<PAGE>

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

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

                               AMENDMENT NO. 1 TO
                                   FORM 10-KSB
(Mark One)
|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the fiscal year ended DECEMBER 31, 1999

                                       OR

| |      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from ____________ to _____________

                        Commission file number: 000-31479

                           BIOGAN INTERNATIONAL, INC.
                                  (Name of small business issuer in its charter)

                   DELAWARE                                       58-1832055
(State or other jurisdiction of incorporation or              (I.R.S. Employer
               organization)                                 Identification No.)

                  813 BERIAULT, SUITE 203                          J4G 1X7
                 LONGUEUIL, QUEBEC, CANADA                        (Zip Code)
          (Address of principal executive offices)

         Issuer's telephone number, including area code: (450) 651-6701

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 no 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, 1999, Biogan International, Inc.
reported no revenues.

     As of September 25, 2001, the aggregate market value of the voting stock
held by nonaffiliates was approximately $2,478,330. The number of shares
outstanding of the registrant's only class of common stock was 120,066,199 on
September 25, 2001.

DOCUMENTS INCORPORATED BY REFERENCE:  NONE.

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

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



<PAGE>

                                     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. We changed our 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 our new name. 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 in electrical motors
called the IntorCorp Motor. To assist in the development of our electrical motor
concept, 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, our 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. We changed our name to Biogan International, Inc. in September 1997 to
avoid any confusion that could result from the use of the word "medical" in our
name because our emphasis at that time was to promote 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
through an Idaho corporation, IntorCorp, Inc., in which we held a 50% ownership
interest. In August 1999, we transferred all of our rights and interest in
IntorCorp, Inc., including our interest in the IntorCorp Motor and the patent
application to the eletromagnetic 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 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 this transaction, 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 China because we
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 our electric motor business and negotiating a
Cooperative Joint Venture Contract, or the Joint Venture Agreement, with Hechi
Industrial Co., Ltd., or Hechi, relating to the formation of a limited liability
company, or the Joint Venture, under the laws of the Peoples' Republic of China.
The Joint Venture was formed on January 27, 2000 for the purpose of engaging in
the smelting and mining of non-ferrous metals in the Guangxi Province of China,
and for the purpose of operating a copper smelter to produce blister copper. In
preparation for the formation of the Joint Venture, in November 1999 Rulon
Tolman and L. William Glazier resigned as Vice President and as President and
Chief Executive Officer of Biogan, 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 Biogan 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, at which time Kuang Yihuai, the
Chairman of the Board and Chief Executive Officer of Hechi, became a director
and the Chairman of the Board of Biogan.

                                      -2-


<PAGE>

         Hechi, originally owned by the Hechi Prefecture Government and formerly
known as the Hechi Prefecture Mining Company, came under private ownership
following the purchase of all of its assets and liabilities by its employees in
June 1998. Operating since 1977, 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. To
our knowledge, Hechi is the only integrated base metal mining and smelting
company in the Hechi Prefecture.

         Effective July 1, 2000, we entered into an Asset Purchase Agreement
with Hechi. The Asset Purchase Agreement provided for our acquisition of certain
assets of Hechi and our assumption of certain of its liabilities, valued at
approximately $24,000,000. On that same date, we contributed the assets and
liabilities to the Joint Venture.

         On or about July 27, 2001, we were advised by our newly appointed legal
counsel licensed to practice in the Peoples' Republic of China that the
transactions contemplated in the Joint Venture Agreement and the Asset Purchase
Agreement were not in compliance with certain regulatory laws of the Peoples'
Republic of China and, therefore, are not valid. Prior to that determination, we
believed that we had properly consummated the transactions with Hechi and,
therefore, we focused entirely upon managing the mining operations of Hechi and
did not engage in any other business operations. Since that time, we have been
working diligently with both China and United States counsel to restructure the
transactions with Hechi to ensure compliance with the laws of both the United
States and the Peoples' Republic of China. Although we believe that a structure
meeting the requisite legal requirements of the United States and the Peoples'
Republic of China is achievable, we cannot provide any assurance that we will in
fact be successful in that regard. We anticipate that the Hechi transactions, if
successfully restructured, will result in a change in control of Biogan that
will be accounted for as a reverse acquisition and will require us to use the
historical financial information of Hechi as our financial information.

         We have never before operated a mining or smelting company. However,
assuming we can adequately restructure the proposed transactions with Hechi, we
believe that together with Hechi we have an established network of relationships
and information resources that provide us with an advantage in establishing and
maintaining a mining and smelting business in the area. In particular, because
the Hechi Prefecture Government originally owned Hechi, management of Hechi has
contacts with the local government that may assist us in obtaining the required
mining permits and in targeting new projects.

         Assuming we are successful in restructuring the proposed transactions
with Hechi, our goal is to further develop and expand Hechi's existing mining
assets and enhance its smelting operations in order to establish Biogan as the
preeminent integrated mining and smelting company in the Guangxi Province. Our
strategy includes the introduction of capital and modern mining technologies to
the Hechi region in order to further develop and produce the mineral resources
in the region.

         The execution and success of our strategy is largely dependent upon our
ability to raise necessary funds. Our future capital requirements depend in
large part upon our ability to consummate restructured transactions with Hechi.
Assuming we are successful in restructuring the transactions with Hechi, we
anticipate our initial capital requirements will be approximately $7,300,000 for
the expansion of the current capacity of Hechi's copper smelter and non-ferrous
metals trading company. If we are not successful in this restructuring, our
capital requirements should be significantly less because we have no current
business operations and currently do not have plans to undertake other products
or services.

                                      -3-


<PAGE>

         This amended Annual Report on Form 10-KSB has been prepared with the
recent knowledge that the transactions with Hechi were not consummated.

EMPLOYEES

         As of September 25, 2001, we had three full-time employees. Our
employees are not represented by any collective bargaining organization, and we
have never experienced a work stoppage. We believe that our relations with our
employees are good.

ITEM 2.  DESCRIPTION OF PROPERTY

         We operate from approximately 250 square feet of office space at 813
Beriault, Suite 203, Longueuil, Quebec, Canada, and approximately 250 square
feet of office space at 55 University, Suite 1210, Toronto, Ontario, 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, 1999.

                                      -4-


<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

    MARKET PRICE

         Until January 9, 2001, our common stock was traded on the National
Association of Securities Dealers', or NASD's, OTC Electronic Bulletin Board
under the symbol "BIGM." Effective at the opening of business on January 9,
2001, the NASD deleted all quotations of our common stock from the OTC
Electronic Bulletin Board. Since January 9, 2001, our common stock has been
quoted only sporadically from time to time in the over-the-counter "pink
sheets," an ad hoc forum for quotations of securities prices intended to match
potential buyers and sellers, which forum is not monitored or supervised by any
regulatory authority or agency.

         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, 1998
and December 31, 1999, as reported on the OTC Electronic Bulletin Board:

                                                            HIGH         LOW
YEAR ENDED DECEMBER 31, 1998:
   First Quarter (January 1 - March 31)..............     $ 0.1400    $ 0.0880
   Second Quarter (April 1 - June 30)................       0.0985      0.0615
   Third Quarter (July 1 - September 30).............       0.0625      0.0365
   Fourth Quarter (October 1 - December 31)..........       0.0465      0.0205

YEAR ENDED DECEMBER 31, 1999:
   First Quarter.....................................       0.0450      0.0200
   Second Quarter....................................       0.0700      0.0210
   Third Quarter.....................................       0.3300      0.1300
   Fourth Quarter....................................       0.8500      0.2100

         As of September 25, 2001, we had approximately 629 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 and do not
anticipate declaring or paying cash dividends in the foreseeable future. We
intend to retain future earnings, if any, to reinvest in our business. We expect
that covenants in our future financing agreements will prohibit or limit our
ability to declare or pay cash dividends.

    RECENT SALES OF UNREGISTERED SECURITIES

         On February 28, 1998, we issued an aggregate of 120,000 shares of our
common stock to Charles E. Caylor pursuant to Section 4(2) of the Securities Act
of 1933, as amended, or the Securities Act, in consideration for finance and
banking consulting services with a fair market value of $16,464.

         In February 1998 and in June 1998, we issued 30,000 and 62,500 shares
of our common stock, respectively, to two Canadian investors pursuant to
Regulation S of the Securities Act in exchange for $12,025 in cash.

                                      -5-


<PAGE>

         On June 8, 1998, we issued an aggregate of 105,320 shares of our common
stock to Wadsworth and Smith, CPAs, R-Tec Engineering and Kelly Services,
pursuant to Section 4(2) of the Securities Act, in consideration for accounting,
engineering and financial consulting services with a fair market value of
$20,116.

         In June 1998, we issued an aggregate of 263,045 shares of our common
stock to Harrison Consulting pursuant to Regulation S of the Securities Act in
consideration for financial consulting services with a fair market value of
$21,044.

         In December 1998, we issued an aggregate of 240,564 shares of our
common stock to one Canadian investor pursuant to Regulation S of the Securities
Act in satisfaction of outstanding loans in the aggregate amount of $60,141.

         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
subsequently was transferred to Thomson Kernaghan & Co., Limited, a Canadian
limited liability company that as of September 25, 2001 held as agent for two
limited partnerships beneficial ownership of in excess of 5% of the shares of
our outstanding common stock. 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 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.

         Prior to September 24, 2001, Thomson Kernaghan 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, and we repaid $5,000 of the $35,000
principal amount of the debenture due to Carbon Mesa Partners. Prior to that
date, we had become in default under the provisions of the debentures and a
related registration rights agreement due to our failure to maintain our listing
on the NASD's OTC Electronic Bulletin Board and our failure to timely register
with the Securities and Exchange Commission for resale the shares of common
stock issued or issuable upon conversion of the debentures and upon exercise of
the related warrants. As of September 24, 2001, we and Thomson Kernaghan entered
into amendments to the Thomson Kernaghan debenture and the registration rights
agreement, which amendments included waivers by Thomson Kernaghan of defaults
under its debenture and waivers on behalf of both debenture holders of defaults
under the registration rights agreement.

         Initially, both debentures were set to mature on February 28, 2002 and
had interest payments due on a quarterly basis. However, the amendment to the
Thomson Kernaghan debenture extended the maturity date of that debenture to
February 28, 2003 and provided that interest on that debenture shall continue to
accrue on that debenture but shall be payable quarterly in arrears beginning
March 31, 2002, and that the principal balance of that debenture is increased by
$650,000 to $2,120,000 in settlement of penalties outstanding under the
registration rights agreement. Accrued interest under both of the debentures
continues to be payable upon conversion in the form of either cash or additional
shares of our common stock, at our option, at the then-applicable conversion
rate.

                                      -6-


<PAGE>

         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 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 our common stock equal to $208,000, in the
case of the Thomson Kernaghan 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 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. Any debentures not previously converted as of the maturity date
automatically will be 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,
except that the conversion rate for the additional $650,000 principal amount of
the Thomson Kernaghan debenture shall not be less than $0.025 per share.
However, if we fail to file all reports required pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and/or
fail to continue our status as an issuer required to file reports under the
Exchange Act, then the conversion rate under the Carbon Mesa debenture will be
amended to equal 90% of the conversion rate otherwise applicable, and Carbon
Mesa may require us to immediately redeem for cash the outstanding portion of
its debenture. The redemption amount would be calculated by dividing the sum of
the outstanding principal balance plus accrued interest by the conversion rate
in effect on the date of redemption, and then multiplying that quotient 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.

         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 him with information more extensive than that contained in a
registration statement. Each of the purchasers had access to all material
information regarding Biogan 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 pursuant to either Section 4(2)
or Regulation S, as the case may be, and by available provisions of similar
applicable state securities laws 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, or Series A
Preferred Stock, and the remaining 9,968,700 shares are undesignated. As of
September 25, 2001, there were 120,066,199 shares of common stock outstanding
held by approximately 629 holders of record and 1,100 shares of Series A
Preferred Stock outstanding held by one holder of record. We also had
outstanding debentures that were convertible into shares of common stock. The
following is a summary description of our capital stock and convertible
debentures.

