##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 10-KSB

|    |  |                                                                                
|--- |  | -------------------------------------------------------------------------------
|[X] |  | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal Year ended October 31, 2003

|      |  |                                                                                    
|----- |  | -----------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1943.

For the Transition period from  to

Commission file number 33-24566-A

BIO-LOK INTERNATIONAL INC.




(Name of small business issuer in its charter)


|                                |  |                                     
|------------------------------- |  | ------------------------------------
|DELAWARE                        |  | 65-0317138                          
|                               
|(State or other jurisdiction of |  | (I.R.S. Employer Identification No.)
|incorporation or organization)  |  |                                     

|                                                |  |           
|----------------------------------------------- |  | ----------
|312 S. Military Trail, Deerfield Beach, Florida |  | 33442     
|                                               
|(Address of principal executive offices)        |  | (Zip Code)

Issuers telephone number, including area code: (954) 698-9998

Securities registered pursuant to Section 12 (b) of the Exchange Act: None

Securities registered pursuant to Section 12 (g) of the Exchange Act: None


Check whether the issuer (1) has 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. [X]
YES [   ] NO

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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]

State Issuers revenues for its most recent fiscal year: $4,288,013

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 price of such common equity, as
of a specific date within the past 60 days: October 31, 2003, $751,398.

(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 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)

As of October 31, 2003, the Registrant had 7,153,701 Common Stock shares
outstanding, at a par value $.01 per share.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format (Check one): [   ] Yes [X]
No





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TABLE OF CONTENTS



|                                                  |                                                                                                                         |                                   |  |  |  |  |  | 
|------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | --------------------------------- |  |  |  |  |  | 
|PART I                                           
|                                                  | ITEM 1. DESCRIPTION OF BUSINESS                                                                                        
|                                                  | ITEM 2. DESCRIPTION OF PROPERTY                                                                                        
|                                                  | ITEM 3. LEGAL PROCEEDINGS                                                                                              
|                                                  | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                            
|PART II                                          
|                                                  | ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                       
|                                                  | ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                                      
|                                                  | ITEM 7. FINANCIAL STATEMENTS                                                                                           
|                                                  | ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                           
|PART III                                         
|                                                  | ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
|                                                  | ITEM 10. EXECUTIVE COMPENSATION                                                                                        
|                                                  | ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS               
|                                                  | ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                
|                                                  | ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K                                                                              
|                                                  | ITEM 14. CONTROLS AND PROCEDURES                                                                                       
|SIGNATURES                                       
|                                                  |                                                                                                                         | CONSOLIDATED FINANCIAL STATEMENTS
|EX-31.1 CEO Certification Pursuant to Section 302
|EX-31.2 CFO Certification Pursuant to Section 302
|EX-32.1 CEO Certification Pursuant to Section 906
|EX-32.2 CFO Certification Pursuant to Section 906



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##### Table of Contents



FORWARD-LOOKING STATEMENTS

When used in this Annual Report on Form 10-KSB or in future filings by the
Company with the Securities and Exchange Commission, in the Companys press
releases or other public or shareholder communications, or in oral statements
made with the approval of an authorized executive officer, the words phrases
will likely result, are expected to, will continue, is anticipated,
estimate, project, or similar expressions are intended to identify
forward-looking statements. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak as of
the date made, and to advise readers that various factors, including regional
and national economic conditions, substantial changes in levels of market
interest rates, credit and other risks of manufacturing, distributing or
marketing activities, and competitive and regulatory factors could affect the
Companys financial performance and could cause the Companys actual results
for future periods to differ materially from those anticipated by any
forward-looking statements.

The Company does not undertake and specifically disclaims any obligation to
update any forward-looking statements to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such statements.

