United States Securities and Exchange Commission
                             Washington, D.C. 20549

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, 1998.


[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

            For the transition period from ___________ to __________

                        Commission file number: 33-23489

                           BIOGAN INTERNATIONAL, INC.
                 (Exact name of business issuer in its charter)

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

  7213 Potomac Drive, Boise,  Idaho                             83704
(Address of principal executive offices)                      (Zip Code)

Issuer's telephone number:  (208)-376-8500             Fax:     (208) 376-4663

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

  Title of each class              Name of each exchange on which registered

________________________               _________________________________

________________________               _________________________________

Securities registered under 12(g) of the Exchange Act:

                          Common Stock $.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) Yes __, No
_X_, and (2) has been subject to such filing requirements for the past 90 days.
Yes _X_ No __

     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]

<PAGE>


State issuer's revenues for its most recent fiscal year.     -0-

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity, as of a
specified date within the past 60 days. As of March 1, 1999, $4,843,210.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes[ ] No[ ].

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the Issuers's classes of
common equity, as of the latest practicable date. December 31, 1998: 85,122,884
shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the documents is incorporated; (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).

Transitional Small Business Disclosure Format.  Yes ___, No  _X_.



                                                                               2
<PAGE>



                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

History and Business Development.

     Biogan International, Inc. (formerly Biogan Medical International, Inc.) is
a Delaware corporation with principal and executive offices at 7213 Potomac
Drive, Boise, Idaho 83704, phone (208) 376-8500, FAX (208) 376-4663. Biogan is
currently in the business of developing a new concept design in electrical
motors called "IntorCorp Motor" which Registrant has previously referred to as
the "Smart-Power Motor", and which management presently intends to develop and
market for commercial purposes.

     Biogan initiated its pursuit of a new concept in electrical motors in 1995
when it entered into a joint venture with Magnetronics, Inc. for the development
of an electrical magnetic motor referred to as the "Magna Motor" under patents
available to Magnetronics, Inc. During calendar year 1996 and after consultation
with Technical Development Consultants, Inc. an independent firm of consulting
electrical engineers and principally Mr. Scott Anderson, management of Biogan
determined that a different technology was required to accomplish the
development of the new concept in electrical motors. In the 1st quarter of 1997
management of Biogan made the decision to table further activity with
Magnetronics and to continue with its consulting agreement with Technical
Development Consultants, Inc. and Mr. Scott Anderson, to develop the "IntorCorp
Motor".

     During calendar year 1997, and as part of the research and development
process, the respective consultants who had, or were expected to perform,
consulting services on the IntorCorp Motor, including Mr. Scott Anderson, was
assembled and formed a company called Collective Technologies, L.L.C. Collective
Technologies acquired from Technical Development Consultants, Inc. and Mr. Scott
Anderson as well as the other individual shareholders of Collective Technologies
any rights to the intellectual technology with respect to the "IntorCorp Motor".
During the calendar year 1997 Biogan and Collective Technologies completed and
demonstrated the development of the proof of concept and feasibility prototype
of a 5 HP "IntorCorp Motor" with a modular design, 72 volt DC motor and
controller system which meets the National Electrical Manufacturers Association
(NEMA) configuration for 5HP motors.

Joint Venture Development: IntorCorp, Inc.

     By the end of 1997 Biogan and Collective Technologies negotiated a joint
venture Preincorporation Agreement which became effective February 25, 1998,
(See Exhibit "1" of Item 13 of 1997 10KSB) in which Biogan and Collective
Technologies each agreed

     (i)  to transfer to "IntorCorp, Inc." (a new Idaho corporation) their
          respective rights to all of the intellectual technology of the
          "IntorCorp Motor", each in exchange for a 50% ownership interest, and

     (ii) that a consulting agreement will be entered into with Collective
          Technologies, Inc. providing for compensation compatible with industry
          standards in the locality, for the continued development and testing
          of the



                                                                               3
<PAGE>



          "IntorCorp Motor".

     The Business Plan incorporated in the Preincorporation Agreement
acknowledges that

     (i)  the 5HP DC Feasibility Prototype has been developed and tested, and

     (ii) management is currently considering the options of developing (a) a
          large power (40HP) motor or (b) a dual development of a 5/10HP motor.

     Under either of the options the cost to develop support functions, conduct
the laboratory prototype phase development and testing, complete production
prototype phase development, and field test the motors will take approximately
two years and will cost approximately $6,000,000 (See Item 6.B. pages 9&10.).
Management is currently of the opinion that the risks are lower and the market
potential higher with the 5/10 HP motors, however the final decision will be
made at such time as financing is located and committed.

     Pursuant to the Preincorporation Agreement IntorCorp Inc. was incorporated
in the state of Idaho on March 11, 1998, and named as the initial directors
Scott DeHart, Wayne Stewart, George Wadsworth, CPA, and John R. Hansen, Jr.,
attorney. See Section 9.6 Management and Key Personnel of IntorCorp, Inc. page
12, for resumes of the Directors and Key Consultants of of Collective
Technologies, L.L.C. who will be responsible for the continued development of
the "IntorCorp Motor".

     The capitalization of IntorCorp under the terms of the Preincorporation
Agreement is the issuance of 1,400,000 shares of common stock, par value $5.00
per share, to each of Biogan and Collective Technologies in exchange for all of
their respective rights to the intellectual technology of each in the IntorCorp
Motor at a total aggregate value, as determined by the Board of Directors, in
the amount of $14,000,000. Management anticipates issuing additional common
stock of IntorCorp Inc. to investing parties at such time as development funding
is committed.

IntorCorp Motor Characteristics.

     The present prototype of the motor is a 5 horsepower motor and integrated
electronic controller. The combination of the motor and controller enables
modular configurations from fractional horsepower to high multiple-horsepower
ratings by modifying the configuration for larger size motors. Some primary
advantages of the motor and controller are:

          o    It has no inrush current spike at startup.

          o    It can not burn out under locked rotor operation (stalled
               condition).

          o    It can (but does not have to) apply full torque to a locked rotor
               indefinitely without burning out (hold power against a load).

          o    It is highly efficient, and maintains very high efficiency over a
               broad RPM band.

          o    It requires less maintenance and is easily serviced when
               necessary.

     The basic motor architecture is that of a stacked axial-gap, permanent
magnet, brushless motor utilizing high field strength neodymium-iron boron
magnets. The high magnetic fields produced by this material allow smaller
architectures that are inherently low in hysteresis, eddy current, and winding
resistance losses. A specifically designed controller, which is incorporated



                                                                               4
<PAGE>

in the IntorCorp Motor design, is required for operation as well as to maximize
its performance advantages. Although the proof of concept prototype runs on 72
volt DC current, the 2nd stage prototype now being developed will run
automatically on either AC or DC current and over a relatively wide range of
voltages while maintaining highly efficient use of amperage draws.

     The controller is quite compact, and will be enclosed in the motor housing
in production models. The motor/controller package can be made smaller and
lighter than an equivalent rated horsepower induction motor. The IntorCorp Motor
is more flexible and efficient. The prototype's control is by an external
computer through a standard serial port for maximum operating flexibility. In
production, this will remain an option, or a control program will be loaded onto
the on-board microprocessor for simpler "plug in" operating regimes.