                                      -7-


<PAGE>

         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 Biogan, 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. Other than shares of
Series A Preferred Stock that we may issue if we are successful in restructuring
the Hechi transaction, we have no present plans to issue any shares of or to
designate any series of preferred stock.

         Below is a summary of the terms of our Series A 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 Preferred 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 Preferred Stock. Each share of Series A
Preferred Stock is convertible, at the option of the holder, into 12,000 shares
of our common stock. However, we have agreed with the holder of the outstanding
shares of Series A Convertible Preferred Stock that such holder 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 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 Preferred Stock is entitled to one vote for each full share of common stock
into which the share of Series A Preferred Stock is convertible on the record
date for the vote. Shares of Series A Preferred Stock are not entitled to any
dividends.

                                      -8-


<PAGE>

         In the event of any liquidation, dissolution or winding up of our
affairs, either voluntary or involuntary, the holders of shares of Series A
Preferred Stock are entitled to receive for each share of Series A 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 Preferred Stock to shares of common stock immediately prior
to the liquidation, dissolution or winding up. The holders of Series A 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 Preferred Stock.

         Convertible Debentures
         ----------------------

         To assist us in financing our required contributions to the Joint
Venture under the terms of the Joint Venture Agreement and the Asset Purchase
Agreement that we now are attempting to restructure, we raised an aggregate of
$2,035,000 in an offering of 8% secured convertible debentures on March 29,
2000. 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 subsequently was
transferred to Thomson Kernaghan & Co., Limited, a Canadian limited liability
company that as of September 25, 2001 beneficially owned in excess of 5% of the
shares of our outstanding common stock.

         From the proceeds from the sale of the debentures, we paid $1,500,000
to the Joint Venture, which was used primarily to purchase metal concentrates,
retained $335,000 for working capital purposes, and paid $200,000 to Thomson
Kernaghan as commissions and administrative fees. Because the transactions with
Hechi need to be restructured, we have agreed with Hechi that the funds we have
already paid to the Joint Venture constitute a non-refundable advance as
consideration for Hechi's continuing to negotiate with us to consummate the
proposed transactions.

         Prior to September 24, 2001, Thomson Kernaghan converted an aggregate
of $530,000 of the principal balance of its debenture plus related interest into
shares of our common stock, and we repaid $5,000 of the $35,000 principal amount
of the debenture due to Carbon Mesa Partners, LLC. Prior to that date, we had
become in default under the provisions of the debentures and a related
registration rights agreement due to our failure to maintain our listing on the
NASD's OTC Electronic Bulletin Board and our failure to timely register with the
Securities and Exchange Commission for resale the shares of common stock issued
or issuable upon conversion of the debentures and upon exercise of the related
warrants. As of September 24, 2001, we and Thomson Kernaghan entered into
amendments to the Thomson Kernaghan debenture and the registration rights
agreement, which amendments included waivers by Thomson Kernaghan of defaults
under its debenture and waivers on behalf of both debenture holders of defaults
under the registration rights agreement.

         Initially, both debentures were set to mature on February 28, 2002 and
had interest payments due on a quarterly basis. However, the amendment to the
Thomson Kernaghan debenture extended the maturity date of that debenture to
February 28, 2003 and provided that interest on that debenture shall continue to
accrue on that debenture but shall be payable quarterly in arrears beginning
March 31, 2002, and that the principal balance of that debenture is increased by
$650,000 to $2,120,000 in settlement of penalties outstanding under the
registration rights agreement. Accrued interest under both of the debentures
continues to be payable upon conversion in the form of either cash or additional
shares of our common stock, at our option, at the then-applicable conversion
rate.

         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 convert more than one-third of the
original principal amount of its debenture during any 30 consecutive days or

                                      -9-


<PAGE>

sell more than a number of shares of our common stock equal to $208,000, in the
case of the Thomson Kernaghan 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 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. 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:

         o    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,
         o    our written admission that we are insolvent, our making an
              assignment for the benefit of creditors or commencing proceedings
              for dissolution, or our application for the appointment of a
              trustee, liquidator or receiver;
         o    the institution of voluntary or involuntary bankruptcy,
              reorganization, insolvency or liquidation proceedings against us
              that are not dismissed within 60 days;
         o    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
         o    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.

         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,
except that the conversion rate for the additional $650,000 principal amount of
the Thomson Kernaghan debenture shall not be less than $0.025 per share.
However, if we fail to file all reports required pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and/or
fail to continue our status as an issuer required to file reports under the
Exchange Act, then the conversion rate under the Carbon Mesa debenture will be
amended to equal 90% of the conversion rate otherwise applicable, and Carbon
Mesa may require us to immediately redeem for cash the outstanding portion of
its debenture. The redemption amount would be calculated by dividing the sum of
the outstanding principal balance plus accrued interest by the conversion rate
in effect on the date of redemption, and then multiplying that quotient 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.

         As of September 25, 2001, we had a total of 120,066,199 shares of
common stock outstanding, and the debentures were convertible into approximately
94,284,932 shares of our common stock at an assumed conversion price of $0.025
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 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.

                                      -10-


<PAGE>

         Our stockholders also could experience a decline in the value of their
investment if the debenture holders engage in short sales. 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
our debentures to convert their debentures into an increased number of shares of
our common stock based upon a discount on the market price 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.
Thomson Kernaghan agreed in the September 2001 amendment to its debenture not to
sell short any of our common stock until the earlier of the repayment or the
maturity of its debenture. However, we cannot provide any assurance that Thomas
Kernaghan will not engage in short sales after that date or that others will not
engage in short sales either before or after that date.

         If we are limited in our ability to issue shares upon the conversion of
the convertible 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 convertible debentures:

         o    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
         o    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 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 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.

                                      -11-


<PAGE>

         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 convertible debentures based on the then-outstanding balances due under
the debentures. Redemptions under the Thomson Kernaghan and Carbon Mesa
debentures 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,
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 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 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 initially were secured by a standby letter of credit in
the amount of $1,200,000 issued by the Bank of India. However, the letter of
credit has since expired. Under the September 2001 amendment, the Thomson
Kernaghan debenture became secured by our assets. The Thomson Kernaghan
debenture also continues to be secured by 28,800,000 shares of our common stock,
or the pledged shares. The pledged shares are being 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, a pledgee may sell the pledged shares and
any other collateral unless the debentures have been paid in full. The pledge
agreement terminates upon satisfaction of all of our obligations under the
debentures and under the registration rights agreement we entered into in
connection with the issuance of the debentures and related 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 for which 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 include our
monthly payment to the debenture holders of 2% to 3% of the purchase price for
the debentures and the right of the debenture holders to cause us to fully
redeem the debentures in cash within three days.

                                      -12-


<PAGE>

         Due to our failure to file the required registration statement,
penalties totaling approximately $956,000 became due. Instead of paying those
penalties or any future penalties under those provisions, we agreed in the
September 2001 amendment to the registration rights agreement to increase the
principal amount of the Thomas Kernaghan debenture by $650,000. We also agreed
that on or before November 30, 2001, we will file with the Securities and
Exchange Commission 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 related warrants. If we fail to comply with these
filing or relisting requirements, then the principal amount of the Thomson
Kernaghan debenture will increase by $50,000 for each 30-day period of
non-compliance, with a maximum aggregate increase of $350,000.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR 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 amended Annual Report on Form 10-K. 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 if we are successful in restructuring the Hechi
transactions and implementing 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.

         We do not undertake to update, revise or correct any forward-looking
statements.

         The information contained in this report is not a complete description
of our business or the risks associated with an investment in our common stock.
Before deciding to buy or maintain a position in our common stock, you should
carefully review and consider the various disclosures we made in this report,
and in our other materials filed with the Securities and Exchange Commission
that discuss our business in greater detail and that disclose various risks,
uncertainties and other factors that may affect our business, results of
operations or financial condition.

         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 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 the 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, in July
2001, we were advised that the transactions were not in compliance with the laws
of the Peoples' Republic of China. Since that time, we have focused our efforts
on restructuring the transactions with Hechi in a manner that complies with the
laws of both the Peoples' Republic of China and the United States.

                                      -13-


<PAGE>

RESULTS OF OPERATIONS

     YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

         We had no significant revenues in the two-year period ended December
31, 1999. The net income for the year ended December 31, 1998 resulted from the
recovery and cancellation of 3,553,000 shares of common stock from Frank Wright,
a shareholder of Biogan, in connection with a settlement agreement signed by
Biogan and Mr. Wright. We believed that we were entitled to recover the shares
because no consideration was paid for their issuance. The recovery and
cancellation of the shares was recognized as a reduction in shares for
restitution, which was reported in prior financial statements under stock
restitution expense and was reported as stock recovery income of $888,250 in the
December 31, 1998 statement of operations. This was a non-cash accounting
transaction. We would have had a net loss of $305,695 for 1998 without the
effect of this transaction. For the year ended December 31, 1999, we had a net
loss of $238,263.

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 President and Chief Executive
Officer. In March 2000, we completed an offering of two 8% secured convertible
debentures in the initial principal amounts of $2,000,000 and $35,000,
respectively. From the proceeds of those debentures, we paid $1,500,000 to the
Joint Venture, which was used primarily to purchase metal concentrates, retained
$335,000 for working capital purposes, and paid $200,000 to Thomson Kernaghan &
Co., Limited as commissions and administrative fees. Because the transactions
with Hechi need to be restructured, we have agreed with Hechi that the funds we
have already paid to the Joint Venture constitute a non-refundable advance as
consideration for Hechi's continuing to negotiate with us to consummate the
proposed transactions.

         In August and December 2000, the holder of the $2,000,000 debenture
converted an aggregate of $530,000 of the principal balance of its debenture
plus related interest into shares of our common stock. Subsequently, we repaid
$5,000 of the $35,000 principal amount of the other debenture. Initially, both
debentures were set to mature on February 28, 2002 and had interest payments due
on a quarterly basis. However, a September 2001 amendment to the debenture that
then had a remaining principal balance of $1,470,000 extended the maturity date
of that debenture to February 28, 2003 and provided that interest on that
debenture shall continue to accrue on that debenture but shall be payable
quarterly in arrears beginning March 31, 2002 and that the principal balance of
that debenture is increased by $650,000 in settlement of penalties outstanding
under a related registration rights agreement. Accrued interest under both of
the debentures continues to be payable upon conversion in the form of either
cash or additional shares of our common stock, at our option, at the
then-applicable conversion rate. To the extent amounts due under the debentures
are converted into common stock, we will not have to repay those amounts.

         We have no current business operations, 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. Our capital requirements
for the next twelve months will depend upon many factors, including our ability
to restructure and consummate the proposed transactions with Hechi. Assuming we
consummate those transactions, our capital requirements will include
approximately $7,300,000 to be used in connection with the new business,
including approximately $5,000,000 necessary to expand the annual capacity of
Hechi's copper smelter from 6,500 tons to 12,000 tons of copper, and
approximately $2,300,000 to increase by 50% the annual volume of concentrates
that are currently traded by Hechi's non-ferrous metals trading company.

                                      -14-


<PAGE>

         To date, we have made some preliminary contacts in an effort to raise
funds in anticipation of the restructured transactions. We anticipate the funds
may be available to us in the third or fourth quarter of 2002. If we are not
successful in this restructuring, our capital requirements will be significantly
less because we have no current business operations.

         To the extent we are in need of additional financing, there can be no
assurance that we would be able to obtain public or private third-party sources
of financing or that favorable terms for such financing would be available. In
addition, given the trading history of our common stock, there can be no
assurance that we will be able to raise additional cash through public or
private offerings of our common stock. 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. At a minimum, we expect
these covenants to include restrictions on our ability to pay dividends on our
common stock. 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.