TABLE OF CONTENTS

|                                                                  |                |                                                                                                                 |    |         |    |  |  | 
|----------------------------------------------------------------- | -------------- | --------------------------------------------------------------------------------------------------------------- | -- | ------- | -- |  |  | 
|                                                                  |                | PART  I                                                                                                         |    |         |    | 
|Item 1.                                                           |                | Description of Business                                                                                         |    |         | 2  | 
|Item 2.                                                           |                | Description of Property                                                                                         |    |         | 5  | 
|Item 3.                                                           |                | Legal Proceedings                                                                                               |    |         | 6  | 
|Item 4.                                                           |                | Submission of Matters to a Vote of Security Holders                                                             |    |         | 6  | 
|                                                                  |                | PART  II                                                                                                        |    |         |    | 
|Item 5.                                                           |                | Market for Common Equity and Related Stockholder Matters                                                        |    |         | 6  | 
|Item 6.                                                           |                | Managements Discussion and Analysis or Plan of Operation                                                       |    |         | 7  | 
|Item 7.                                                           |                | Financial Statements                                                                                            |    |         | 10 | 
|Item 8.                                                           |                | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures                           |    |         | 10 | 
|                                                                  |                | PART  III                                                                                                       |    |         |    | 
|Item 9.                                                           |                | Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act |    |         | 10 | 
|Item 10.                                                          |                | Executive Compensation                                                                                          |    |         | 11 | 
|Item 11.                                                          |                | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                  |    |         | 12 | 
|Item 12.                                                          |                | Certain Relationships and Related Transactions                                                                  |    |         | 12 | 
|Item 13.                                                          |                | Exhibits and Reports on Form 8-K                                                                                |    |         | 13 | 
|Item 14.                                                          |                | Controls and Procedures                                                                                         |    |         | 13 | 
|Signatures                                                        |                |                                                                                                                 | 14 |        
|                                                                  | Certifications |                                                                                                                 |    | 15 - 18 |   
|Consolidated Financial Statements as of October 31, 2003 and 2002 |                | F-1 to F-25                                                                                                    

2



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PART I




ITEM 1. DESCRIPTION OF BUSINESS

Bio-Lok International Inc. (hereinafter BioLok or the Company) via
predecessor entities and management has been involved in the design,
development and manufacture of dental products for over 16 years. The Company
was originally established in 1988 as Colfax, Inc.

Bio-Lok is the manufacturer and distributor of the Bio-Lok Precision Dental
Implant System.The system represents an all-inclusive product line which is
augmented with a few products purchased for resale on a private label. The
products are marketed domestically direct to the end-market, and
internationally on a country-by-country basis via select Distributors or a
majority owned Company facility. The Company is compliant with good
manufacturing practices (GMP) and registers its products with the Federal Drug
Administration (FDA), and is ISO 9001 certified.

Business of Issuer

Bio-Loks principal product consists of a line of dental implants, their
prosthetic components, tools, devices, irrigated spade drills, and membranes
and bone augmentation materials for use around implants. The dental implants
are the foundation upon which natural looking teeth are placed via a sound and
lasting prosthesis. Dental implants are small anchors (root form) shaped like
screws or cylinders which when placed become an artificial replacement of the
natural roots, are made out of bio-compatible titanium, and are placed into the
maxilla and mandible of a patient. Many of the implants have various coatings
or treatments (Hydroxylapatite, Titanium Plasma Sprayed, treated via a
resorbable blasted material  Osseo-Lok, passivated, and other like
processes), which are bonded to the implant to enhance the bonding and bone
growth process resulting in improved osseointegration.

Dental implant systems are placed by trained dentists, oral surgeons,
periodontists, implantologists, and other similar disciplined individuals.
Implants can have a high success rate if placed properly and expertly. With
proper oral care and regular dental visits, implants have lasted as long as 20
years and may last a lifetime.

Products, services and markets

The dental products Bio-Lok manufactures and markets consists of the following
key products:

(a)  Hex Top Implants

|                   |   |                                                                            |                                                                   | 
|------------------ | - | -------------------------------------------------------------------------- | ----------------------------------------------------------------- | 
|- 3.45 mm Platform |   | -                                                                          | Silhouette Screw Implant with a tapered body from 4.0mm to 2.5mm;
|                   | - | Micro-Lok Screw Implant 3.45mm body to head;                              
|                   | - | Micro-Lok Cylinder Implant 3.45mm body to 4.00mm head;                    
|                  
|- 4.00 mm Platform |   | -                                                                          | Silhouette Screw Implant with a tapered body from 4.5mm to 2.5mm;
|                   | - | Micro-Lok Screw Implant 3.75mm body to 4.00mm head;                       
|                   | - | Micro-Lok Screw Implant 4.00mm body to 4.00mm head;                       
|                   | - | Micro-Lok Cylinder Implant 3.3mm body to 4.00mm head;                     
|                   | - | Micro-Lok Cylinder Implant 4.0mm body to 4.00mm head;                     
|                  
|- 5.00 mm Platform |   | -                                                                          | Silhouette Screw Implant with a tapered body from 5.5mm to 3.3mm;
|                   | - | Micro-Lok Screw Implant 4.75mm body to 5.0mm head then cuff back to 4.0mm;
|                   | - | Micro-Lok Screw Implant 4.75mm body to 5.0mm head;                        
|                   | - | Micro-Lok Cylinder Implant 5.0mm body to 5.0mm head;                      
|                  
|- 6.50 mm Platform |   | -                                                                          | Silhouette Screw Implant with a tapered body from 7.0mm to 4.0mm;