     The control program, whether on-board or remote, can control speed,
acceleration, torque, power, direction of rotation, and index to any position
(like a stepper motor). It can provide feedback to the controller (and user) on
torque provided, horsepower delivered to the load, speed, angular position, and
rotation direction.

     The controller forms the interface between the power source and the motor
windings. Its heart is the microprocessor chip that continuously monitors the
motor's speed, direction, applied voltage, back emf (voltage generated by the
motor), and user/control inputs. From all these inputs the controller calculates
and delivers to the windings a series of variable high-energy pulses. The result
is smooth, efficient, and highly responsive operation.

     The controller effectively conditions its power inputs, giving unique
advantages such as:

          o    The power current draw from an AC source can be shaped by the
               controller to be sinusoidal and precisely mapped onto the source
               waveform, achieving a unity power factor. This is not true of
               conventional low frequency silicon controlled rectifier starters.

          o    The motor can be used in relatively large horsepower applications
               on single-phase lines. Inrush current spike limits conventional
               motors to about 7.5 horsepower on single-phase lines.

          o    The motor can be operated over a wide range of torque and speed
               conditions in either direction and maintains high efficiency use
               of the power source.

     Many new and exciting applications for the IntorCorp high-efficiency,
flexible motor are being generated by the market forces driving the rapid growth
of conventional variable speed high efficiency motor/controller combinations.
Those forces are primarily utility companies and the government's continuing
drive for electric power and environmental conservation evidenced by the EPAct
legislation, the Motor Challenge Program, and other initiatives combined with
continually increasing efforts by industry to reduce life-cycle operating costs.

     Strong interests and support has been expressed by state and federal
government engineers, electric power utility engineers and officials, and other
industrial executives for various applications of the motor.




                                                                               5
<PAGE>

Intellectual Technology.

     Collective Technologies, Inc. has filed an application for Patent with
respect to the intellectual technology encompassed in the IntorCorp Motor. Under
the terms of the Preincorporation Agreement the rights to any patents on
Intellectual Technology are to be assigned to IntorCorp, Inc.

Competition.

     Management of Biogan is aware that competition in the electrical motor
industry is very competitive, with several very large companies who have
extensive financial resources. Management is not, however, at this time aware of
any company that has the same or similar product as the IntorCorp Motor.
Management is of the opinion that there are several established companies that
can provide other electrical motors for the same or similar functions that the
IntorCorp Motor is expected to perform. Management is of the opinion that the
IntorCorp Motor will, however, be substantially more efficient and able to
successfully compete at such time as production of the IntorCorp Motor is
commenced.

Employees.

     Effective the date of this report, Registrant has no full time employees.

ITEM 2. DESCRIPTION OF PROPERTY.

     Registrant operates from approximately 250 square feet of office space at
7213 Potomac Drive, Boise, Idaho 83704, under a month-to-month tenancy.
Negotiations are now in process with representatives of the landlord to renew
the lease on the same office space or in the same office complex. Registrant
owns the office furniture and equipment which consists of 5 executive desks with
swivel chairs and side pieces, 3 secretarial desks, AT&T 25 phone system with
hardware, 4 computers with computer software, and miscellaneous other office
equipment most of which is now in storage.

ITEM 3. LEGAL PROCEEDINGS.

     There is no pending litigation involving the Registrant, and to the best
knowledge of management there is no threatened litigation, the unfavorable
resolution of which would have a material adverse effect on the business, the
financial position or results of operations of Registrant.

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

     None.



                                                                               6
<PAGE>

                                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED

     STOCKHOLDER MATTERS.

     A. Market for Common Stock. Registrant's common stock is traded on the
NASDAQ over-the-counter Bulletin Board under the symbol "BIGM". The following
table shows the trading price data for the common stock as reported by NASDAQ as
the range of representative bid prices for the common stock for 1996 and 1997.
The Registrant's stock is quoted in the National Quotation Bureau's Pink Sheets
and listed on the NASD's Electronic Bulletin Board. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions.

                                                         Bid Price
                                                         ---------
                                                 High                 Low
                                                 ----                 ---
          1997
          ----
          First Quarter                         $0.3600             $0.2400
          Second Quarter                        $0.2500             $0.1150
          Third Quarter                         $0.1975             $0.1600
          Fourth Quarter                        $0.2500             $0.1200

          1998
          ----
          First Quarter                         $0.1400             $0.0880
          Second Quarter                        $0.0985             $0.0615
          Third Quarter                         $0.0625             $0.0365
          Fourth Quarter                        $0.0465             $0.0205

     B. Holders of Common Stock. The approximate number of holders of record of
the Registrant's was 788 as of December 31, 1998. A number of the Company's
record shareholders are broker/dealers who are holding record title for other
customers, and accordingly management believes the actual number of beneficial
holders of its common stock is greater than the number of shareholders of
record.

     C. Dividends. There have been no cash or other distributions or dividends.

     D. Unregistered Equity Securities Sold by Registrant During 1998.

     During 1998 Registrant issued common stock of Registrant without
registration under the Securities Act in private transactions (Section 4(2)
exemption) to the class of persons indicated, without discounts or commissions,
for cancellation of debt and services rendered. (The list does not include
securities issued under Regulation S).

<TABLE>
<CAPTION>
Date       Shares        Price          Value            Consideration              Purchasers
----       ------        -----          -----            -------------             -----------
<S>        <C>           <C>            <C>               <C>                       <C>
Feb 28     120,000       0.1372         $16.464           Services Rendered         Professionals
Jun 8      105,320       0.1910         $20,116           Services Rendered         Professionals
</TABLE>


                                                                               7
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND PLAN OF OPERATION.

A.   IntorCorp Motor Development - IntorCorp, Inc.

     To resolve issues related to rights to intellectual technology and to
assemble the desired personnel to expeditiously proceed with the further
development of the IntorCorp Motor, all material parties agreed to form
IntorCorp, Inc., a subsidiary owned 50% by Biogan and 50% by Collective
Technologies, L.L.C. (a consolidation of personnel and intellectual technology
material to the development of the IntorCorp Motor), (See "Joint Venture
Development: IntorCorp, Inc. page 3). IntorCorp Inc. intends to develop a
consulting agreement with an engineering group to continue the research and
development of the IntorCorp Motor to reach production design, and a consulting
agreement with Biogan to accomplish marketing research and other functions to
facilitate commercial marketing of the IntorCorp Motor.

     The Business Plan of IntorCorp is essentially as follows (time estimates
run from the date of available funds):

1.   Present Status:        A 5 HP Feasibility Prototype has been developed and
                            tested. Presently considering the development of a
                            high HP motor, or a dual development of 5/10 HP
                            motors.