RISK FACTORS

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

THE SUCCESS OF OUR CURRENT BUSINESS PLAN DEPENDS UPON OUR ABILITY TO RESTRUCTURE
SUCCESSFULLY THE HECHI TRANSACTIONS. IF WE ARE UNSUCCESSFUL IN THE
RESTRUCTURING, WE WILL NEED TO INVEST OUR TIME AND RESOURCES IN IDENTIFYING AND
PURSUING OTHER BUSINESS OPPORTUNITIES AND WILL BE UNABLE TO GENERATE OPERATING
REVENUES DURING THAT TIME PERIOD.

         During 1999 and 2000, we formed the Joint Venture with Hechi for the
purpose of engaging in the smelting and mining of non-ferrous metals in the
Guangxi Province of China, and for the purpose of operating a copper smelter to
produce blister copper. On or about July 27, 2001, we were advised by our newly
appointed legal counsel licensed to practice in the Peoples' Republic of China
that the transactions contemplated in connection with the Joint Venture were not
in compliance with certain regulatory laws of the Peoples' Republic of China
and, therefore, are not valid. Since that determination, we have been working
diligently with both China and United States counsel to restructure the
transactions with Hechi to ensure compliance with the laws of both the United
States and the Peoples' Republic of China. Until July 27, 2001, we believed that
we had properly consummated the transactions with Hechi, and as such, we were
focused entirely upon managing the mining operations of Hechi and did not engage
in any other business operations. Since that time, we have focused our efforts
on restructuring the proposed transactions with Hechi. Although we believe that
a structure meeting the requisite legal requirements of the United States and
the Peoples' Republic of China is achievable, we cannot provide any assurance
that we will in fact be successful in that regard. If we are unsuccessful in
restructuring the transactions with Hechi, we will be unable to consummate our
current business plans and will need to invest our time and resources in
identifying and pursuing other business opportunities and will be unable to
generate operating revenues during that time period.

                                      -15-


<PAGE>

WE HAVE A HISTORY OF LOSSES THAT MAY CONTINUE IN THE FUTURE AND THAT MAY
ADVERSELY IMPACT OUR BUSINESS AND OUR STOCKHOLDERS.

         Our 1999 financial statements have been prepared assuming we will
continue as a going concern. We incurred significant net operating losses in
each of the years ended December 31, 1999 and 1998 and had a stockholders'
deficiency of $5,024,010 at December 31, 1999. We are in covenant default under
our convertible debentures due to our failure to maintain our listing on the
NASD's OTC Electronic Bulletin Board. Our recurring losses from development
stage activities raised 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 1999 financial statements an
explanatory paragraph related to our ability to continue as a going concern. Our
1999 financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

         We currently have no business operations. 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
our convertible 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 MAY 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.

         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 President and Chief Executive
Officer. We have no current business operations, 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. Our capital requirements
for the next twelve months will depend upon many factors, including our ability
to restructure and consummate the proposed transactions with Hechi. Assuming we
consummate those transactions, our capital requirements will include
approximately $7,300,000 to be used in connection with the new business. If we
are not successful in this restructuring, our capital requirements will be
significantly less because we have no current business operations.

         To the extent we are in need of additional financing, there can be no
assurance that any additional financing will be available to us on acceptable
terms, or at all. If we raise additional funds by issuing equity securities,
further dilution to the existing stockholders may result. If adequate funds are
not available, we may be required to delay, scale back or eliminate portions of
our 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 operations.

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 THOSE DEBENTURES DEPENDS UPON THE MARKET PRICE OF OUR COMMON
STOCK, AND THERE IS NO CEILING ON THE NUMBER OF SHARES OF OUR COMMON STOCK THAT
ARE ISSUABLE UPON CONVERSION OF THOSE DEBENTURES.

                                      -16-


<PAGE>

         We have issued to two investors debentures that 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. As of September 25, 2001, we had a total of 120,066,199 shares of common
stock outstanding, and the debentures were convertible into approximately
94,284,932 shares of our common stock at an assumed conversion price of $0.025
if contractual limitations on conversion were disregarded. The number of shares
that those 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. 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 convertible 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 our convertible 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:

         o    our ability to successfully restructure and consummate the
              transactions with Hechi;
         o    the level of demand for base metal products within China and
              internationally;
         o    the prices that we will be able to charge for mineral products
              assuming we are able to consummate the transactions with Hechi;
         o    costs related to possible acquisitions of new mines or
              technologies to modernize mining operations;
         o    regulatory changes affecting the Chinese mining community
              generally or our operation of mines; and
         o    the amount and timing of capital expenditures and other costs
              relating to the expansion of smelting 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. Assuming we successfully consummate the transactions with Hechi, we
plan to increase our expenditures for our marketing operations and to expand and
develop Hechi's mining and smelting operations to increase production and sales
of products. 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.

                                      -17-


<PAGE>

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:

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

OUR SUCCESS DEPENDS ON OUR ABILITY TO RETAIN OUR CURRENT MANAGEMENT TEAM AND
RECRUIT ADDITIONAL KEY MANAGEMENT PERSONNEL.

         Our success is highly dependent upon the continued services of key
managerial employees both in the United States and in China, including our
President and Chief Executive Officer, Gilles Laverdiere, and Kuang Yihuai, our
Chairman of the Board. Mr. Laverdiere is an experienced geologist in the mining
industry and has financial and technology contacts upon which Biogan is relying
in its new business focus. Mr. Yihuai is the Chairman and Chief Executive
Officer of Hechi and has substantial skills, experience and contacts that Biogan
believes will aid in its business operations assuming a successful restructuring
of the Hechi transactions is achieved. We have not entered into any employment
agreements with any of our executive officers. We do not currently maintain
key-man life insurance policies on any member of management. Consequently, the
loss of Mr. Laverdiere or Mr. Yihuai or one or more other key members of
management could have a material adverse effect on us.

         Our success also depends upon our ability to recruit, assimilate and
retain other qualified employees. China's current economic restructuring and the
corresponding creation of a liquid market for skilled employees may lead to
problems retaining local Chinese management. The loss of key employees and/or
the inability to attract and retain management personnel could result in a
management shortage and inefficient production, which would have a material
adverse effect on us.

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 Securities and
Exchange Commission. Penny stocks, like shares of our common stock, generally
are 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

                                      -18-


<PAGE>

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. Until January 9, 2001, our common stock was traded on the NASD's OTC
Electronic Bulletin Board under the symbol "BIGM." Effective January 9, 2001,
the NASD deleted all quotations of our common stock from the OTC Electronic
Bulletin Board. Since that time, our common stock has been quoted only
sporadically from time to time in the over-the-counter "pink sheets," an ad hoc
forum for quotations of securities prices intended to match potential buyers and
sellers, which forum is not monitored or supervised by any regulatory authority
or agency. 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 BIOGAN, 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 September 25, 2001, a total of 1,100 shares
of our Series A Convertible Preferred Stock were outstanding, and each of those
shares was convertible into 12,000 shares of our common stock. 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. However, the issuance of preferred stock could result in a change in
control, such as the change in control that we anticipate will occur if the
Hechi transactions are successfully restructured, which change in control would
diminish the voting power of our existing stockholders. 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 Biogan 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 Biogan 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.

                                      -19-


<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

         Our audited financial statements for the years ended December 31, 1999
and December 31, 1998 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 Biogan 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.

         On February 26, 2001 and March 8, 2001, we filed Current Reports on
Form 8-K to report a change in our independent certifying accountants. The
February 26, 2001 Form 8-K was amended on March 8, 2001, March 15, 2001 and
March 27, 2001, to report the engagement of KPMG LLP as our new independent
certified public accountants on February 20, 2001 and our dismissal of Bersch
Accounting, which engagement and dismissal were approved by our board of
directors. Bersch Accounting did not render a report on our financial
statements. Following the termination of our relationship with Bersch
Accounting, we received letters from Bersch Accounting stating that there were
disagreements between Bersch Accounting and us. These letters are incorporated
by reference as exhibits to this report.

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 September 25, 2001:
<TABLE>
<CAPTION>

         NAME                     AGE     TITLES
         ----                     ---     ------
<S>                                 <C>   <C>
         Kuang Yihuai               50    Chairman of the Board
         Gilles Laverdiere          47    President, Chief Executive Officer and Director
         Kerry D. Smith             47    Chief Financial Officer, Vice President
         Ronald J. Tolman           49    Vice President, Operations and Director
         Robert C. Montgomery       53    Secretary
         Kuang Zhong                27    Director
         Pierre O'Dowd              45    Director
</TABLE>

                                      -20-


<PAGE>

BUSINESS EXPERIENCE

         KUANG YIHUAI has served as a director and Chairman of the Board of
Directors of Biogan since March 2000. In addition, since March 2000, Mr. Yihuai
has served as the Chief Executive Officer and Chairman of the Board of Directors
of Hechi. He acted as President of Hechi Prefecture Mining Company from 1988
until its privatization in June 1998, and as President of Hechi Industrial Co.,
Ltd. since June 1998. Mr. Kuang Yihuai is the uncle of Mr. Kuang Zhong.

         GILLES LAVERDIERE has served as our Chief Executive Officer and
President since November 1999. Mr. Laverdiere has been a director of Biogan
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
Biogan, Mr. Laverdiere served as Chief Executive Officer and Chairman of the
Board of Directors of Tiaro Bay Resources Inc. from 1996 until 1999. 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 Stock 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.

         KERRY D. SMITH has served as the Chief Financial Officer and a Vice
President of Biogan since January 2001. From 1996 until 2000, Mr. Smith served
as a Senior Mining Analyst of Merrill Lynch Canada Inc., formerly known as
Midland Walwyn Capital Inc. From 1995 until 1996, he served as a Senior Mining
Analyst of RBC Dominion Securities Inc. Mr. Smith received a B.A.Sc. in mining
engineering in 1978, and an M.B.A. in finance and production from Queen's
University in 1980.

         RONALD J. TOLMAN has served as a Vice President of Biogan since
December 1994, and Acting Vice President, Operations since March 2000. In
addition, Mr. Tolman has been a member of our Board of Directors since 1995.
Previously, Mr. Tolman worked as an administrator of operations and fiscal
officer for the Idaho State Department of Insurance. Mr. Tolman received a B.S.
in accounting and a B.A. in finance in 1978 from Boise State University, and is
a candidate for an M.B.A. from Boise State University.

         ROBERT C. MONTGOMERY has served as Secretary of Biogan since March
2000. In addition, Mr. Montgomery has advised us in the drafting and negotiating
of contracts and other legal matters. He received a J.D. from the University of
Idaho in 1974 and is licensed to practice law in the State of Idaho, where he
has conducted a private law practice since 1974.

         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.

         PIERRE O'DOWD has served as a director of Biogan 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 President of
Noveder, Inc. From 1979 to 1992, Mr. O'Dowd worked as a project geologist in
Canada and South America. He received a D.E.C. Sciences Degree from Maisonneuve
College in Montreal in 1974 and a B.S. in geology in 1978 from Montreal
University.

                                      -21-


<PAGE>

         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 there are no committees of the board of directors. Rulon
Tolman and L. William Glazier resigned as Vice President and President and Chief
Executive Officer, respectively, in November 1999. Steven Yishyun Chi resigned
as a director in February 2001, and Gerald Sneddon resigned as a director in
March 2001.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934, and the
regulations thereunder, requires our directors, executive officers and persons
who beneficially own more than 10% of any registered class of our equity
securities to file reports of securities ownership and changes in such ownership
with the Securities and Exchange Commission. Such persons are also required by
rules promulgated by the Securities and Exchange Commission to furnish us with
copies of all Section 16(a) forms they file with the Securities and Exchange
Commission.

         To our knowledge, based upon a review of the copies of such reports
furnished to us and upon oral representations made to us that no other reports
were required to be filed during our fiscal year ended December 31, 1999, all
reporting requirements under Section 16(a) for the fiscal year ended December
31, 1999 were met in a timely manner by our directors, executive officers and
holders of more than 10% of any registered class of our equity securities.