(b) 
IC  Internal Connection Implants (NEW)

|                   |  |   |                                                                   | 
|------------------ |  | - | ----------------------------------------------------------------- | 
|- 3.45 mm Platform |  | - | Silhouette Screw Implant with a tapered body from 4.0mm to 2.5mm;
|                  
|- 4.00 mm Platform |  | - | Silhouette Screw Implant with a tapered body from 4.5mm to 2.5mm;
|                  
|- 5.00 mm Platform |  | - | Silhouette Screw Implant with a tapered body from 5.5mm to 3.3mm;

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|                   |  |   |                                                                   | 
|------------------ |  | - | ----------------------------------------------------------------- | 
|- 6.50 mm Platform |  | - | Silhouette Screw Implant with a tapered body from 7.0mm to 4.0mm;

(c)  Armamentarium, Tools and Devices



| | - |  | an extensive line of prosthetic abutments providing a practitioner ease
of identifying options available for completion of any prosthesis; including a
newTapered Chimney Abutment, a Ceramic Abutment (cylinder style);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | - |  | all necessary tooling and devices for both placement of the implants
and for completion of a prosthesis;                                                                                                                
|
| | - |  | a large selection of four(4) fluted (longitudinal cutting surfaces)
spade drills, pilot drills, fissure bur, countersinks and counter bores;                                                                            

(d)  Other products marketed and sold on a resale basis:



| | - |  | Mem-Lok Collagen Resorbable Membrane
| | - |  | -------------------------------------
|
| | - |  | SurgiPlaster Calcium Sulphate 9.5 gm.
|
| | - |  | Surgical motors and handpieces       

Distribution

Domestically the Company markets the Bio-Lok Precision Dental Implant System
directly to the end market  clinicians, dental specialists and institutions.
As of 2002, the Company has been actively engaged in the hire of a national
sales force. The development of the domestic market is expected to grow the
Company considerably and result in the domestic business representing over 40%
of total sales. Internationally, Bio-Lok sells and markets its products via
distributors, majority owned subsidiaries and/or joint ventures.

As of October 31, 2003, the Company has contracts outstanding with over 15
Distributors, has set up three (3) majority owned subsidiaries and is
continually engaged in soliciting and establishing added international
relationships.

Competition

The Companys competition
consists of a number of entities - approximately 10
primary competitors. The major competitors are Nobel Biocare, Zimmer Dental
(previously Centerpulse), BioMed Inc. - Implant Innovations Inc. (3I), Dentsply
 Friedent and its Frialit implant, Lifecore Biomedical,
Sterngold, Straumann 
ITI implant, and other smaller implant companies. To compete and overcome the
competitor(s) advantages in the marketplace, Bio-Lok offers to the market a
product line designed and manufactured in-house: a product line which
represents State of the Art based on todays technology by having
incorporated into the system unique and patented designs consisting of
journals, thread design, seals and other features which provide strength and
fit to the product line. Due to these factors, Bio-Lok anticipates being able
to penetrate the existing dental implant marketplace and gain market share as
it completes the development and implementation of its marketing objectives.

Raw Materials

The material used in manufacturing the dental products is medical grade
titanium alloy (ASTM F1472 Rev: 02 [Ti 6AL4V]), gold alloy and stainless steel.
Titanium is inert to body tissue and bone and is an alloy which has the unique
ability to form a permanent biological bond with living tissue after being
placed. Research in the use of ceramic and other materials is underway,
particularly for use as an abutment.

Financial Information about Industry Segments

The Company captures data for segmentation of its business activity via sales
by geographic areas. To accumulate information for assets and expenses is not
practical as the product line manufactured by the Company is not unique to any
market.

Trademarks and Patents

The Company has filed trademarks on the Company name and logo, and its dental
implant product line names and logos.

The Company owns a number of patents. These patents were obtained by, or have
been transferred and assigned to, the Company. The Company has been granted a
total of twenty one (21) patents and has eight (8) patents pending.

Regulatory

The Company has maintained its ISO 9001 / EN46001 and Annex II (CE mark)
certification to continue to permit the Company to import and market its
products within the European Economic Community (EEC). The ISO certification
is required to permit the Company to import its products into the EEC or any
other country that has adopted the ISO rules, regulations and policies.

4



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The Company has received 510(k) registrations from the Federal Drug
Administration (FDA) for required products and adheres to the GMP guidelines
established by them. FDA registration for the product line is required by the
US Government to enable the Company to present and detail the merits, quality
and performance of its products.

Research and Development

Product research is being done continually on the existing product line. New
ideas and concepts relating to dental implantology are continually being
evaluated. New products will be and are being brought to market as clinical
evaluations, studies and testing are completed, and FDA registration, if
required or necessary, is obtained.

Product currently under final evaluation, trials and testing is the
laser-machined implant  Laser-LokTM. The new implants are expected to be
brought to market with FDA registration by early 2004. The implant collar of
the current Silhouette Implant has been redesigned and laser-machined to
enhance bone and tissue attachment. The improved implant should reduce bone
loss and lessen periodontal problems.