2.   Support Functions:     Site preparation for high voltage and high power
                            working and testing environment, intellectual
                            technology filings and procurement, and general
                            workplace setup. (Estimated 6 months and $1,000,000
                            cost)

3.   Lab Prototype:         Scale the design to size of motor, include AC front
                            end option, extensive stress testing and reliability
                            development, meet all design objectives including
                            full environmental requirements. Deliver 5 test
                            units and 5 demonstration units. (Estimated
                            71/2months and $2,300,000 cost)

4.   Production Prototype:  Include design improvements from reliability tests,
                            finalize intellectual property filings, obtain
                            regulatory agency approvals, and first unit
                            application testing, prepare 5 units for internal
                            destructive testing and 10 demonstration units
                            including units for regulatory approval. (Estimated
                            5 months and $1,400,000 cost)

5.   Field Test:            Beta test site application testing, 20 demonstration
                            sales units, 10 Beta field application test units.
                            (Estimated 5 months and $1,300,000 cost)

6.   Production Start:      During the field testing period the manufacturing
                            facilities, line and tooling can be set up such that
                            when the field testing is completed the
                            manufacturing can begin . The cost of manufacturing
                            is variable depending on the approach developed, the
                            line capacity and the degree of development of the
                            tooling involved.

Management estimates that an investment of $6,000,000 will take the project
through the development phases and field test. Management of both Biogan,
Collective Technologies, Inc. and IntorCorp, Inc. are presently exploring and
seeking sources of financing for the IntorCorp



                                                                               8
<PAGE>

Motor project.

B.   Management's Discussion of Finances and Business Activities.

     The financial statements reflect that there were no revenues during the
year and a net income of $562,555. This results from the settlement of the Frank
Wright litigation previously reported with the recovery of 3,553,000 shares of
common stock valued at $0.25 per share. The recovered common stock was recorded
as a negative expense in the amount of $888,250.00 which reduced the restitution
expense from prior calendar years. Reference is made to Note 2. D of the
attached financial statements.

     On December 31, 1998, Biogan issued 240,564 shares of restricted common
stock to individual lenders to retire corporate loans in the amount of $64,856
at the rate of $0.2696 per share.

     Presently the primary focus of management will be the funding and marketing
of the IntorCorp Motor as a consultant to IntorCorp, Inc., described in the
preceding section. In addition, management is presently seeking other business
opportunities to acquire, develop and/or joint venture.

     In order to continue with the business of IntorCorp and/or Biogan, it will
be necessary to raise additional capital which Management intends to obtain
through private placements of common stock or other securities, with qualified
investors or other business reorganizations.

     Management does not now have any basis for projecting revenues from any
operations.

     Management does not now have any plans for the purchase or acquisition of
any plant or significant other equipment, or to make any significant change in
the number of employees currently employed by Registrant.

ITEM 7. FINANCIAL STATEMENTS.

     Included herewith are the audited Financial Statements of Registrant for
the year ended December 31, 1998, and from inception February 5, 1988 through
December 31, 1998.

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

     None.


                                                                               9
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

     The Management of Biogan is under the direct control of a board of
directors consisting of three directors who are elected at the annual meeting of
shareholders. Following the annual meeting of shareholders after the election of
the directors, the board of directors is to hold the organizational meeting at
which time the officers are appointed. In addition the Board of Directors has
established an Advisory Board, on a non-compensation basis (however, see Item
11.c. page s 14&15), to assist the Directors in directing business policy of the
Company.

     9.1  Directors and Officers.

     The current directors and executive officers of Biogan are as follows:

     Name                   Age   Position                  Date of Appointment
     ----                   ---   --------                  -------------------

     L. William Glazier     69    President, Director           May, 1994
     Ronald J. Tolman       47    Executive VP, Director        May, 1994
     Rulon L. Tolman        49    VP, Treasurer, Director       *
     Robert C. Montgomery   47    Secretary                     **

     *    Mr. Rulon L. Tolman was appointed Sec.-Treas, and Director in
          September of 1994. He was appointed Vice President in February 1997,
          and remained as secretary-Treasurer until September, 1997, when he was
          released as Secretary.

     **   Mr. Montgomery was appointed corporate Secretary in September, 1997.

     9.2  Business Experience.

L. William Glazier, was appointed Director and President in May of 1994, and has
since continued in the offices. Mr. Glazier retired from Chevron Oil Corporation
in 1989 as an executive having supervised five offices and a $600,000,000
operating budget. Since his appointment as Director and President, he has been
primarily responsible for assisting in the restructure of Registrant and
development of new business.

Ronald J. Tolman, was appointed Director and acting Vice President in May of
1994, and has been Executive Vice President in charge of operations since
December of 1994. Mr. Tolman was National Training & Marketing Director for
Weather Master Architectural Coatings from 1988 to 1994. Previously he served in
business related government positions including Administrator of Operations for
the State of Idaho Department of Insurance and Business Development Specialist
for the Small Business Administration.

Rulon L. Tolman, was appointed Director September 1994, and is currently a Vice
President of the Company. Mr. Tolman has been with Mutual of New York since 1978
and has been Account Executive, Field Underwriter and Sales Manager. Previously
Mr. Tolman was a Production Supervisor with Boise Cascade Container Division
managing 80 employees.

Robert C. Montgomery, 6940 Ashland Drive, Boise, Id. 83709, is presently
Secretary-Treasurer and house legal counsel for the Company. Mr. Montgomery
received his J.D. degree from the University of Idaho in 1974. Mr. Montgomery is
a member of the bar in Idaho, Oregon and Washington. He was a former adjunct
professor of Business Laws and Ethics at Boise State University, and has
practiced law in Idaho since 1974.



                                                                              10
<PAGE>

     9.3  Advisory Board.

     The Advisory Board consists of 5 members who meet as requested by the
directors, generally twice per month. The Advisory Board Members are:

     Robert C. Montgomery, see resume above.

     Keith Cline, 1252 E. Victory Rd., Meridian, Id. 83642, investor and advisor
to the company. Mr. Cline is presently retired, but was a graduate in
engineering from U.C. Berkely in 1951, and was the owner-operator of Universal
Wood Products, Inc. and in the construction business in Meridian.

     John R. Hansen, Jr., 12035 Ginger Creek Drive, Boise, Id. 83713. Mr. Hansen
received his J.D.  degree from UCLA in 1956,  and has practiced law from 1957 to
1968 in  California  and  from  1968  to the  present  in  Idaho,  primarily  in
securities and business practice. Mr. Hansen is presently outside counsel to the
Company.

     Jacque L. Tolman, Executive Secretary for the company. Mrs. Tolman received
her accounting degree from Boise State University in 1975. She has acted as the
administrative assistant for the Company for the past three years. Her
experience includes 4 years as the Medical Staff Coordinator for St. Luke's
Regional Hospital, and one year with the St. Luke's Mountain States Tumor
Institute.

     George W. Wadsworth, 214 S. Cole Road, Boise, Id. 83709, has been a partner
in the accounting firm Wadsworth & Smith, Chartered for the last 23 years. He is
also the CPA for the Company.

     9.4  Family Relationships.

     Mr. Ron Tolman and Mr. Rulon Tolman are cousins, and Mr. Ron Tolman and
Jacque Tolman are husband and wife.