ITEM 10. EXECUTIVE COMPENSATION

     SUMMARY COMPENSATION TABLE

         The following table sets forth information concerning compensation paid
to our Chief Executive Officer for services rendered to us during the fiscal
years ended December 31, 1999, 1998 and 1997. 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 $100,000.
                                                             ANNUAL COMPENSATION
              NAME AND                                             SALARY
              POSITION                     YEAR                     ($)
              --------                     ----                   -----
Gilles Laverdiere..................        1999                  $7,300(1)
   President and Chief Executive           1998                      --
   Officer                                 1997                      --
--------------------

(1)  Although Mr. Laverdiere did not receive any compensation during the year
     ended December 31, 1999, the amount shown in the table reflects the fair
     value of the services he provided to Biogan during that period.

         We have not granted any stock options or stock appreciation rights to
any of our executive officers. Directors are not compensated for any services
they may provide as directors on our board of directors. We have not entered
into any employment agreements with our executive officers.

                                      -22-


<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
beneficial ownership of our common stock as of September 25, 2001, by:

         o    each person known by us to own beneficially 5% or more of our
              outstanding common stock;
         o    each of our directors;
         o    each of our executive officers named in the summary compensation
              table above; and
         o    all of our directors and executive officers as a group.

         The following calculations of the percent of outstanding shares are
based on 120,066,199 shares of our common stock and 1,100 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. Thomson Kernaghan & Co., Limited, or T.K.,
holds as agent for two other entities outstanding shares of common stock and
shares of Series A Convertible Preferred Stock, convertible debentures and
common stock purchase warrants. Each share of Series A Convertible Preferred
Stock is convertible into 12,000 shares of common stock. The terms of the
debenture and warrant held by T.K. prohibit conversion of more than one-third of
the original principal amount of the debenture during any 30 calendar day period
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 debenture or exercise of
the related warrant 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 debenture holder from
converting or exercising and selling shares underlying shares of Series A
Convertible Preferred Stock, the debenture and the warrant in stages over time
where each stage does not cause the debenture holder to beneficially own in
excess of the limitation amounts. In light of the conversion limitations
described above and in light of the number of shares of common stock that were
held by T.K. or that could have been acquired by T.K. upon conversion of shares
of Series A Convertible Preferred Stock or upon conversion of the debenture or
exercise of the warrant as of the date of the table, the number of shares of
common stock shown in the table as beneficially owned by T.K. has been limited
to 9.99% of the shares of common stock outstanding as of the date of the table.

                                      -23-


<PAGE>
<TABLE>
<CAPTION>

             NAME AND ADDRESS OF              TITLE OF              AMOUNT AND NATURE         PERCENT OF
             BENEFICIAL OWNER(1)               CLASS             OF BENEFICIAL OWNERSHIP         CLASS
             ----------------                  -----             -----------------------         -----
<S>                                            <C>                       <C>                   <C>
Gilles Laverdiere                              Common                     3,339,488              2.78%
Ronald J. Tolman                               Common                     4,027,473              3.35%
Robert C. Montgomery                           Common                     1,754,959              1.46%
Kerry D. Smith                                 Common                            --                --
Kuang Yihuai                                   Common                            --                --
Kuang Zhong                                    Common                            --                --
Pierre O'Dowd (2)                              Common                        25,000                  *
Rulon L. Tolman                                Common                     6,879,284              5.73%
Thomson Kernaghan & Co., Limited (3)           Common                    12,781,613 (4)          9.99%
                                               Series A Convertible
                                               Preferred                      1,100            100.00%
All directors and executive officers as a
group (8 persons)                              Common                     9,146,920              7.62%
                                               Series A Convertible
                                               Preferred                         --                --
-------------------------
</TABLE>

*      Represents less than 1%.
(1)    Unless otherwise indicated, the address of each person in this table is
       c/o Biogan International, Inc. 7213 Potomac Drive, Boise, Idaho 83704.
       Kuang Yihuai, Gilles Laverdiere, Kuang Zhong, Pierre O'Dowd and Ronald
       Tolman are directors of Biogan. Gilles Laverdiere, Robert Montgomery,
       Kerry Smith and Ronald Tolman are executive officers of Biogan. Ronald
       Tolman and Rulon Tolman are cousins.
(2)    Mr. O'Dowd's address is c/o Noveder Inc., 1255 University Street, Suite
       450, Montreal, Quebec Canada H3B 3B6.
(3)    Thomson Kernaghan & Co., Limited holds the securities shown in the table
       as agent for Canadian Advantage Limited Partnership ("CALP") and
       Advantage (Bermuda) Fund Ltd. ("ABFL"). VMH Management Ltd. is the
       general partner of CALP, 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 Thomson Kernaghan &
       Co., Limited. The address for Mr. Valentine is c/o Thomson Kernaghan &
       Co., Limited, 120 Adelaide Street West, Suite 1600, Toronto, Ontario,
       Canada M5H 1T1.
(4)    Represents 4,906,808 shares of common stock issued and outstanding and an
       aggregate of 7,874,805 shares of common stock issuable upon conversion of
       a debenture, upon conversion of preferred stock and/or upon exercise of a
       warrant.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In 1999, Biogan began to focus its attention, experience and resources
on developing a base metal mining and smelting operation in China through
reorganization transactions with Hechi, which transactions were unable to be
consummated. The proposed transactions were to involve a one-for-twelve reverse
split of Biogan's common stock, the issuance by Biogan of common stock and
preferred stock to Hechi shareholders and the payoff by Biogan of certain of its
obligations. With the goal of minimizing the dilution that was to occur to
existing Biogan stockholders upon consummation of the Hechi transactions, a

                                      -24-


<PAGE>

group of Biogan stockholders, including Biogan 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 Biogan, sold a portion of the shares and
contributed the proceeds from the sales to Biogan to be used to satisfy certain
outstanding liabilities of Biogan and to coordinate the proposed Hechi
transactions. The capital contributions made by Mr. Laverdiere during 1999
totaled $376,500 and included $123,000 deposited into Biogan for operations,
$53,500 paid on behalf of Biogan to cover audit, legal and consulting expenses
relating to the Hechi transactions, and a $200,000 non-refundable deposit made
in connection with the Hechi transactions. Mr. Laverdiere did not receive stock
or a note payable for these amounts. A total of 3,339,488 of the shares remain
held by Mr. Laverdiere during the attempted restructuring of the Hechi
transactions.

         In September 1999, Biogan entered into a letter agreement with Mr.
Laverdiere. The letter agreement provided that Mr. Laverdiere would pay or cause
to be paid certain of Biogan's liabilities in consideration for the issuance to
Mr. Laverdiere of approximately 16,800,000 shares of Biogan common stock. To
facilitate the proposed Hechi transactions, Mr. Laverdiere orally agreed that
the shares of common stock could instead be issued to Hechi shareholders;
however, those shares are not presently outstanding because the Hechi
transactions were unable to be consummated. To further facilitate the proposed
Hechi transactions, the group of Biogan stockholders described above orally
agreed to satisfy other liabilities of Biogan through a further reduction in
their ownership of Biogan common stock. To date, members of the group of Biogan
stockholders have transferred 1,000,000 of their own shares of Biogan common
stock to satisfy liabilities of Biogan and have orally agreed to transfer up to
approximately 346,000 additional shares of their own common stock if it is
needed to satisfy other obligations of Biogan.

         Robert Montgomery, our Secretary, operates a private law practice in
the State of Idaho. As an attorney, he has provided legal services to us as
general counsel and in connection with certain contracts to which we are a
party. The amount of fees charged to Biogan for such services are determined on
an arm's-length basis.

         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
subsequently was transferred to Thomson Kernaghan & Co., Limited, a Canadian
limited liability company that as of September 25, 2001 held as agent for two
limited partnerships beneficial ownership of in excess of 5% of the shares of
our outstanding common stock. 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 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.

         Prior to September 24, 2001, Thomson Kernaghan 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, and we repaid $5,000 of the $35,000
principal amount of the debenture due to Carbon Mesa Partners. Prior to that
date, we had become in default under the provisions of the debentures and a
related registration rights agreement due to our failure to maintain our listing
on the NASD's OTC Electronic Bulletin Board and our failure to timely register
with the Securities and Exchange Commission for resale the shares of common

                                      -25-


<PAGE>

stock issued or issuable upon conversion of the debentures and upon exercise of
the related warrants. As of September 24, 2001, we and Thomson Kernaghan entered
into amendments to the Thomson Kernaghan debenture and the registration rights
agreement, which amendments included waivers by Thomson Kernaghan of defaults
under its debenture and waivers on behalf of both debenture holders of defaults
under the registration rights agreement. The original debentures and warrants
and the amendments to the debenture and the registration rights agreement are
discussed in further detail in Item 5 of this report.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a)      EXHIBITS

         Reference is made to the exhibits listed on and attached following the
Index to Exhibits beginning at page 28 of this report.

     (b)      REPORTS ON FORM 8-K

         On August 18, 1999, we filed a Current Report on Form 8-K concerning a
letter of intent we entered into with R-Tec Corporation and its shareholders for
the transfer of our interest in IntorCorp, Inc. The Form 8-K included "Item 5.
Other Events."

         On October 27, 1999, we filed a Current Report on Form 8-K concerning
the spin-off of R-Tec Holding, Inc., the recapitalization of R-Tec Corporation
and reorganization agreement entered into between Biogan and Tiaro Bay
Resources, Inc. The Form 8-K included "Item 5. Other Events."

         On December 16, 1999, we filed a Current Report on Form 8-K concerning
a change in our officers and directors and to report our entry into a revised
Share Exchange Agreement with Hechi.

                                      -26-


<PAGE>
<TABLE>

                           BIOGAN INTERNATIONAL, INC.
                              FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

                           BIOGAN INTERNATIONAL, INC.
                                DECEMBER 31, 1999
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                    <C>
Independent Auditor's Report ...........................................................F-1

Balance Sheet as of December 31, 1999...................................................F-2

Statement of Operations for the Years Ended December 31, 1999 and 1998,
and from Inception through December 31, 1999............................................F-3

Statement of Changes in Stockholders' Equity (Deficiency) for the Period
from Inception through December 31, 1999................................................F-4

Statement of Cash Flows for the Years Ended December 31, 1999 and 1998,
and from Inception through December 31, 1999 ...........................................F-8

Notes to Financial Statements .........................................................F-10

</TABLE>

                                      -27-


<PAGE>

                               GEORGE BRENNER, CPA
                           A Professional Corporation
                       10680 W. Pico Boulevard, Suite 260
                          Los Angeles, California 90064
                          310-202-6445 FAX 310-202-6494

                          REPORT OF INDEPENDENT AUDITOR

Board of Directors
Biogan International, Inc. (A Development-Stage Company)
Boise, Idaho

I have audited the accompanying balance sheet of Biogan International, Inc., (A
Development-Stage Company) as of December 31, 1999 and the related statements of
operations, stockholders' equity (deficiency) and cash flows for the years ended
December 31, 1998 and 1999 and from inception (February 5, 1988) through
December 31, 1999. 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 audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for my opinion.

In my opinion, such financial statements referred to above present fairly, in
all material respects, the financial condition of Biogan International, Inc. as
of December 31, 1999 and the results of its operations, stockholders' equity
(deficiency) and cash flows for the years ended December 31, 1999 and 1998 and
from inception (February 5, 1988) through December 31, 1999 in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the company
will continue as a going concern. As more fully described in Note 1 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 Note 4 "Contributed Capital" and in Note 10
"Subsequent Event" which note is unaudited.

                                                     /s/ George Brenner, C.P.A.
                                                     George Brenner, C.P.A.

