | 2,250,000    |   | 2,250  |   |                               |  | 22,750                                 |   | (15,052                                                                  | ) | 9,950     |  
|1989                          | 21,387,347   |   | 21,387 |   |                               |  | 197,352                                |   | (149,448                                                                 | ) | 79,241    |  
|1995                          | 56,858,115   |   | 56,858 |   |                               |  | 3,246,860                              |   | (3,261,573                                                               | ) | 121,386   |  
|1996                          | 4,573,939    |   | 4,574  |   |                               |  | 1,123,417                              |   | (1,263,513                                                               | ) | (14,136   | )
|1997                          | 2,785,054    |   | 2,785  |   |                               |  | 560,139                                |   | (678,716                                                                 | ) | (129,927  | )
|1998                          | (2,731,571   | ) | (2,732 | ) |                               |  | (782,711                               | ) | 582,555                                                                  |   | (332,815  | )
|                              | 85,122,884   |   | 85,123 |   |                               |  | 4,367,807                              |   | (4,785,747                                                               | ) | (332,815) |  
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|JULY 1, 1999                  | 235,350      |   | 235    |   | 0.0340                        |  | 7,778                                  |   |                                                                          |   | 8,013     |  
|JULY 31, 1999                 | (150,000     | ) | (150   | ) | 0.3838                        |  | (57,420                                | ) |                                                                          |   | (57,570   | )
|AUGUST 20, 1999               | 178,476      |   | 178    |   | 0.0476                        |  | 8,311                                  |   |                                                                          |   | 8,489     |  
|SEPTEMBER 20, 1999            | -            |   | -      |   | -                             |  | 20,000                                 |   |                                                                          |   | 20,000    |  
|DECEMBER 7, 1999              | -            |   | -      |   | -                             |  | 156,500                                |   |                                                                          |   | 156,500   |  
|DECEMBER 31, 1999             | -            |   | -      |   | -                             |  | 107,700                                |   |                                                                          |   | 107,700   |  
|NET LOSS DECEMBER 31, 1999    | -            |   | -      |   | -                             |  | -                                      |   | (238,263                                                                 | ) | (238,263  | )
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|TOTAL AT DECEMBER 31, 1999    | 85,386,710   |   | 85,387 |   |                               |  | 4,610,675                              |   | (5,024,010                                                               | ) | (327,946  | )
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|MARCH 8, 2000                 |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|BENEFICIAL CONVERSION FEATURE |              |   |        |   |                               |  | 508,750                                |   |                                                                          |   | 508,750   |  
|MARCH 31, 2000                |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|CONTRIBUTED CAPITAL           |              |   |        |   |                               |  | 370,500                                |   |                                                                          |   | 370,500   |  
|NET LOSS FOR QUARTER ENDING   |              |   |        |   |                               |  |                                        |   | (666,638                                                                 | ) | (666,638) |  
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|TOTAL AT MARCH 31, 2000       | 85,386,710   |   | 85,387 |   |                               |  | 5,489,925                              |   | (5,690,648                                                               | ) | (115,337  | )
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|CONTRIBUTED CAPITAL           | -            |   | -      |   |                               |  | 205,500                                |   |                                                                          |   | 205,500   |  
|FORGIVEN OFFICERS WAGES       | -            |   | -      |   |                               |  | 171,201                                |   |                                                                          |   | 171,201   |  
|NET LOSS FOR QUARTER ENDING   | -            |   | -      |   |                               |  | -                                      |   | (260,230                                                                 | ) | (260,230  | )
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|TOTAL AT JUNE 30 , 2000       | 85,386,710   |   | 85,387 |   |                               |  | 5,866,626                              |   | (5,950,878                                                               | ) | 1,134     |  
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|CONTRIBUTED CAPITAL           |              |   |        |   |                               |  | 10,000                                 |   |                                                                          |   | 10,000    |  
|$500,000 DEBENTURE CONVERSION |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|PLUS INTEREST OF $15,122      | 2,712,387    |   | 2,712  |   | 0.1899                        |  | 512,409                                |   |                                                                          |   | 515,122   |  
|SEPTEMBER 30, 2000            |              |   |        |   |                               |  |                                        |   | (349,428                                                                 | ) | (349,428  | )
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  
|TOTAL AT SEPTEMBER 30, 2000   | 88,099,097   |   | 88,099 |   |                               |  | 6,389,035                              |   | (6,300,307                                                               | ) | 176,827   |  
|                              |              |   |        |   |                               |  |                                        |   |                                                                          |   |           |  

SEE ACCOMPANYING NOTES AND REPORT OF
INDEPENDENT AUDITOR



BIOGAN INTERNATIONAL, INC.