     9.5  Compliance with Section 16(a) of the Exchange Act:

     Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Registrant's officers and directors, and persons
who own more than 10% of a registered class of the Registrant's equity
securities, to file initial reports of ownership and reports of changes in
ownership (Forms 3,4 an 5) of common stock of the Registrant with the Securities
and Exchange Commission ("SEC"). Officers and directors and greater than 10%
beneficial holders are required by SEC regulation to furnish the Registrant with
copies of all such forms that they file.

     To the Registrant's knowledge, based solely on the Registrant's failure to
receive any copies of such reports, the Registrant believes that during the
fiscal year ended December 31, 1997, none of the Section 16(a) filing
requirements applicable of its officers, directors and greater and 10%
beneficial owners was complied with.



                                                                              11
<PAGE>

     9.6  Resumes of Management and Key Consultants of IntorCorp Inc.

     Directors of IntorCorp Inc. are Scott DeHart, Wayne Stewart, George
Wadsworth and John R. Hansen, Jr. See Advisory Board for resumes of George
Wadsworth and John R. Hansen, Jr.

     Scott DeHart is 51 years of age, and received Bachelors and Masters Degrees
from Brigham Young University in Electrical Engineering. From 1975 to 1997 Mr.
DeHart was employed with Hewlett Packard and included 4 years experience as
Section Manager of the Greeley Division in Greeley, Colorado; 4 years as Section
Manager of Disk Storage Systems Division in Boise, Idaho; and 2 years as Project
Manager, Firmware Development and Firmware Development Manager. The assignments
included planning, development and managing conceptualized projects to market
production.

     Wayne Stewart is 53 years of age, is a graduate of Brigham Young University
and attended graduate school at Purdue. From 1983 to 1995 he was the
Manufacturing Manager for the disk memory division of Hewlett Packard, located
in Boise, Idaho. From 1995 to 1997 he was VP over world manufacturing for
Whirlpool, and in 1997 he accepted the position of VP ov operations at Iomega.

ITEM 10. EXECUTIVE COMPENSATION.

     The 1998 salary and stock remuneration accrued by Biogan to the officers
and directors and other benefits received by each of them are set forth below:

                                        Annual               Restricted Stock
Name & Position              Year       Compensation         Shares  Date
--------------------------------------------------------------------------------
L. William Glazier, Pres.    1998         -0-                 -0-

Ronald J. Tolman, V-Pres     1998       $62,100               -0-

Rulon L. Tolman,             1998       $34,800               -0-

Jacque L. Tolman             1998       $10,800               -0-

     Salaries were discontinued after the 3rd quarter of 1998.

     Both in 1997 and in 1998 each of the management members are reimbursed for
their out of pocket expenses relating to company business.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

     The following table reflects the ownership by the persons indicated as of
December 31, 1998.


                                                                              12
<PAGE>

a:   Beneficial Owners, known to Registrant, owning more than 5% of voting
     securities:

                                        Common Stock              Percentage of
Name of Owner                           Beneficially Owned          Ownership
--------------------------------------------------------------------------------

L. William Glazier                       10,500,000                    12.3%
805 W. Cross Street
Woodland Hills, CA 95695

Ronald J. Tolman                          7,558,400                    8.88%
2326 Bruins Avenue
Boise, Idaho 83704

Rulon L. Tolman                           9,808,333                   11.22%
7272 Glenridge View
Boise, Idaho 83709

b.   Security Ownership of Management:


                                        Common Stock              Percentage of
Name of Owner                           Beneficially Owned          Ownership
--------------------------------------------------------------------------------
L. William Glazier                       10,500,000                    12.3%
805 W. Cross Street
Woodland Hills, CA 95695

Ronald J. Tolman                          7,558,400                    8.88%
2326 Bruins Avenue
Boise, Idaho 83704

Rulon L. Tolman                           9,808,333                    11.5%
7272 Glenridge View
Boise, Idaho 83709

Robert C. Montgomery                      2,338,000                    2.75%
6940 Ashland
Boise, Idaho 83709

Jacque L. Tolman                          3,664,867                    4.31%
2326 Bruins Avenue
Boise, Idaho 83704

c.   Security Ownership of Advisory Board Members

Keith Cline                               1,130,000                    1.33%
1252 E. Victory Rd.
Meridian, Idaho 83642

                                                                              13
<PAGE>


John R. Hansen, Jr.                       2,500.000                    2.94%
1419 W. Washington
Boise, Idaho 83702

Robert C. Montgomery                      2,338,000*                   2.75%
6940 Ashland Drive
Boise, Idaho 83709

Jacque L. Tolman                          3,664,867*                   4.31%
2326 Bruins Avenue
Boise, Idaho 83704

George W. Wadsworth                       2,766,676                    3.25%
214 S. Cole Road
Boise, Idaho 83709

*    Also listed under 11 (b) above.

     Robert C. Montgomery and George W. Wadsworth are issued stock from time to
time for services rendered to the Company.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

None.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         None





                                                                              14
<PAGE>

SIGNATURES

     In accordance with requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                         BIOGAN INTERNATIONAL, INC.
                         (formerly known as Biogan Medical International, Inc.)
                                               (Registrant)

                         By /S/ RONALD J. TOLMAN V.P.
                            --------------------------
                               (Signature and Title)
                            /S/ RULON L. TOLMAN V.P.
                            --------------------------
                               (Printed name and Title)

                         Date:  8-10-99

     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.

     By   /s/ Ronald J. Tolman       Executive VP & Director    August 10, 1999.
          ------------------------
              Ronald J. Tolman

     By   /s/ Rulon L. Tolman        VP, Treasurer & Director   August 10, 1999
          ------------------------
              Rulon L. Tolman



                                                                              15
<PAGE>





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

                              FINANCIAL STATEMENTS
                                DECEMBER 31, 1998



<PAGE>



                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                                DECEMBER 31, 1998


CONTENTS

Report of Independent Auditor                                                  1

Balance Sheet                                                                  2

Statement of Operations                                                        3

Statement of Stockholders' Equity (Deficiency)                                 4

Statement of Cash Flows                                                        5

Notes to Financial Statements                                               6-12



<PAGE>

                                  [LETTERHEAD]
                                 GEORGE BRENNER
                          CERTIFIED PUBLIC ACCOUNTANT

                          REPORT OF INDEPENDENT AUDITOR

Board of Directors
Biogan International, Inc. formerly Biogan Medical International, Inc.
Boise, Idaho

I have audited the accompanying balance sheet of Biogan International, Inc. (a
development stage company) as of December 31, 1998 and related statements of
operations, stockholders deficiency and cash flows for the years ended December
31, 1997 and 1998 and the period from February 5, 1988 (date of inception)
through December 31, 1998. These financial statements are the responsibility of
the Companys 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, 1998 and the results of its operations, stockholders deficiency
and cash flows for the years ended December 31, 1997, 1998 and the period
February 5, 1988 through December 31, 1998 in conformity with the 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 Companys recurring losses from development stage
activities raises 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.