Beverly Hills, California
March 10, 2000 except as to
Note 10 (unaudited)
which is October 2, 2001

                                      F-1


<PAGE>

                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                                 BALANCE SHEET
                            AS OF DECEMBER 31, 1999

ASSETS
CASH                                                                $    67,193
                                                                    ------------
TOTAL CURRENT ASSETS                                                     67,193

FURNITURE/EQUIPMENT                                                      34,716
ACCUMULATED DEPRECIATION                                                (19,501)
                                                                    ------------

TOTAL FIXED ASSETS                                                       15,215

TOTAL ASSETS                                                        $    82,408
                                                                    ============

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)

ACCOUNTS PAYABLE                                                    $    67,434

NOTES PAYABLE - STOCKHOLDERS                                            120,000

NOTES PAYABLE - OTHER                                                    20,000

ACCRUED SALARIES - OFFICERS                                             171,200

ACCRUED EXPENSES (ACCRUED INTEREST DUE STOCKHOLDERS $30,461)             31,722
                                                                    ------------

TOTAL CURRENT LIABILITIES                                               410,356

STOCKHOLDERS' EQUITY (DEFICIENCY)
  PREFERRED STOCK $.001 PAR VALUE,
    10,000,000 SHARES AUTHORIZED, NO SHARES ISSUED
  COMMON STOCK $.001 PAR VALUE, 300,000,000
    SHARES AUTHORIZED, 85,386,710 ISSUED                                 85,387
ADDITIONAL PAID IN CAPITAL                                            4,434,175
CONTRIBUTED CAPITAL (NET OF DEPOSIT FOR $200,000 SEE NOTE 4)            176,500
ACCUMULATED DEFICIT                                                  (5,024,010)
                                                                    ------------

TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)                                (327,948)
                                                                    ------------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)               $    82,408
                                                                    ============

                             SEE ACCOMPANYING NOTES

                                      F-2


<PAGE>
<TABLE>
                                          BIOGAN INTERNATIONAL, INC.
                                         (A DEVELOPMENT-STAGE COMPANY)
                                            STATEMENT OF OPERATIONS
<CAPTION>

                                                                             FROM INCEPTION
                                      FOR THE YEAR        FOR THE YEAR      FEBRUARY 5, 1988
                                         ENDING              ENDING             THROUGH
                                    DECEMBER 31, 1998   DECEMBER 31, 1999   DECEMBER 31, 1999
                                      ------------        ------------        ------------

<S>                                   <C>                 <C>                 <C>
SALES                                 $        --         $        --         $     7,150
REVENUE                                       360                 360               1,470
                                      ------------        ------------        ------------

TOTAL SALES                                   360                 360               8,620

EXPENSES
WAGES                                     140,351             108,492             611,589
STOCK SUBSCRIPTION LOSS                        --                  --             101,006
DEPRECIATION EXPENSE                        5,923               5,890              19,651
INTEREST EXPENSE                           15,286              13,400              51,844
INCENTIVE BONUS                                --                  --             149,364
LEGAL & ACCOUNTING FEES                    56,071              90,999             366,269
RENT                                       11,620               2,611              37,287
START UP COSTS                                 --              53,500             180,941
RESEARCH AND DEVELOPMENT                      602                 (22)            343,681
SUBSIDIARIES LOSSES                          (141)                 --             158,380
OTHER OPERATING EXPENSES                   74,472             (36,519)            336,428
                                      ------------        ------------        ------------

TOTAL EXPENSES                            304,184             238,351           2,356,440
                                      ------------        ------------        ------------

NET OPERATING INCOME (LOSS)              (303,824)           (237,991)         (2,347,820)

STOCK RECOVERY INCOME                     888,250                  --          (2,676,409)
INTEREST INCOME                               379                  15               5,463
OTHER INCOME                                  228                   9                 248
MISCELLANEOUS EXPENSE                      (2,478)               (296)             (5,492)
                                      ------------        ------------        ------------

TOTAL OTHER                               886,379                (272)         (2,676,190)
                                      ------------        ------------        ------------

NET INCOME (LOSS)                     $   582,555         $  (238,263)        $(5,024,010)
                                      ============        ============        ============

PRIMARY INCOME (LOSS) PER SHARE       $      0.01         $     (0.00)        $     (0.12)
                                      ============        ============        ============

</TABLE>

                                            SEE ACCOMPANYING NOTES

                                                     F-3



<PAGE>
<TABLE>

                                                    BIOGAN INTERNATIONAL, INC.
                                                   (A DEVELOPMENT-STAGE COMPANY)
                                          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                         FOR THE PERIOD FROM INCEPTION (FEBRUARY 5, 1988)
                                                     THROUGH DECEMBER 31, 1999
<CAPTION>

                                                                                             DEFICIENCY
                                                                                             ACCUMULATED
                      COMMON STOCK                        AMOUNT    ADDITIONAL               DURING THE   STOCKHOLDERS'
------------------------------------------------------      PER       PAID-IN    CONTRIBUTED  DEVELOPMENT     EQUITY
ISSUED:                       SHARES          AMOUNT       SHARE      CAPITAL      CAPITAL       STAGE     (DEFICIENCY)
------------------------------------------------------  -----------   -------     ----------  -----------  ------------
<S>                        <C>                 <C>         <C>        <C>                 <C>          <C>  <C>
  JULY 27, 1988             2,250,000           2,250      0.0111        22,750           -            -        25,000

  JANUARY 25, 1989         17,750,000          17,750      0.0060        88,750           -            -       106,500
  JANUARY 29, 1989          3,637,347           3,637      0.0309       108,602           -            -       112,239
                         -------------   -------------              ------------                            -----------
                           21,387,347          21,387                   197,352                                218,739

  SEPTEMBER 14, 1995       41,955,173          41,955      0.0010             -           -            -        41,955
  SEPTEMBER 14, 1995          906,667             907      0.0030         1,813           -            -         2,720
  SEPTEMBER 14, 1995          452,600             453      0.0100         4,073           -            -         4,526
  SEPTEMBER 14, 1995          120,000             120      0.0100         1,080           -            -         1,200
  SEPTEMBER 14, 1995           61,000              61      0.1000         6,039           -            -         6,100
  SEPTEMBER 14, 1995        2,668,967           2,669      0.2500       664,573           -            -       667,242
  SEPTEMBER 14, 1995           75,000              75      0.1000         7,425           -            -         7,500
  OCTOBER 4, 1995              61,980              62      0.1000         6,136           -            -         6,198
  OCTOBER 4, 1995             100,000             100      0.0100           900           -            -         1,000
  OCTOBER 4, 1995           2,180,600           2,181      0.2500       542,969           -            -       545,150
  OCTOBER 4, 1995              25,000              25      0.1000         2,475           -            -         2,500
  NOVEMBER 1, 1995             50,000              50      0.1000         4,950           -            -         5,000
  NOVEMBER 1, 1995            372,270             372      0.2500        92,695           -            -        93,068
  NOVEMBER 1, 1995             31,030              31      0.1000         3,072           -            -         3,103
  NOVEMBER 1, 1995              5,000               5      0.2500         1,245           -            -         1,250
  DECEMBER 8, 1995             23,580              24      0.2500         5,871           -            -         5,895
  DECEMBER 8, 1995            100,000             100      0.0100           900           -            -         1,000

                                                      SEE ACCOMPANYING NOTES

                                                               F-4


<PAGE>
                                                    BIOGAN INTERNATIONAL, INC.
                                                   (A DEVELOPMENT-STAGE COMPANY)
                                          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                         FOR THE PERIOD FROM INCEPTION (FEBRUARY 5, 1988)
                                                     THROUGH DECEMBER 31, 1999
                                                            (CONTINUED)

                                                                                             DEFICIENCY
                                                                                             ACCUMULATED
                      COMMON STOCK                        AMOUNT    ADDITIONAL               DURING THE   STOCKHOLDERS'
------------------------------------------------------      PER       PAID-IN    CONTRIBUTED  DEVELOPMENT     EQUITY
ISSUED:                       SHARES          AMOUNT       SHARE      CAPITAL      CAPITAL       STAGE     (DEFICIENCY)
------------------------------------------------------  -----------   -------     ----------  -----------  ------------

  DECEMBER 8, 1995             10,000              10      0.1000           990           -            -         1,000
  DECEMBER 8, 1995          7,353,248           7,353      0.2500     1,830,959           -            -     1,838,312
  DECEMBER 8, 1995             50,000              50      0.1000         4,950           -            -         5,000
  DECEMBER 8, 1995            256,000             256      0.2500        63,744           -            -        64,000
                         -------------   -------------              ------------                            -----------
                           56,858,115          56,858                 3,246,860                              3,303,718

  FEBRUARY 23, 1996           115,222             115      0.2149        24,643           -            -        24,759
  FEBRUARY 23, 1996           744,444             744      0.2500       185,367           -            -       186,111
  FEBRUARY 23, 1996           672,923             673      0.2208       147,875           -            -       148,548
  MAY 3, 1996                 125,929             126      0.2500        31,356           -            -        31,482
  MAY 3, 1996                 353,667             354      0.2208        77,718           -            -        78,072
  JUNE 21, 1996               350,863             351      0.2500        87,365           -            -        87,716
  JUNE 21, 1996               606,900             607      0.2208       133,366           -            -       133,973
  JULY 29, 1996               493,034             493      0.2149       105,448           -            -       105,941
  JULY 29, 1996               310,567             311      0.2500        77,331           -            -        77,642
  JULY 29, 1996               252,000             252      0.2201        55,206           -            -        55,458
  SEPTEMBER 11, 1996            2,667               3      0.2500           664           -            -           667
  DECEMBER 2, 1996            417,893             418      0.3691       153,835           -            -       154,253
  DECEMBER 2, 1996             73,480              73      0.2500        18,297           -            -        18,370
  DECEMBER 31, 1996            54,350              54      0.4600        24,946           -            -        25,000
                         -------------   -------------              ------------                            -----------
                            4,573,939           4,574                 1,123,417                              1,127,991

                                                      SEE ACCOMPANYING NOTES

                                                               F-5



<PAGE>
                                                    BIOGAN INTERNATIONAL, INC.
                                                   (A DEVELOPMENT-STAGE COMPANY)
                                          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                         FOR THE PERIOD FROM INCEPTION (FEBRUARY 5, 1988)
                                                     THROUGH DECEMBER 31, 1999
                                                            (CONTINUED)

                                                                                             DEFICIENCY
                                                                                             ACCUMULATED
                      COMMON STOCK                        AMOUNT    ADDITIONAL               DURING THE   STOCKHOLDERS'
------------------------------------------------------      PER       PAID-IN    CONTRIBUTED  DEVELOPMENT     EQUITY
ISSUED:                       SHARES          AMOUNT       SHARE      CAPITAL      CAPITAL       STAGE     (DEFICIENCY)
------------------------------------------------------  -----------   -------     ----------  -----------  ------------

  JANUARY 31, 1997            250,774             251      0.2460        61,436           -            -        61,687
  JANUARY 31, 1997              4,000               4      0.2500           996           -            -         1,000
  FEBRUARY 28, 1997            56,621              57      0.2600        14,665           -            -        14,721
  FEBRUARY 28, 1997            38,000              38      0.2500         9,462           -            -         9,500
  MARCH 15, 1997               76,173              76      0.2600        19,729           -            -        19,805
  MARCH 29, 1997               15,400              15      0.2600         3,989           -            -         4,004
  MARCH 29, 1997              154,000             154      0.2500        38,346           -            -        38,500
  JUNE 2, 1997                225,597             226      0.1492        33,441           -            -        33,667
  JUNE 2, 1997                 18,000              18      0.2500         4,482           -            -         4,500
  AUGUST 12, 1997             224,269             224      0.1465        32,626           -            -        32,851
  AUGUST 12, 1997              41,600              42      0.2000         8,278           -            -         8,320
  AUGUST 31, 1997              66,666              67      0.1500         9,933           -            -        10,000
  AUGUST 12, 1997              11,200              11      0.2500         2,789           -            -         2,800
  OCTOBER 31, 1997            304,546             305      0.1892        57,322           -            -        57,626
  OCTOBER 1, 1997              57,692              58      0.2600        14,942           -            -        15,000
  OCTOBER 31, 1997              4,400               4      0.2500         1,096           -            -         1,100
  DECEMBER 31, 1997          (352,634)           (353)     0.2070       (72,650)          -            -       (73,003)
  DECEMBER 30, 1997           240,000             240      0.2504        59,856           -            -        60,096
  DECEMBER 4, 1997            640,000             640      0.2500       159,360           -            -       160,000
  DECEMBER 31, 1997           708,750             709      0.1422       100,041           -            -       100,750
                         -------------   -------------              ------------                            -----------
                            2,785,054           2,785                   560,139                                562,924