    (A DEVELOPMENT-STAGE COMPANY)

STATEMENT OF CASH FLOWS
UNAUDITED

|                                                    | FOR THE THREE
    MONTH PERIOD
    ENDING
    MARCH 31, 2000 | FOR THE THREE
    MONTH
    PERIOD
    ENDED
    MARCH 31, 1999 | FOR THE SIX
    MONTH PERIOD
    ENDED
    JUNE 30, 2000 | FOR THE SIX
    MONTH PERIOD
    ENDED
    JUNE 30, 1999 | FOR THE 
    NINE
    MONTH PERIOD
    ENDED
    SEPTEMBER 30, 2000 | FOR THE NINE
    MONTH
    PERIOD
    ENDED
    SEPTEMBER 30, 1999 | FROM INCEPTION
    FEBRUARY 5, 1988
    THROUGH 
    SEPTEMBER 30, 2000
|--------------------------------------------------- | ------------------------------------------------------------ | --------------------------------------------------------------- | -------------------------------------------------------- | -------------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------------------------------------ | -----------------------------------------------------------------------
|CASH FLOWS FROM
    OPERATIONS                      |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|NET INCOME (LOSS)                                   | $(666,638)                                                   | $(10,753)                                                       | $(926,867)                                               | (32,497)                                                 | (1,276,296)                                                         | $(38,838)                                                          | $(6,300,307)                                                           
|ADJUSTMENTS TO
    RECONCILE NET LOSS TO            |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|NET CASH USED BY
    OPERATING ACTIVITIES:          |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|ADD BACK STOCK
    ISSUED FOR:                      |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|MANAGEMENT                                          | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 61,294                                                                 
|CONTRACT LABOR,
    INCENTIVE BONUSES, PROFESSIONAL |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|SERVICES, AND
    RESEARCH AND DEVELOPMENT          |                                                              | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 485,054                                                                
|IMPUTED EXECUTIVE
    COMPENSATION                  |                                                              |                                                                 | -                                                        |                                                          | -                                                                   | -                                                                  | 278,900                                                                
|RESTITUTION                                         | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 2,676,409                                                              
|INTEREST EXPENSE                                    | -                                                            | -                                                               | -                                                        | -                                                        | 15,123                                                              | -                                                                  | 44,043                                                                 
|INTEREST EXPENSE -
    BENEFICIAL CONVERSION        | 508,750                                                      |                                                                 | 508,750                                                  |                                                          | 508,750                                                             |                                                                    | 508,750                                                                
|DISPUTE SETTLEMENTS                                 | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 10,603                                                                 
|STOCK CANCELLATION                                  | -                                                            | -                                                               | -                                                        | -                                                        |                                                                     | -                                                                  | (57,570)                                                               
|OTHER ADJUSTMENTS:                                  |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|SUBSIDIARIES LOSSES                                 |                                                              |                                                                 |                                                          |                                                          | -                                                                   | -                                                                  | 158,380                                                                
|STOCK SUBSCRIPTION
    LOSS                         | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 101,006                                                                
|FIRST DEVELOPMENT
    STAGE LOSS                    | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 142,733                                                                
|AMORTIZATION                                        | -                                                            | -                                                               | 64,564                                                   | -                                                        | 129,039                                                             | -                                                                  | 129,039                                                                
|DEPRECIATION AND
    AMORTIZATION                   | 3,219                                                        | 1,473                                                           | 3,184                                                    | 2,947                                                    | 4,555                                                               | 4,418                                                              | 24,206                                                                 
|TOTAL ADJUSTMENTS                                   | 511,969                                                      | 1,473                                                           | 576,498                                                  | 2,947                                                    | 657,467                                                             | 4,418                                                              | 4,562,847                                                              
|PREPAID EXPENSES                                    | -                                                            | -                                                               | (36,988)                                                 | -                                                        | -                                                                   | -                                                                  | -                                                                      
|ACCOUNTS RECEIVABLE                                 | -                                                            | 180                                                             | -                                                        | 180                                                      | -                                                                   | 180                                                                | -                                                                      
|ACCOUNTS PAYABLE                                    | 9,193                                                        | 4,819                                                           | (32,740)                                                 | 13,774                                                   | 26,004                                                              | 26,065                                                             | 93,440                                                                 
|ACCRUED LIABILITIES                                 | 47,601                                                       | 3,062                                                           | 125,686                                                  | 4,614                                                    | 191,708                                                             | 8,609                                                              | 223,430                                                                
|NET CASH PROVIDED
    (USED)                        |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|BY OPERATING
    ACTIVITIES                         | (97,875)                                                     | (1,219)                                                         | (294,411)                                                | (10,982)                                                 | (401,117)                                                           | 434                                                                | (1,420,590)                                                            
|CASH FLOWS FROM
    INVESTING ACTIVITIES            |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|PURCHASE FURNITURE/
    EQUIPMENT                   | -                                                            | -                                                               | -                                                        | -                                                        | (1,078)                                                             | -                                                                  | (36,191)                                                               
|DISPOSAL
    FURNITURE/
    EQUIPMENT               | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 475                                                                    
|ADVANCE ON BUSINESS
    COMBINATION                 | -                                                            | -                                                               | (850,000)                                                | -                                                        | (1,700,000)                                                         | -                                                                  | (1,700,000)                                                            