                                         /s/ George Brenner

                                         George Brenner, C.P.A.
Beverly Hills, California
May 13, 1999

<PAGE>

                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                                  BALANCE SHEET
                             As of DECEMBER 31, 1998


ASSETS
CASH                                                                $     1,039
ACCOUNTS RECEIVABLE                                                         180
PAYROLL ADVANCE                                                             400
                                                                    -----------
TOTAL CURRENT ASSETS                                                $     1,619

FURNITURE/EQUIPMENT                                                      34,716
ACCUMULATED DEPRECIATION                                                (13,611)
                                                                    -----------

TOTAL FIXED ASSETS                                                  $    21,105

INVESTMENT IN SUBSIDIARIES                                                   --


TOTAL ASSETS                                                        $    22,724
                                                                    ===========


LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)
ACCOUNTS PAYABLE                                                    $    49,770
NOTES PAYABLE - STOCKHOLDERS                                             80,000
NOTES PAYABLE - OTHER                                                    35,000
ACCRUED SALARIES - OFFICERS                                             171,200
ACCRUED EXPENSES (ACCRUED INTEREST DUE STOCKHOLDERS $18,316)             19,572
                                                                    -----------

TOTAL CURRENT LIABILITIES                                           $   355,542

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, 85,122,884 ISSUED                                 85,123
ADDITIONAL PAID IN CAPITAL                                            4,367,807
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE                     (4,785,748)
                                                                    -----------

TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)                             $  (332,818)
                                                                    -----------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)               $    22,724
                                                                    ===========



                 SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REPORT


                                        2
<PAGE>

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


<TABLE>
<CAPTION>
                                                                                FROM INCEPTION
                                        FOR THE YEAR        FOR THE YEAR       FEBRUARY 5, 1988
                                           ENDING              ENDING               THROUGH
                                      DECEMBER 31, 1997   DECEMBER 31, 1998    DECEMBER 31, 1998
<S>                                      <C>                   <C>              <C>
SALES
REVENUE - FEES                           $       225                --          $     7,150
RENTAL INCOME                                     --               360                1,110
                                         -----------       -----------          -----------

TOTAL SALES                                      225               360                8,260

EXPENSES
WAGES                                    $   197,070           140,351          $   503,097
STOCK SUBSCRIPTION LOSS                           --                --              101,006
DEPRECIATION EXPENSE                           5,570             5,923               13,761
INTEREST EXPENSE                              16,798            15,286               38,444
INCENTIVE BONUS                               40,803                --              149,364
LEGAL & ACCOUNTING FEES                       80,475            56,071              275,270
RENT                                          12,823            11,620               34,676
START UP COSTS                                    --                --              127,441
RESEARCH AND DEVELOPMENT                     128,865               602              343,703
SUBSIDIARIES LOSSES                           77,461              (141)             158,380
OTHER OPERATING EXPENSES                      98,584            74,472              372,947
                                         -----------       -----------          -----------

TOTAL EXPENSES                           $   658,449           304,184          $ 2,118,089
                                         -----------       -----------          -----------

NET OPERATING INCOME (LOSS)                 (658,224)         (303,824)          (2,109,829)

STOCK RESTITUTION EXPENSE (NOTE 1D)          (18,900)          888,250           (2,676,409)
INTEREST INCOME                                  334               379                5,448
OTHER INCOME                                      --               228                  238
MISCELLANEOUS EXPENSE                         (1,926)           (2,478)              (5,196)
                                         -----------       -----------          -----------

TOTAL OTHER                              $   (20,492)          886,379          $(2,675,919)
                                         -----------       -----------          -----------

NET INCOME (LOSS)                        $  (678,716)          582,555          $(4,785,748)
                                         ===========       ===========          ===========


PRIMARY INCOME (LOSS) PER SHARE          $   (0.0079)      $    0.0069          $   (0.1242)
                                         ===========       ===========          ===========
</TABLE>



                 SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REPORT


                                        3

<PAGE>


                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                 STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                FOR THE PERIOD FROM INCEPTION (FEBRUARY 5, 1988)
                            THROUGH DECEMBER 31, 1998

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

To management:
  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
  October 4, 1995                    61,980          62            0.1000          6,136                --             6,198
  December 8, 1995                   23,580          24            0.2500          5,871                --             5,895

For professional services:
  September 14, 1995                120,000         120            0.0100          1,080                --             1,200
  October 4, 1995                   100,000         100            0.0100            900                --             1,000
  December 8, 1995                  100,000         100            0.0100            900                --             1,000
  February 23, 1996                 115,222         115            0.2149         24,643                --            24,759
  July 29, 1996                     493,034         493            0.2149        105,448                --           105,941
  December 2, 1996                  417,893         418            0.3691        153,835                --           154,253
  January 31, 1997                  250,774         251            0.2460         61,436                --            61,687
  February 28, 1997                  56,621          57            0.2600         14,665                --            14,721
  March 15, 1997                     76,173          76            0.2600         19,729                --            19,805
  March 29, 1997                     15,400          15            0.2600          3,989                --             4,004
  June 2, 1997                      225,597         226            0.1492         33,441                --            33,667
  August 12, 1997                   224,269         224            0.1465         32,626                --            32,851
  October 31, 1997                  304,546         305            0.1892         57,322                --            57,626
  December 31, 1997                (352,634)       (353)           0.2070        (72,650)               --           (73,003)
  February 28, 1998                 120,000         120            0.1872         22,340                --            22,460
  June 30, 1998                     342,820         343            0.0191          6,213                --             6,556
  December 31, 1998                  25,545          26            0.0010              0                --                26

For loan payments:
  September 14, 1995                 61,000          61            0.1000          6,039                --             6,100
  November 1, 1995                   50,000          50            0.1000          4,950                --             5,000
  December 8, 1995                   10,000          10            0.1000            990                --             1,000
  August 12, 1997                    41,600          42            0.2000          8,278                --             8,320
  August 31, 1997                    66,666          67            0.1500          9,933                --            10,000
  October 1, 1997                    57,692          58            0.2600         14,942                --            15,000
  December 30, 1997                 240,000         240            0.2504         59,856                --            60,096
  December 31, 1998                 240,564         241            0.2696         64,625                --            64,865

For restitution:
  September 14, 1995              2,668,967       2,669            0.2500        664,573                --           667,242
  October 4, 1995                 2,180,600       2,181            0.2500        542,969                --           545,150
  November 1, 1995                  372,270         372            0.2500         92,695                --            93,068
  December 8, 1995                7,353,248       7,353            0.2500      1,830,959                --         1,838,312
  February 23, 1996                 744,444         744            0.2500        185,367                --           186,111
  May 3, 1996                       125,929         126            0.2500         31,356                --            31,482
  June 21, 1996                     350,863         351            0.2500         87,365                --            87,716
  July 29, 1996                     310,567         311            0.2500         77,331                --            77,642
  September 11, 1996                  2,667           3            0.2500            664                --               667
  December 2, 1996                   73,480          73            0.2500         18,297                --            18,370
  January 31, 1997                    4,000           4            0.2500            996                --             1,000
  February 28, 1997                  38,000          38            0.2500          9,462                --             9,500
  June 2, 1997                       18,000          18            0.2500          4,482                --             4,500
  August 12, 1997                    11,200          11            0.2500          2,789                --             2,800
  October 31, 1997                    4,400           4            0.2500          1,096                --             1,100
  November 20, 1998              (3,553,000)     (3,553)           0.2500       (884,697)               --          (888,250)