                                                      SEE ACCOMPANYING NOTES

                                                               F-6



<PAGE>
                                                    BIOGAN INTERNATIONAL, INC.
                                                   (A DEVELOPMENT-STAGE COMPANY)
                                          STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                                         FOR THE PERIOD FROM INCEPTION (FEBRUARY 5, 1988)
                                                     THROUGH DECEMBER 31, 1999
                                                            (CONTINUED)

                                                                                             DEFICIENCY
                                                                                             ACCUMULATED
                      COMMON STOCK                        AMOUNT    ADDITIONAL               DURING THE   STOCKHOLDERS'
------------------------------------------------------      PER       PAID-IN    CONTRIBUTED  DEVELOPMENT     EQUITY
ISSUED:                       SHARES          AMOUNT       SHARE      CAPITAL      CAPITAL       STAGE     (DEFICIENCY)
------------------------------------------------------  -----------   -------     ----------  -----------  ------------

  FEBRUARY 18, 1998            30,000              30      0.1300         3,870           -            -         3,900
  FEBRUARY 28, 1998           120,000             120      0.1872        22,340           -            -        22,460
  JUNE 8, 1998                 62,500              63      0.0800         4,938           -            -         5,000
  JUNE 30, 1998               342,820             343      0.0191         6,213           -            -         6,556
  NOVEMBER 20, 1998        (3,553,000)         (3,553)     0.2500      (884,697)          -            -      (888,250)
  DECEMBER 31, 1998            25,545              26      0.0010             0           -            -            26
  DECEMBER 31, 1998           240,564             241      0.2696        64,625           -            -        64,865
                         -------------   -------------              ------------                            -----------
                           (2,731,571)         (2,732)                 (782,711)                              (785,443)

 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
                         -------------   -------------              ------------                            -----------
                              263,826             264                    66,368     176,500                    243,132

NET LOSS                            -               -                         -           -   (5,024,010)   (5,024,010)
                         -------------   -------------              ------------  ---------- ------------   -----------

                           85,386,710          85,387                 4,434,175     176,500   (5,024,010)     (327,948)
                         =============   =============              ============  ========== ============   ===========

                                                      SEE ACCOMPANYING NOTES

                                                               F-7

</TABLE>



<PAGE>
<TABLE>

                                                    BIOGAN INTERNATIONAL, INC.
                                                   (A DEVELOPMENT-STAGE COMPANY)
                                                      STATEMENT OF CASH FLOWS
<CAPTION>

                                                                                          FROM INCEPTION
                                                    FOR THE YEAR       FOR THE YEAR      FEBRUARY 5, 1988
                                                      ENDING              ENDING             THROUGH
                                                 DECEMBER 31, 1998   DECEMBER 31, 1999   DECEMBER 31, 1999
                                                  --------------      --------------      --------------
<S>                                               <C>                 <C>                 <C>
CASH FLOWS FROM OPERATIONS
NET INCOME (LOSS)                                 $     582,555       $    (238,263)      $  (5,024,010)

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                 29,041              16,502             485,054
1999 IMPUTED EXECUTIVE COMPENSATION                           -             107,700             107,700
RESTITUTION                                            (888,250)                  -           2,676,409
INTEREST EXPENSE                                          4,724                   -              28,920
DISPUTE SETTLEMENTS                                           -                   -              10,603
STOCK CANCELLATION                                            -             (57,570)            (57,570)

OTHER ADJUSTMENTS:
SUBSIDIARIES LOSSES                                        (141)                  -             158,380
STOCK SUBSCRIPTION LOSS                                       -                   -             101,006
FIRST DEVELOPMENT STAGE LOSS                                  -                   -             142,733
DEPRECIATION AND AMORTIZATION                             5,923               5,890              19,650
                                                  --------------      --------------      --------------
TOTAL ADJUSTMENTS                                      (848,703)             72,522           3,734,179

ADVANCES                                                   (400)                400                   -
ACCOUNTS RECEIVABLE                                        (180)                180                   -
ACCOUNTS PAYABLE                                         23,998              17,665              67,435
ACCRUED LIABILITIES                                      82,502              12,150             202,922
                                                  --------------      --------------      --------------

NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES                                (160,228)           (135,346)         (1,019,474)
                                                  --------------      --------------      --------------

CASH FLOWS FROM INVESTING ACTIVITIES
PURCHASE FURNITURE/EQUIPMENT                                  -                   -             (35,113)
DISPOSAL FURNITURE/EQUIPMENT                                475                   -                 475
INVESTMENT IN BIOMAGNETRONICS                               141                   -            (103,937)
INVESTMENT IN BIOLINK                                         -                   -             (54,443)
                                                  --------------      --------------      --------------

NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES                                     616                   -            (193,018)
                                                  --------------      --------------      --------------
CASH FLOWS FROM FINANCING ACTIVITIES
NOTE PAYABLE-STOCKHOLDER RECEIVED                             -              40,000             120,000
NOTES PAYABLE - OTHER RECEIVED                           95,141                   -             220,141
PAYMENT OF NOTES PAYABLE - OTHER                        (43,680)            (15,000)            (58,680)
ISSUANCE OF COMMON STOCK                                  8,901                   -             821,952

                                                          F-8


<PAGE>
                                                    BIOGAN INTERNATIONAL, INC.
                                                   (A DEVELOPMENT-STAGE COMPANY)
                                                      STATEMENT OF CASH FLOWS

                                                                                          FROM INCEPTION
                                                    FOR THE YEAR       FOR THE YEAR      FEBRUARY 5, 1988
                                                      ENDING              ENDING             THROUGH
                                                 DECEMBER 31, 1998   DECEMBER 31, 1999   DECEMBER 31, 1999
                                                  --------------      --------------      --------------

CONTRIBUTED CAPITAL                                           -             176,500             176,500
OTHER                                                      (228)                  -                (228)
                                                  --------------      --------------      --------------

NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES                                  60,134             201,500           1,279,685
                                                  --------------      --------------      --------------

NET INCREASE (DECREASE) IN CASH                         (99,478)             66,154              67,193

BEGINNING CASH BALANCE                                  100,517               1,039                   -
                                                  --------------      --------------      --------------

CASH ENDING BALANCE                               $       1,039       $      67,193       $      67,193
                                                  ==============      ==============      ==============

SUPPLEMENTAL INFORMATION

CASH PAYMENTS FOR INTEREST EXPENSE                $       2,711       $           -       $       2,711
CASH PAYMENTS FOR INCOME TAXES                                -                   -                   -

NONMONETARY TRANSACTIONS
STOCK ISSUED FOR:
DEBT REDUCTION                                           60,141                   -             141,461
MANAGEMENT                                                    -                   -              61,294
CONTRACT LABOR, INCENTIVE BONUSES, PROFESSIONAL
   SERVICES AND RESEARCH AND DEVELOPMENT                 29,041              16,502             485,054
1999 IMPUTED EXECUTIVE COMPENSATION                           -             107,700             107,700
RESTITUTION                                            (888,250)                  -           2,676,409
INTEREST EXPENSE                                          4,724                   -              28,920
DISPUTE SETTLEMENT                                            -                   -              10,603
STOCK CANCELLATION                                            -             (57,570)            (57,570)

                                                 SEE ACCOMPANYING NOTES

                                                          F-9
</TABLE>



<PAGE>

                           BIOGAN INTERNATIONAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BUSINESS SUMMARY

         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 eletromagnetic 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.

         During 1999, the Company did not engage in any significant business
         activities other than divesting itself of its electric motor business
         and negotiating a joint venture arrangement with Hechi Industrial Co.,
         Ltd. Additional details relating to the formation and status of the
         joint venture are disclosed in Note 10 below.

                                      F-10


<PAGE>

         NET INCOME (LOSS) PER SHARE

         Basic income (loss) per share is based on the weighted-average number
         of outstanding common shares during the development stage period. The
         weighted-average number of shares of common stock outstanding for the
         years ended December 31, 1998, December 31, 1999, and the period from
         February 5, 1998 (inception) through December 31, 1999 were 85,194,622,
         85,243,038, and 42,609,554 respectively. Of the 85,386,710 shares
         outstanding 48,852,065 are restricted and 36,534,645 shares are
         unrestricted.

         The net income for the year ended December 31, 1998 was generated from
         the recovery and cancellation of 3,553,000 shares of common stock,
         which shares were recovered in connection with a settlement agreement
         signed by the Company and Frank Wright, a stockholder of the Company.
         The Company believes that it was entitled to recover these shares
         because no consideration was paid for the issuance of the shares. The
         recovery and cancellation of the shares was recognized as a reduction
         in shares for restitution, which was reported in prior financial
         statements under stock restitution expense and was reported as stock
         recovery income of $888,250 in the December 31, 1998 statement of
         operations. The Company is reporting this transaction as a change in an
         accounting estimate under Accounting Principles Board Opinion number 20
         "Accounting Changes." The entire recovery was recognized in 1998,
         resulting in the Company showing a net income of $582,555. The Company
         would have had a net loss for 1998 of $305,695 or $0.00 per share,
         without the effect of the stock recovery income.

         INCOME TAXES

         At December 31, 1999, Biogan had net operating losses (NOL)
         carryforwards and research & development tax credit as follows:
<TABLE>
<CAPTION>

                Year          NOL          Year Expires     Tax Credits     Year Expires
                ----          ---          ------------     -----------     ------------
<S>             <C>       <C>                  <C>           <C>                <C>
                1995      $ 2,887,130          2010          $      --
                1996        1,122,539          2011             12,197          2011
                1997          736,051          2017              9,665          2012
                1999          141,035          2019                 --
                          -----------                        ---------
                          $ 4,886,755                        $  21,862
                          ===========                        =========
</TABLE>

         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 ($2,676,409) is a
         tax deductible expense, it could be subject to an IRS disallowance. If
         the transaction described in Note 10 takes place, there will be a
         significant change in ownership, and the net operating losses may be
         significantly reduced.

         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-11


<PAGE>

         CONTINUE IN EXISTENCE

         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
         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 Notes 4 and
         10. There can be no assurance that these plans will be successful.

2.       PROPERTY DISTRIBUTION

         Effective February 25, 1998, Biogan and Collective Technologies, LLC
         transferred to IntorCorp, Inc., a newly formed Idaho corporation, their
         respective rights to all of the intellectual technology of the
         "IntorCorp Motor," each in exchange for a 50% ownership interest in the
         newly formed corporation.