|INVESTMENT IN
    SUBSIDIARIES                      | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | (158,380)                                                              
|NET CASH PROVIDED
    (USED)                        |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|BY INVESTING
    ACTIVITIES                         | -                                                            | -                                                               | (850,000)                                                | -                                                        | (1,701,078)                                                         | -                                                                  | (1,894,096)                                                            
|CASH FLOWS FROM
    FINANCING ACTIVITIES            |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|NOTES PAYABLE -
    OTHER RECEIVED                  | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | 10,000                                                             | 220,140                                                                
|NOTE
    PAYABLE-STOCKHOLDER RECEIVED               | -                                                            | -                                                               | -                                                        | 10,000                                                   | -                                                                   | 25,000                                                             | 120,000                                                                
|NOTE
    PAYABLE-STOCKHOLDER PAID                   | -                                                            | -                                                               | (25,000)                                                 | -                                                        | (25,000)                                                            | -                                                                  | (83,680)                                                               
|PAYMENT OF NOTES
    PAYABLE - OTHER                | -                                                            | -                                                               | (20,000)                                                 | -                                                        | (20,000)                                                            | (10,000)                                                           | (20,000)                                                               
|ISSUANCE OF COMMON
    STOCK                        | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | (21,068)                                                           | 821,952                                                                
|CONTRIBUTED CAPITAL                                 | 370,500                                                      | -                                                               | 576,000                                                  | -                                                        | 586,000                                                             | -                                                                  | 762,500                                                                
|BOND ISSUANCE COST
    CAPITALIZED                  | (300,000)                                                    | -                                                               | (300,000)                                                | -                                                        | (300,000)                                                           | -                                                                  | (300,000)                                                              
|CONVERTIBLE
    DEBENTURES                          | 1,800,000                                                    | -                                                               | 1,800,000                                                | -                                                        | 1,800,000                                                           | -                                                                  | 1,800,000                                                              
|OTHER                                               | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | (228)                                                                  
|NET CASH PROVIDED
    (USED)                        |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|BY FINANCING
    ACTIVITIES                         | 1,870,500                                                    | -                                                               | 2,031,000                                                | 10,000                                                   | 2,041,000                                                           | 3,932                                                              | 3,320,684                                                              
|NET
    INCREASE (DECREASE) IN CASH                 | 1,772,625                                                    | (1,219)                                                         | 886,589                                                  | (982)                                                    | (61,195)                                                            | 4,366                                                              | 5,998                                                                  
|BEGINNING CASH
    BALANCE                          | 67,193                                                       | 1,038                                                           | 67,193                                                   | 1,038                                                    | 67,193                                                              | 1,039                                                              | -                                                                      
|CASH ENDING BALANCE                                 | $ 1,839,818                                                  | (181)                                                           | 953,782                                                  | 56                                                       | 5,998                                                               | 5,405                                                              | 5,998                                                                  
|SUPPLEMENTAL
    INFORMATION                        |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|CASH PAYMENTS FOR
    INTEREST EXPENSE              | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 2,711                                                                  
|CASH PAYMENTS FOR
    INCOME TAXES                  | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | -                                                                      
|NONMONETARY
    TRANSACTIONS                        |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|STOCK ISSUED FOR:                                   |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|DEBT REDUCTION                                      | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 141,461                                                                
|MANAGEMENT                                          | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 61,294                                                                 
|CONTRACT LABOR,
    INCENTIVE BONUSES, PROFESSIONAL |                                                              |                                                                 |                                                          |                                                          |                                                                     |                                                                    |                                                                        
|SERVICES, AND
    RESEARCH AND DEVELOPMENT          | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 535,184                                                                
|IMPUTED EXECUTIVE
    COMPENSATION                  | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 278,900                                                                
|RESTITUTION                                         | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 2,676,409                                                              
|INTEREST EXPENSE -
    BOND CONVERSION              | -                                                            | -                                                               | -                                                        | -                                                        | 15,123                                                              | -                                                                  | 44,043                                                                 
|INTEREST EXPENSE -
    BENEFICIAL CONVERSION        | 508,750                                                      |                                                                 | 508,750                                                  |                                                          | 508,750                                                             |                                                                    | 508,750                                                                
|DISPUTE SETTLEMENT                                  | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 10,603                                                                 
|STOCK CANCELLATION                                  | -                                                            | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | (57,570)                                                               
|BOND ISSUANCE COSTS
    CAPITALIZED                 | 235,000                                                      | -                                                               | -                                                        | -                                                        | -                                                                   | -                                                                  | 235,000                                                                
|BOND CONVERSION INTO
    COMMON STOCK               | -                                                            | -                                                               | -                                                        | -                                                        | 500,000                                                             | -                                                                  | 500,000