For dispute settlement:
  October 4, 1995                    25,000          25            0.1000          2,475                --             2,500
  November 1, 1995                   31,030          31            0.1000          3,072                --             3,103
  December 8, 1995                   50,000          50            0.1000          4,950                --             5,000

For private offering:
  September 14, 1995                 75,000          75            0.1000          7,425                --             7,500
  November 1, 1995                    5,000           5            0.2500          1,245                --             1,250
  December 8, 1995                  256,000         256            0.2500         63,744                --            64,000
  February 23, 1996                 672,923         673            0.2208        147,875                --           148,548
  May 3, 1996                       353,667         354            0.2208         77,718                --            78,072
  June 21, 1996                     606,900         607            0.2208        133,366                --           133,973
  July 29, 1996                     252,000         252            0.2201         55,206                --            55,458
  December 31, 1996                  54,350          54            0.4600         24,946                --            25,000
  March 29, 1997                    154,000         154            0.2500         38,346                --            38,500
  December 4, 1997                  640,000         640            0.2500        159,360                --           160,000
  December 31, 1997                 708,750         709            0.1422        100,041                --           100,750
  February 18, 1998                  30,000          30            0.1300          3,870                --             3,900
  June 8, 1998                       62,500          63            0.0800          4,938                --             5,000

NET LOSS                                 --          --                               --        (4,785,748)       (4,785,748)
                                 ---------- -----------                      -----------       -----------       -----------

                                 85,122,884      85,123                        4,367,807        (4,785,748)         (332,818)
                                 ========== ===========                      ===========       ===========       ===========

</TABLE>

                 SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REPORT.

                                        4

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


<TABLE>
<CAPTION>
                                                                                                                 FROM INCEPTION
                                                                     FOR THE YEAR           FOR THE YEAR        FEBRUARY 5, 1988
                                                                        ENDING                 ENDING                THROUGH
                                                                   DECEMBER 31, 1997      DECEMBER 31, 1998     DECEMBER 31, 1998
<S>                                                                  <C>                    <C>                    <C>
CASH FLOWS FROM OPERATIONS
NET INCOME (LOSS)                                                    $  (678,716)           $   582,555            $(4,785,748)

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                               151,358                 29,041                468,552
RESTITUTION                                                               18,900               (888,250)             2,676,409
INTEREST EXPENSE                                                          12,096                  4,724                 28,920
DISPUTE SETTLEMENTS                                                           --                     --                 10,603

OTHER ADJUSTMENTS:
SUBSIDIARIES LOSSES                                                       77,460                   (141)               158,380
STOCK SUBSCRIPTION LOSS                                                       --                     --                101,006
FIRST DEVELOPMENT STAGE LOSS                                                  --                     --                142,733
DEPRECIATION AND AMORTIZATION                                              5,570                  5,923                 13,761
                                                                     -----------            -----------            -----------
TOTAL ADJUSTMENTS                                                        265,384               (848,703)             3,661,658

ADVANCES                                                                      --                   (400)                  (400)
ACCOUNTS RECEIVABLE                                                           --                   (180)                  (180)
ACCOUNTS PAYABLE                                                           1,239                 23,998                 49,770
ACCRUED LIABILITIES                                                       89,242                 82,502                190,772
                                                                     -----------            -----------            -----------

NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES                                              $  (322,851)           $  (160,228)           $  (884,128)
                                                                     -----------            -----------            -----------

CASH FLOWS FROM INVESTING ACTIVITIES
PURCHASE FURNITURE/EQUIPMENT                                              (2,396)                    --                (35,113)
DISPOSAL FURNITURE/EQUIPMENT                                                  --                    475                    475
INVESTMENT IN BIOMAGNETRONICS                                               (195)                   141               (103,937)
INVESTMENT IN BIOLINK                                                     (2,588)                    --                (54,443)
                                                                     -----------            -----------            -----------

NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES                                              $    (5,179)           $       616            $  (193,018)
                                                                     -----------            -----------            -----------

CASH FLOWS FROM FINANCING ACTIVITIES
NOTE PAYABLE-STOCKHOLDER                                                      --                     --                 80,000
NOTES PAYABLE - OTHER RECEIVED                                            75,000                 95,141                220,141
PAYMENT OF NOTES PAYABLE - OTHER                                              --                (43,680)               (43,680)
ISSUANCE OF COMMON STOCK                                                 299,250                  8,901                821,952
OTHER                                                                         --                   (228)                  (228)
                                                                     -----------            -----------            -----------

NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES                                              $   374,250            $    60,134            $ 1,078,185
                                                                     -----------            -----------            -----------


NET INCREASE (DECREASE) IN CASH                                      $    46,220            $   (99,478)           $     1,039


BEGINNING CASH BALANCE                                               $    54,297            $   100,517            $        --
                                                                     -----------            -----------            -----------

CASH ENDING BALANCE                                                  $   100,517            $     1,039            $     1,039
                                                                     ===========            ===========            ===========

SUPPLEMENTAL INFORMATION

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

NONMONETARY TRANSACTIONS
STOCK ISSUED FOR:
DEBT REDUCTION                                                            81,320                 60,141                141,461
MANAGEMENT                                                                    --                 61,294
CONTRACT LABOR, INCENTIVE BONUSES, PROFESSIONAL
    SERVICES, AND RESEARCH AND DEVELOPMENT                               151,358                 29,041                468,552
RESTITUTION                                                               18,900               (888,250)             2,676,409
INTEREST EXPENSE                                                          12,096                  4,724                 28,920
DISPUTE SETTLEMENTS                                                           --                     --                 10,603
</TABLE>


                 SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REPORT

                                        5
<PAGE>


                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


1.   BUSINESS AND ABILITY TO CONTINUE IN EXISTENCE

     Biogan International, Inc. (Biogan), is a development-stage company. See
     Note 5 "Stockholders' Equity" for a history of Biogan's securities issuance
     and accumulated deficit. Management presently intends to focus aggressively
     on the continued further development and prototype testing of the
     Motor/Controller system as well as entering into strategic alliances for
     both manufacturing and marketing of the motor. Additional capital will be
     required to fund the growth and expansion and provide working capital for
     continued operations.

     Biogan and Collective Technologies, LLC (Collective) negotiated a joint
     venture Preincorporation Agreement effective February 25, 1998, in which
     Biogan and Collective Technologies each agreed:

          (i)  to transfer to "IntorCorp, Inc." (a new Idaho corporation ) their
               respective rights to all of the intellectual technology of the
               "IntorCorp Motor", each in exchange for 50% ownership interest,
               and

          (ii) that a consulting agreement will be entered into with Collective
               for the continued development and testing of the "IntorCorp
               Motor" compatible with industry standards in the locality.


     The Business Plan incorporated in the Preincorporation Agreement
     acknowledges that:

          (i)  the 5HP DC Feasibility Prototype has been developed and tested,
               and

          (ii) management is currently considering the options of developing (a)
               a large power (40HP) motor or (b) a duel development of a 5/10HP
               motor.