         DIVIDEND DISTRIBUTION: 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.
         Biogan had expensed as research and development expenses the
         intellectual property transferred to IntorCorp, Inc. as charges to
         operations. Therefore, there was no book value at the time of
         incorporation or transfer to R-Tec Holding, Inc. and no financial
         reporting effect on Biogan. On September 27, 1999, Biogan paid a stock
         distribution of all of its R-Tec Holding, Inc. common stock to its
         shareholders of record as of September 15, 1999, at the rate of one
         share of R-Tec Holding, Inc. for each 20 shares of Biogan, rounded up.
         The stock distribution was paid to American Securities Transfer &
         Trust, Inc. to be held in escrow until an information statement is sent
         to each of the shareholders receiving such R-Tec Holding, Inc. stock
         and a Form 10-SB to be filed with the Securities and Exchange
         Commission by R-Tec Holding, Inc. is effective. Management of R-Tec
         Holding, Inc. is preparing an information statement to be mailed to the
         shareholders receiving R-Tec Holding, Inc. stock. The audit is in
         process to file Form 10-SB with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
3.       NOTES PAYABLE AT DECEMBER 31, 1999, CONSISTED OF THE FOLLOWING:
<S>                                                                                                    <C>
          Notes Payable - Other:

          Notes payable to an individual with interest at 10% per annum from July 1,
          1998. Note is unsecured and is payable on demand.                                            $   5,000

          Notes payable to an individual with interest at 10% per annum from August 18,
          1998. Note is unsecured and is payable on demand.                                               15,000
                                                                                                       ---------
          Total Notes Payable - Other                                                                  $  20,000
                                                                                                       =========
          Notes Payable - Stockholders:

          Notes payable to Ronald J. Tolman 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

                                      F-12


<PAGE>

          Notes payable to Ronald J. Tolman with interest at 10% per annum from September
          7, 1999. Note is unsecured and is payable on demand.                                             5,000

          Notes payable to Ronald J. Tolman with interest at 8% per annum from July 26,
          1999. Note is unsecured and is due April 28, 2000.                                              10,000

          Notes payable to Ronald J. Tolman with interest at 12% per annum from September
          29, 1998. Note is unsecured and is payable on demand.                                           15,000

          Notes payable to Rulon L. Tolman 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 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 - Stockholder                                                            $ 120,000
                                                                                                       =========

4.       CONTRIBUTED CAPITAL

          In anticipation of the transaction outlined in Note 10, capital was
          contributed by Gilles Laverdiere, the Company's President and CEO, in
          the following transactions:

          Cash deposited into Biogan for operations                                                    $ 123,000

          Direct payments made for auditing, legal, and consulting expenses related to
          the joint venture detailed in Note 10                                                           53,500
                                                                                                       ---------
          Total Contributed Capital                                                                    $ 176,500

          Nonrefundable deposit as detailed in Note 10                                                   200,000
                                                                                                       ---------
                                                                                                       $ 376,500
                                                                                                       =========
</TABLE>

5.       RELATED PARTY TRANSACTIONS

         Bill Glazier and Rulon Tolman resigned as officers of the Company on
         November 29, 1999.

         See Note 3 for details on notes payable due to stockholders.

         Ron Tolman, Rulon Tolman and Jacque Tolman have accrued wages for the
         two-year period ended December 31, 1998, of $96,600, $63,800 and
         $10,800, respectively.

         The Company's officers did not receive any paid compensation during
         1999. The fair value of those services provided to the Company by Ron
         Tolman, Rulon Tolman and Gilles Laverdiere was $82,800, $17,400 and
         $7,500, respectively.

         Gilles Laverdiere, President and CEO of Biogan, contributed capital of
         $376,500 (see Note 4).

                                      F-13


<PAGE>

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.       OTHER OPERATING EXPENSES

         In December 1996, 150,000 shares of common stock were issued as a
         sign-on incentive to an individual who was a consultant of the Company
         and who was being hired as president of a medical supply business into
         which the Company was then entering. The Company recognized the expense
         upon issuance. The individual did not, however, become an employee of
         the Company. Consequently, the Company and the individual mutually
         agreed to the cancellation of the 150,000 shares on July 31, 1999. The
         cancellation resulted in a credit to other operating expenses of
         $57,570.

8.       CONTINGENCY

         In December 1999, the Company became a party to a dispute with a
         company that claimed to have an option to purchase shares of the
         Company's common stock at a discount to the market price based upon an
         April 1995 agreement. No contingency was recorded on the Company's
         financial statements because the dispute was not expected to have a
         material adverse effect on the Company's financial position, results of
         operation and cash flows.

9.       STOCK OPTIONS

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

10.      SUBSEQUENT EVENTS (UNAUDITED)

         COOPERATIVE JOINT VENTURE

         During 1999, Biogan did not engage in any significant business
         activities other than divesting itself of its electric motor business
         and negotiating a Cooperative Joint Venture Contract, or the Joint
         Venture Agreement, with Hechi Industrial Co., Ltd., or Hechi, relating
         to the formation of a limited liability company, or the Joint Venture,
         under the laws of the Peoples' Republic of China. The Joint Venture was
         formed on January 27, 2000 for the purpose of engaging in the smelting
         and mining of non-ferrous metals in the Guangxi Province of China, and
         for the purpose of operating a copper smelter to produce blister
         copper.

         Hechi, originally owned by the Hechi Prefecture Government and formerly
         known as the Hechi Prefecture Mining Company, came under private
         ownership following the purchase of all of its assets and liabilities
         by its employees in June 1998. Operating since 1977, 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. To Biogan's
         knowledge, Hechi is the only integrated base metal mining and smelting
         company in the Hechi Prefecture.

                                      F-14


<PAGE>

         Effective July 1, 2000, Biogan entered into an Asset Purchase Agreement
         with Hechi. The Asset Purchase Agreement provided for Biogan's
         acquisition of certain assets of Hechi and Biogan's assumption of
         certain of its liabilities, valued at approximately $24,000,000. On
         that same date, Biogan contributed those assets and liabilities to the
         Joint Venture.

         On or about July 27, 2001, Biogan was advised by its newly appointed
         legal counsel licensed to practice in the Peoples' Republic of China
         that the transactions contemplated in the Joint Venture Agreement and
         the Asset Purchase Agreement were not in compliance with certain
         regulatory laws of the Peoples' Republic of China and, therefore, are
         not valid. Prior to that determination, Biogan believed that it had
         properly consummated the transactions with Hechi and, therefore, Biogan
         focused entirely upon managing the mining operations of Hechi and did
         not engage in any other business operations. Since that time, Biogan
         has been working diligently with both China and United States counsel
         to restructure the transactions with Hechi to ensure compliance with
         the laws of both the United States and the Peoples' Republic of China.
         Although Biogan believes that a structure meeting the requisite legal
         requirements of the United States and the Peoples' Republic of China is
         achievable, Biogan cannot provide any assurance that Biogan will in
         fact be successful in that regard. Biogan anticipates that the Hechi
         transactions, if successfully restructured, will result in a change in
         control of Biogan that will be accounted for as a reverse acquisition
         and will require Biogan to use the historical financial information of
         Hechi as Biogan's financial information.

         Biogan has never before operated a mining or smelting company. However,
         assuming Biogan can adequately restructure the proposed transactions
         with Hechi, Biogan believes that Biogan and Hechi have an established
         network of relationships and information resources that provide Biogan
         with an advantage in establishing and maintaining a mining and smelting
         business in the area. In particular, because the Hechi Prefecture
         Government originally owned Hechi, management of Hechi has contacts
         with the local government that may assist Biogan in obtaining the
         required mining permits and in targeting new projects.

         Assuming Biogan is successful in restructuring the proposed
         transactions with Hechi, Biogan's goal is to further develop and expand
         Hechi's existing mining assets and enhance its smelting operations in
         order to establish Biogan as the preeminent integrated mining and
         smelting company in the Guangxi Province. Biogan's strategy includes
         the introduction of capital and modern mining technologies to the Hechi
         region in order to further develop and produce the mineral resources in
         the region.

         The execution and success of Biogan's strategy is largely dependent
         upon its ability to raise necessary funds. Biogan's future capital
         requirements depend in large part upon Biogan's ability to consummate
         restructured transactions with Hechi. Assuming Biogan is successful in
         restructuring the transactions with Hechi, Biogan anticipates its
         initial capital requirements will be approximately $7,300,000 for the
         expansion of the current capacity of Hechi's copper smelter and
         non-ferrous metals trading company. If Biogan is not successful in this
         restructuring, Biogan's capital requirements should be significantly
         less because Biogan has no current business operations and currently
         does not have plans to undertake other products or services.

         CONVERTIBLE DEBENTURES

         To assist Biogan in financing its required contributions to the Joint
         Venture under the terms of the Joint Venture Agreement and the Asset
         Purchase Agreement that Biogan is now attempting to restructure, Biogan
         raised an aggregate of $2,035,000 in an offering of 8% secured
         convertible debentures on March 29, 2000. Biogan issued a $2,000,000

                                      F-15


<PAGE>

         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 subsequently was
         transferred to Thomson Kernaghan & Co., Limited, a Canadian limited
         liability company that as of September 25, 2001 beneficially owned in
         excess of 5% of the shares of Biogan's outstanding common stock.

         From the proceeds from the sale of the debentures, Biogan paid
         $1,500,000 to the Joint Venture, which was used primarily to purchase
         metal concentrates, retained $335,000 for working capital purposes, and
         paid $200,000 to Thomson Kernaghan as commissions and administrative
         fees. Because the transactions with Hechi need to be restructured,
         Biogan has agreed with Hechi that the funds Biogan has already paid to
         the Joint Venture constitute a non-refundable advance as consideration
         for Hechi's continuing to negotiate with Biogan to consummate the
         proposed transactions.

         Prior to September 24, 2001, Thomson Kernaghan converted an aggregate
         of $530,000 of the principal balance of its debenture plus related
         interest into shares of Biogan's common stock, and Biogan repaid $5,000
         of the $35,000 principal amount of the debenture due to Carbon Mesa
         Partners, LLC. Prior to that date, Biogan had become in default under
         the provisions of the debentures and a related registration rights
         agreement due to Biogan's failure to maintain its listing on the NASD's
         OTC Electronic Bulletin Board and Biogan's failure to timely register
         with the Securities and Exchange Commission for resale the shares of
         common stock issued or issuable upon conversion of the debentures and
         upon exercise of the related warrants. As of September 24, 2001, Biogan
         and Thomson Kernaghan entered into amendments to the Thomson Kernaghan
         debenture and the registration rights agreement, which amendments
         included waivers by Thomson Kernaghan of defaults under its debenture
         and waivers on behalf of both debenture holders of defaults under the
         registration rights agreement.

         Initially, both debentures were set to mature on February 28, 2002 and
         had interest payments due on a quarterly basis. However, the amendment
         to the Thomson Kernaghan debenture extended the maturity date of that
         debenture to February 28, 2003 and provided that interest on that
         debenture shall continue to accrue on that debenture but shall be
         payable quarterly in arrears beginning March 31, 2002, and that the
         principal balance of that debenture is increased by $650,000 to
         $2,120,000 in settlement of penalties outstanding under the
         registration rights agreement. Accrued interest under both of the
         debentures continues to be payable upon conversion in the form of
         either cash or additional shares of Biogan's common stock, at Biogan's
         option, at the then-applicable conversion rate.

         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 Thomson
         Kernaghan 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. Any debentures not
         previously converted as of the maturity date automatically will be
         converted at the then-applicable conversion rate.

                                      F-16


<PAGE>

         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:

         o        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,

         o        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;

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

         o        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

         o        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, except that the conversion
         rate for the additional $650,000 principal amount of the Thomson
         Kernaghan debenture shall not be less than $0.025 per share. However,
         if Biogan fails to file all reports required pursuant to Section 13 or
         15(d) of the Securities Exchange Act of 1934, as amended, or the
         Exchange Act, and/or fails to continue its status as an issuer required
         to file reports under the Exchange Act, then the conversion rate under
         the Carbon Mesa debenture will be amended to equal 90% of the
         conversion rate otherwise applicable, and Carbon Mesa may require
         Biogan to immediately redeem for cash the outstanding portion of its
         debenture. The redemption amount would be calculated by dividing the
         sum of the outstanding principal balance plus accrued interest by the
         conversion rate in effect on the date of redemption, and then
         multiplying that quotient 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.

         As of September 25, 2001, Biogan had a total of 120,066,199 shares of
         common stock outstanding, and the debentures were convertible into
         approximately 94,284,932 shares of Biogan common stock at an assumed
         conversion price of $0.025 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.
         Further, to the extent the holders convert those debentures and then
         sell the underlying shares of common stock into the market, the price
         of Biogan's 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.
         Biogan's 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.

                                      F-17


<PAGE>

         Biogan's stockholders also could experience a decline in the value of
         their investment if the debenture holders engage in short sales.
         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 Biogan's debentures or Series A Convertible
         Preferred Stock or others sell large volumes of Biogan's common stock
         within a relatively short period of time, the market price of Biogan's
         common stock may decrease. The decrease in market price would allow
         holders of Biogan's debentures to convert their debentures into an
         increased number of shares of Biogan's common stock based upon a
         discount on the market price of Biogan's common stock. Further sales of
         common stock issued upon conversion of debentures could cause even
         greater declines in the price of Biogan's 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 Biogan's common stock. Thomson Kernaghan agreed
         in the September 2001 amendment to its debenture not to sell short any
         of Biogan's common stock until the earlier of the repayment or the
         maturity of its debenture. However, Biogan cannot provide any assurance
         that Thomas Kernaghan will not engage in short sales after that date or
         that others will not engage in short sales either before or after that
         date.