     Under either of the options the cost to develop support functions, conduct
     the laboratory prototype phase development and testing, complete production
     prototype phase development, and field test the motors will take
     approximately two years and will cost approximately $6,000,000. Management
     is currently of the opinion that the risks are lower and the market
     potential higher with 5/10 HP motors, however, the final decision will be
     made at such time as financing is located and committed. Research and
     development on the motor have ceased and will continue when funds are
     available. The company is continuing to search for funding for the
     development of the motor.


                             See Accountant's Report

                                       -6-
<PAGE>


                           BIOGAN INTERNATIONAL, INC.
                         (A DEVELOPMENT- STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS - Continued
                                DECEMBER 31, 1998


     Management presently does not have any plans for the purchase or
     acquisition of any significant plant or other equipment. It is anticipated
     that additional employees will be required by the Registrant as the
     acquired operations meet their expected growth. Since it is uncertain
     whether Biogan will be successful in these ventures and whether it can
     obtain sufficient capital to finance these ventures, it is uncertain
     whether the Company will be capable of continuing in existence.
     Management's plans to continue in existence are discussed in Note 6B.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.   PRESENTATION

     The accompanying financial statements have been prepared in accordance with
     the Statement of Financial Accounting Standards No. 7 "Accounting and
     Reporting by Development-stage Enterprises". A development stage enterprise
     is one in which planned principal operations have not commenced or if its
     operations have commenced there has been no significant revenue there from.
     Development-stage companies report cumulative costs from the enterprise's
     inception. Biogan has had two stages of development (Note 5G).

B.   INVESTMENT IN SUBSIDIARIES

     Biogan owns 50% of the voting stock of BioMagnetronics, Inc. and Biolink ,
     Inc. Biomagnetronics, Inc. and Biolink, Inc. were both development-stage
     enterprises and neither company had any operating activities during the
     current year of operations. The investments were accounted for by the
     equity method whereby the purchase of stock shares was recorded at cost and
     increased and decreased by 50% of any profits or losses respectively.
     Biogan invested $103,937 in Biomagnetronics, Inc. and $54,443 in Biolink,
     Inc. The carrying amount of the investments have been reduced to $0 for
     each company since both companies have had no operating activities and
     there are no plans for future operations. As of December 31, 1998, neither
     company has assets of any value.

     The Board of Directors of IntorCorp, Inc., a new Corporation, met on April
     30, 1998 and at that time approved the issuance of stock to Biogan and
     Collective in exchange for the transfer of their respective rights of their
     Intellectual Technology. Biogan owns 50% of the voting stock of the new
     Corporation. The other investor in the new corporation is Collective, an
     engineering group. The two groups formed this new corporation in order to
     continue further development of the motor. The new corporation is a
     development stage company. There has been no financial transactions in the
     new Corporation.



                             See Accountant's Report

                                       -7-
<PAGE>

                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS - Continued
                                DECEMBER 31, 1998


C.   STOCK VALUATION

     Stock issued for non cash consideration has been valued at market value or
     above from $.001 to $.25 per share (see Statement of Stockholders' Equity
     "To Management" Note 5D). Stock issued for restitution (Note 5F) is valued
     at $.25 per share.

D.   NET INCOME (LOSS) PER SHARE

     The net income (loss) per share has been calculated using the weighted
     average number of shares of common stock outstanding during the development
     stage period. The weighted average number of shares of common stock
     outstanding for the year ended December 31, 1997, December 31, 1998, and
     the period from February 5, 1988 (inception), through December 31, 1998,
     was 85,957,910; 84,638,704; and 38,524,172 respectively. Of the 85,122,884
     shares outstanding 59,089,340 are restricted and 26,033,544 shares are
     unrestricted.

     The net income for the year ended December 31, 1998 was generated from the
     recovery of 3,553,000 shares of common stock. The recovery of the shares
     was recognized as a reduction in shares for restitution and reduced the
     stock restitution expense in the current year statement of operations by
     $888,250. The Company is reporting this transaction as a change in an
     accounting estimate under Accounting Principles Board Opinion number 20
     "Accounting Changes" and the entire recovery has been recognized in the
     current year resulting the Company to showing a net income of $582,555. The
     Company would have a net loss for the current year of $305,695 or $.0036
     per share without the effect of the recovery of the stock restitution
     expense.

E.   INCOME TAXES At December 31, 1998, Biogan had net operating losses (NOL)
     carryforwards as follows:

            YEAR                      NOL                   YEAR EXPIRES
            1995                    2,819,521                   2010
            1996                    1,122,539                   2011
            1997                      736,051                   2012
                                   ----------
                                   $4,678,111

     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.

F.   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.

                             See Accountant's Report

                                       -8-
<PAGE>

                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS - Continued
                                DECEMBER 31, 1998


3.   NOTES PAYABLE AT DECEMBER 31, 1998, CONSISTED OF THE FOLLOWING:

<TABLE>
<CAPTION>
          Notes Payable - Other:
          <S>                                                                       <C>
          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
                      --- -----

          Notes payable to an individual with interest at 12% per
          annum from September 29, 1998.  Note is unsecured and is payable
          on  demand                                                                 15,000
                                                                                    -------
          Total Notes Payable - Other                                               $35,000
                                                                                    =======

          Notes Payable - Stockholder:

          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

          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
                                                                                    -------

          Total Notes Payable -  Stockholder                                        $80,000
                                                                                    =======
</TABLE>

4.   STOCK OPTIONS

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


                             See Accountant's Report

                                       -9-
<PAGE>


                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS - Continued
                                DECEMBER 31, 1998



5.   STOCKHOLDERS' EQUITY (Deficit)

     Following is a table of Biogan International Inc.'s stock and equity
transactions:

<TABLE>
<CAPTION>
                                    In (000)
                                    Common        .001/share       Paid-In        Accumulated         Total
                                    Shares          Amount         Capital          Deficit           Equity
--------------------------------------------------------------------------------------------------------------
<S>                                   <C>        <C>             <C>             <C>               <C>
A)  Ronney shares                      2,250     $     2,250     $    22,750     $                 $    25,000
B)  Biogan merger                     17,750          17,750          88,750                           106,500
C)  Stock Subscriptions                3,637           3,637         108,602                           112,239
D)  Expenses/Service Mgmt Grp         43,400          43,400          17,894                            61,294
E)  Shares for Cash                    7,380           7,380       1,464,107                         1,471,487
F)  Shares for Restitution            10,706          10,706       2,665,704                         2,676,410
G)  Deficit:
          2/5/88 - 6/26/94                                                          (142,733)         (142,733)
          6/27/94 - 6/30/98                                                       (4,643,015)       (4,643,015)
                                      -------------------------------------------------------------------------
            Totals                    85,123     $    85,123     $ 4,367,807     $(4,785,748)      $  (332,818)
                                      ======     ===========     ===========     ===========       ===========
</TABLE>

     A.   Issuance of 2,250,000 shares of Ronney, a Delaware Corporation.

     B.   Exchange of Biogan (an Oregon Corporation), 5,000,000 shares for
          17,750,000 shares of Ronney. Ronney and Biogan merged and changed its
          name to Biogan International, Inc.