         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:

         o        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

         o        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.

                                      F-18


<PAGE>

         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. Redemptions
         under the Thomson Kernaghan and Carbon Mesa debentures are to be made
         at a redemption price equal to 100% or 125%, respectively, of the
         amount to be redeemed. If Biogan serves a redemption notice, 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. Biogan 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, 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, which rights are discussed further below.

         The debentures initially were secured by a standby letter of credit in
         the amount of $1,200,000 issued by the Bank of India. However, the
         letter of credit has since expired. Under the September 2001 amendment,
         the Thomson Kernaghan debenture became secured by Biogan's assets. The
         Thomson Kernaghan debenture also continues to be secured by 28,800,000
         shares of Biogan's common stock, or the pledged shares. The pledged
         shares are being 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,
         Biogan's 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 Biogan's common stock, as provided
         in the debentures. In addition, upon an event of default, a pledgee may
         sell the pledged shares and any other collateral unless the debentures
         have been paid in full. The pledge agreement terminates upon
         satisfaction of all of Biogan's obligations under the debentures and
         under the registration rights agreement Biogan entered into in
         connection with the issuance of the debentures and related warrants.

         The registration rights agreement obligated Biogan 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 Biogan's 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, Biogan was
         required to register no less than 200% of the aggregate number of
         shares into which the debentures are convertible and for which 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 include Biogan's monthly
         payment to the debenture holders of 2% to 3% of the purchase price for
         the debentures and the right of the debenture holders to cause Biogan
         to fully redeem the debentures in cash within three days.

                                      F-19


<PAGE>

         Due to Biogan's failure to file the required registration statement,
         penalties totaling approximately $956,000 became due. Instead of paying
         those penalties or any future penalties under those provisions, Biogan
         agreed in the September 2001 amendment to the registration rights
         agreement to increase the principal amount of the Thomas Kernaghan
         debenture by $650,000. Biogan also agreed that on or before November
         30, 2001, Biogan will file with the Securities and Exchange Commission
         all securities filings that are required to be filed prior to that date
         and secure and maintain the listing of Biogan's common stock on an
         exchange or on the NASD's OTC Electronic Bulletin Board. In addition,
         Biogan 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 related
         warrants. If Biogan fails to comply with these filing or relisting
         requirements, then the principal amount of the Thomson Kernaghan
         debenture will increase by $50,000 for each 30-day period of
         non-compliance, with a maximum aggregate increase of $350,000.

                                      F-20


<PAGE>

                                  EXHIBIT INDEX

EXHIBIT
NUMBER            DESCRIPTION
--------          -----------

    3.1           Certificate of Incorporation of the Registrant filed with the
                  Delaware Secretary of State on February 5, 1988 (1)

    3.2           Certificate of Amendment of Certificate of Incorporation of
                  the Registrant filed with the Delaware Secretary of State on
                  March 31, 1989 (1)

    3.3           Certificate of Amendment of Certificate of Incorporation of
                  the Registrant filed with the Delaware Secretary of State on
                  June 29, 1989 (1)

    3.4           Certificate for Renewal and Revival of Charter of the
                  Registrant filed with the Delaware Secretary of State on May
                  2, 1990 (1)

    3.5           Certificate for Renewal and Revival of Charter of the
                  Registrant filed with the Delaware Secretary of State on
                  August 29, 1994 (1)

    3.6           Certificate of Amendment of Certificate of Incorporation of
                  the Registrant filed with the Delaware Secretary of State on
                  September 5, 1997 (1)

    3.7           Amended Certificate of Designations of Series A Convertible
                  Preferred Stock of the Registrant filed with the Delaware
                  Secretary of State on August 1, 2000 (1)

    3.8           Amended and Restated Bylaws of Registrant (1)

    4.1           Specimen Common Stock Certificate (1)

    4.2           8% Secured Convertible Debenture due February 28, 2002 issued
                  by the Registrant to CALP II, LLC (1)

    4.3           8% Secured Convertible Debenture due February 28, 2002 issued
                  by the Registrant to Carbon Mesa Partners, LLC (1)

    4.4           Common Stock Purchase Warrant dated March 29, 2000 issued by
                  the Registrant to CALP II, LLC (1)

    4.5           Common Stock Purchase Warrant dated March 29, 2000 issued by
                  the Registrant to Carbon Mesa Partners, LLC (1)

    4.6           Registration Rights Agreement dated as of March 8, 2000
                  between the Registrant, CALP II, LLC and Carbon Mesa Partners,
                  LLC (1)

    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 (1)

    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 (1)



<PAGE>

    4.9           Joint Escrow Instructions dated March 8, 2000 by and between
                  the Registrant and CALP II, LLC and Carbon Mesa Partners, LLC

    4.10          First Amendment to 8% Secured Convertible Debenture due
                  February 28, 2002 dated as of September 24, 2001 by and
                  between the Registrant and Thomson Kernaghan & Co., Limited

    4.11          First Amendment to Registration Rights Agreement dated as of
                  September 24, 2001 by and between the Registrant and Thomson
                  Kernaghan & Co., Limited

    4.12          Addendum to First Amendment to 8% Secured Convertible
                  Debenture due February 28, 2002 dated as of September 24, 2001
                  by and between the Registrant and Thomson Kernaghan & Co.,
                  Limited

   10.1          2000 Stock Option Plan (#) (1)

   10.2           Form of Incentive Stock Option Agreement (#) (1)

   10.3           Form of Non-Qualified Stock Option Agreement (#) (1)

   10.4           8% Secured Convertible Debenture due February 28, 2002 issued
                  by the Registrant to CALP II, LLC (1)

   10.5           Common Stock Purchase Warrant dated March 29, 2000 issued by
                  the Registrant to CALP II, LLC (1)

   10.6           Registration Rights Agreement dated as of March 8, 2000
                  between the Registrant, CALP II, LLC and Carbon Mesa Partners,
                  LLC (1)

   10.7           Securities Purchase Agreement dated as of March 8, 2000 by and
                  between the Registrant and CALP II, LLC and Carbon Mesa
                  Partners, LLC (1)

   10.8           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 (1)

   10.9           Joint Escrow Instructions dated March 8, 2000 by and between
                  the Registrant and CALP II, LLC and Carbon Mesa Partners, LLC

   10.10          First Amendment to 8% Secured Convertible Debenture due
                  February 28, 2002 dated as of September 24, 2001 by and
                  between the Registrant and Thomson Kernaghan & Co., Limited

   10.11          First Amendment to Registration Rights Agreement dated as of
                  September 24, 2001 by and between the Registrant and Thomson
                  Kernaghan & Co., Limited

   10.12          Addendum to First Amendment to 8% Secured Convertible
                  Debenture due February 28, 2002 dated as of September 24, 2001
                  by and between the Registrant and Thomson Kernaghan & Co.,
                  Limited

   10.13          Letter Agreement dated September 9, 1999 between the
                  Registrant and Gilles Laverdiere

   16.1           Letter to the Registrant dated August 7, 2000 from George
                  Brenner, C.P.A. (2)



<PAGE>

   16.2           Letter to the Registrant dated March 5, 2001 from Dennis W.
                  Bersch, C.P.A. (3)

   16.3           Letter to the Securities and Exchange Commission dated March
                  7, 2001 from Dennis W. Bersch, C.P.A. (3)

   16.4           Letter to the Securities and Exchange Commission dated March
                  7, 2001 from Dennis W. Bersch, C.P.A. (4)

   16.5           Letter to the Securities and Exchange Commission dated March
                  7, 2001 from Dennis W. Bersch, C.P.A. (5)

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

(#)      Management contract or compensatory plan, contract or arrangement
         required to be filed as an exhibit.
(1)      Filed as an exhibit to the Registrant's Form 8-A filed with the
         Securities and Exchange Commission on September 6, 2000 and
         incorporated herein by reference.
(2)      Filed as an exhibit to the Registrant's Form 8-K filed with the
         Securities and Exchange Commission on August 10, 2000 and incorporated
         herein by reference.
(3)      Filed as an exhibit to the Registrant's Form 8-K filed with the
         Securities and Exchange Commission on March 8, 2001 and incorporated
         herein by reference.
(4)      Filed as an exhibit to Amendment No. 1 to the Registrant's Form 8-K
         filed with the Securities and Exchange Commission on March 8, 2001 and
         incorporated herein by reference.
(5)      Filed as an exhibit to Amendment No. 3 to the Registrant's Form 8-K
         filed with the Securities and Exchange Commission on March 27, 2001 and
         incorporated herein by reference.



<PAGE>

                                   SIGNATURES

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

                                          BIOGAN INTERNATIONAL, INC.,
                                          a Delaware corporation

Dated:  October 2, 2001                   By:  /S/ GILLES LAVERDIERE
                                             -----------------------------------
                                               Gilles Laverdiere, President and
                                               Chief Executive Officer

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

        NAME                                  TITLE                              DATE
        ----                                  -----                              ----
<S>                               <C>                                       <C>
/S/ Gilles Laverdiere             President, Chief Executive Officer        October 2, 2001
-----------------------------     and Director (Principal Executive
Gilles Laverdiere                 Officer)

/S/ Kerry D. Smith                Chief Financial Officer (Principal        October 2, 2001
-----------------------------     Financial Officer)
Kerry D. Smith

                                  Chairman of the Board                     October 2, 2001
-----------------------------
Kuang Yihuai

/S/ Ronald J. Tolman              Vice President, Operations and            October 2, 2001
-----------------------------     Director
Ronald J. Tolman

                                  Director                                  October 2, 2001
-----------------------------
Kuang Zhong

/S/ Pierre O'Dowd                 Director                                  October 2, 2001
-----------------------------

Pierre O'Dowd

</TABLE>



<PAGE>

                         EXHIBITS FILED WITH THIS REPORT

EXHIBIT
NUMBER            DESCRIPTION
------            -----------

    4.9           Joint Escrow Instructions dated March 8, 2000 by and between
                  the Registrant and CALP II, LLC and Carbon Mesa Partners, LLC

    4.10          First Amendment to 8% Secured Convertible Debenture due
                  February 28, 2002 dated as of September 24, 2001 by and
                  between the Registrant and Thomson Kernaghan & Co., Limited

    4.11          First Amendment to Registration Rights Agreement dated as of
                  September 24, 2001 by and between the Registrant and Thomson
                  Kernaghan & Co., Limited

    4.12          Addendum to First Amendment to 8% Secured Convertible
                  Debenture due February 28, 2002 dated as of September 24, 2001
                  by and between the Registrant and Thomson Kernaghan & Co.,
                  Limited

   10.9           Joint Escrow Instructions dated March 8, 2000 by and between
                  the Registrant and CALP II, LLC and Carbon Mesa Partners, LLC
                  (filed as Exhibit 4.9 to this filing)

   10.10          First Amendment to 8% Secured Convertible Debenture due
                  February 28, 2002 dated as of September 24, 2001 by and
                  between the Registrant and Thomson Kernaghan & Co., Limited
                  (filed as Exhibit 4.10 to this filing)

   10.11          First Amendment to Registration Rights Agreement dated as of
                  September 24, 2001 by and between the Registrant and Thomson
                  Kernaghan & Co., Limited (filed as Exhibit 4.11 to this
                  filing)

   10.12          Addendum to First Amendment to 8% Secured Convertible
                  Debenture due February 28, 2002 dated as of September 24, 2001
                  by and between the Registrant and Thomson Kernaghan & Co.,
                  Limited (filed as Exhibit 4.12 to this filing)

   10.13          Letter Agreement dated September 9, 1999 between the
                  Registrant and Gilles Laverdiere