     C.   Issuance of a stock subscription to Tower Enterprises International,
          Inc. (a European Corporation), a former 84% shareholder in Biogan
          International, Inc. 11,512,653 of the 15,150,000 original stock
          subscription has been canceled as of December 31, 1998.

     D.   Shares issued to new management for expenses/services incurred in
          re-starting Biogan International, Inc. were valued at or above the
          market value of the common stock listed on NASDAQ BB at $.001 to $.25
          per share at the time the expenses were incurred; the services were
          rendered; and the Board of Directors' resolution approving the
          issuance was made. See "Statement of Stockholders' Equity" and Note 7.

     E.   Cash shares and shares issued for services rendered and for loan
          payments by parties other than management. F. From 1990 through May
          1994 Biogan International, Inc. was under the control of prior
          management and affiliates. Effective December 31, 1996, the Company
          completed its review stock transactions and has issued 14,258,635
          shares of common stock as restitution to investors who substantiated
          their claims of purchasing stock from the Company but had not received
          stock certificates. In addition, the Company has obtained a court
          judgment canceling 15,150,000 shares of common stock issued in "C"
          above, and 4,117,653 shares issued to Tower Enterprises International,
          Inc. in "B" above. The company recovered 3,553,000 shares relating to
          the above court order on November 20, 1998. This transaction results
          in a net total of 10,705,635 shares for restitution being issued.

     G.   Biogan International has effectively had two development stages:

          (1)  From February 5, 1988, through June 27, 1994. During this period
               the company was dormant for approximately four years.

          (2)  The second development stage (June 27, 1994, through December 31,
               1998) is and continues under the new management group set forth
               in D above.


                             See accountant's Report

                                      -10-
<PAGE>


                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS - Continued
                                DECEMBER 31, 1998


6.   COMMITMENTS AND CONTINGENCIES

     A.   SHARES FOR RESTITUTION

          As set forth in Note 5F "Shareholders' Equity" Biogan was committed
          through December 31, 1997, to issue shares to replace shares sold by
          Tower International's US agent, Tower Holdings, Ltd.

     B.   OTHER

          In connection with the Company's plans to become operational,
          management will focus on the funding and marketing of the InterCorp
          Motor as a consultant to InterCorp, Inc. In addition, management is
          presently seeking other business opportunities to acquire, develop
          and/or joint venture. In order to continue with the business of
          InterCorp and/or Biogan, it will be necessary to raise additional
          capital which management intends to obtain through private placements
          of common stock or other securities, with qualified investors or other
          business organizations. It is uncertain whether the Company will be
          successful in raising the needed capital. However, as discussed in
          Note 1 the Company remains a development stage company.

7.   RELATED PARTY TRANSACTIONS

          Pursuant to a board of directors meeting held in July 1995, the
          Company issued common stock to the following related parties in
          exchange for expenses incurred on behalf of the Company and for
          services rendered: (The schedule below has been adjusted to reflect
          shares issued to the Advisory Board from each of the related parties
          listed below - see Note 12)

<TABLE>
<CAPTION>
Name              Date                          Numbered of         Market        Issue          Expense/
             Expense/Service                   shares issued        Price         Price          Service
                Rendered                                          per share     per share        Amount
<S>                                               <C>               <C>            <C>            <C>
Glazier Family Trust
--------------------
         during 1994                              10,079,178        $.001          $.001          $10,079
         during first quarter of 1995                245,000         .001           .003              735
         during second quarter of 1995               148,300         .010           .010            1,483
         during third quarter of 1995                 20,830         .100           .100            2,083
         during fourth quarter of 1995                 6,692         .125           .250            1,673
         ------------------------------------------------------------------------------------------------
                                                  10,500,000                                      $16,053

Ronald J. Tolman Family Trust
-----------------------------
         during 1994                               8,982,729        $.001          $.001           $8,983
         during first quarter of 1995                328,333         .001           .003              985
         during second quarter of 1995               154,300         .010           .010            1,543
         during third quarter of 1995                 21,150         .100           .100            2,115
         during fourth quarter of 1995                 6,888         .125           .250            1,722
         ------------------------------------------------------------------------------------------------
                                                   9,493,400                                      $15,348

Rulon L. Tolman
---------------
         during 1994                               9,386,667        $.001          $.001           $9,387
         during first quarter of 1995                333,333         .001           .003            1,000
         during second quarter of 1995               150,000         .010           .010            1,500
         during third quarter of 1995                 20,000         .100           .100            2,000
         during fourth quarter of 1995                10,000         .125           .250            2,500
         ------------------------------------------------------------------------------------------------
                                                   9,900,000                                      $16,387

</TABLE>


                             See Accountant's Report

                                      -11-
<PAGE>

                           BIOGAN INTERNATIONAL, INC.
                          (A DEVELOPMENT-STAGE COMPANY)
                    NOTES TO FINANCIAL STATEMENTS - Continued
                                DECEMBER 31, 1998


     Biogan sub-leased office space (month to month) from a company owned by
     Ronald J. Tolman until December 31, 1996. Total rental expense for the
     period from inception February 5, 1988, until December 31, 1998, amounted
     to $10,233. See Note 3 for details on notes payable due stockholders. Ron
     Tolman, Rulon Tolman and Jacque Tolman have accrued wages for the two year
     period ending December 31, 1998, of $96,600, $63,800 and $10,800
     respectively.

8.   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.

9.   LEASES

     The Company conducts its operations from facilities that are leased under a
     noncancelable operating lease that expired on May 31, 1999. The Company is
     presently on a month to month lease.

     Rental expense for the year ending December 31, 1998, amounted to $11,620.
     Rental expense for the period from inception February 5, 1988, through
     December 31, 1998, amounted to $34,676. See Note 7 for related party rental
     transactions.

10.  CORPORATE NAME CHANGE

     The Board of Directors consented to change the name of the corporation from
     Biogan Medical International, Inc. to Biogan International , Inc. This
     action was deemed necessary to avoid the confusion that has developed from
     the word "medical" in the name when the main emphasis of the company is to
     promote the development of the electro-magnetic motor. The name change was
     recorded by the state of Delaware on September 5, 1997.

11.  YEAR 2000 COMPLIANCE

     The Company will begin a Year 2000 compliance project in June 1999. The
     project will encompass upgrading the server and all proprietary software
     and non-proprietary software. The project will be completed by September
     1999.

     The Company is in the process of assessing Year 2000 issues not related to
     its internal systems, including issues with suppliers and consultants. Due
     to the general uncertainty of the Year 2000 readiness of suppliers and
     consultants, the Company is unable to determine at this time whether the
     consequences of Year 2000 failures will have a material impact on the
     Company's results of operations, liquidity or financial condition. The
     Company believes that interruptions of normal operations will not be
     affected.

     Total expenditures for the Year 2000 project are estimated to be $5,000 in
     fiscal year 1999. There were no Year 2000 related costs in the current
     fiscal year.

     The Company is currently formulating contingency plans in the event of a
     Year 2000 failure. The Company expects that a contingency plan will be in
     place by September 30, 1999.


                             See Accountant's Report

                                      -12-