Other research is in the process of being completed utilizing the laser
machining technology applied to dental implants, along with other product to be
brought to market in 2004 and later. The laser machining applied to the dental
implant collar and identified as Laser-Lok has many applications to other
products and materials for the management of tissue.

Environmental Laws

Environmental laws do not impact the Company, except for waste
products/materials created and/or generated by manufacturing processes. These
waste products are being recycled according to and in compliance with federal,
state, and local environmental protection laws.

Compliance by the Company with federal, state and local environmental
protection laws has not had and is not expected in the future to have, an
effect on capital expenditures, liquidity, earnings or its competitive
position.

Reports to Security Holders

The Company has filed all requisite reports with the SEC. Reports filed for
the years 2003 and 2002 are on Forms 10-QSB, 10-KSB, S-8 and 8-K.

SEC reports issued by the Company are completed electronically, hence they can
be obtained from the SEC maintained Internet site (http:\\www.sec.gov). The
reports can also be accessed and obtained through the Companys Internet site
(http:\\www.biolok.com). The public may read and copy any materials filed by
the Company with the Securities and Exchange Commission at the Commissions
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330. The Commission maintains an internet
site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the Commission.
The address of that site is http://www.sec.gov.




ITEM 2. DESCRIPTION OF PROPERTY

The Companys principal executive office and manufacturing facility is located
in Deerfield Beach, Florida. The facility is considered to be in good
condition, fully utilized, and consists of 7,690 sq. ft. of leased plant and
offices. Added space is in the process of being negotiated to add 5,500 sp.
ft. of space at the Deerfield Beach location.

The Companys manufacturing facility consists of numerous automated CNC Swiss
and manual lathe machines.

The Company also maintains a facility in Springfield, New Jersey, for Orthogen
Corporation, its wholly owned subsidiary. The facility consists of 900 sq. ft.
of leased office space.




ITEM 3. LEGAL PROCEEDINGS       No legal proceedings exist.

5



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

Only matters put to a vote of Security Holders for 2003 was the election of
Directors, the appointment of the independent Auditor and approval of the 2003
Stock Plan at an annual stockholders meeting held on April 30, 2003.




PART II




ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

The Companys common stock has been trading on the NASD OTC Electronic Bulletin
Board under the symbol BLLI since May 2000.

The following table sets forth the quarterly high and low bid prices of the
Companys common stock for the fiscal years ended October 31, 2001 to 2003, as
reported on the OTC Bulleting Board. Such quotes do not necessarily reflect
actual transactions or value since the stock is thinly traded.

|                               |  |            |      |     |  |   |      | 
|------------------------------ |  | ---------- | ---- | --- |  | - | ---- | 
|                               |  | BID PRICES
|                               |  |           
|                               |  | HIGH       |      | LOW
|                               |  |            |      |    
|Quarter Ended October 31, 2001 |  | $          | 0.30 |     |  | $ | 0.23 | 
|Quarter Ended January 31, 2002 |  | $          | 0.45 |     |  | $ | 0.45 | 
|Quarter Ended April 30, 2002   |  | $          | 0.48 |     |  | $ | 0.20 | 
|Quarter Ended July 31, 2002    |  | $          | 0.60 |     |  | $ | 0.60 | 
|Quarter Ended October 31, 2002 |  | $          | 0.23 |     |  | $ | 0.17 | 
|Quarter Ended January 31, 2003 |  | $          | 0.30 |     |  | $ | 0.30 | 
|Quarter Ended April 30, 2003   |  | $          | 0.24 |     |  | $ | 0.10 | 
|Quarter Ended July 31, 2003    |  | $          | 0.25 |     |  | $ | 0.19 | 
|Quarter Ended October 31, 2003 |  | $          | 0.32 |     |  | $ | 0.25 | 

These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions. The Company
understands that eight member firms currently act as market makers for the
Companys common stock.

The Company has only one class of common stock which is publicly-traded. As of
October 31, 2003, there were approximately 604 shareholders of record of the
Companys common stock issued and outstanding. A number of these shares are
held in street name and may, therefore, be held by several beneficial owners.

The holders of the common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Holders of the
common stock have no preemptive rights to convert their common stock into any
other securities. There are no redemption or sinking fund provisions
applicable to the common stock.

Stockholders Equity

On January 3, 2002, an option to purchase an aggregate of 30,000 shares of
common stock at $.05 per share was issued to a clinician for services and
support of the Company. On January 3, 2002, an option to purchase an aggregate
of 10,000 shares of common stock at $.25 per share was issued to an employee.
On February 15, 2002, one option to purchase an aggregate of 20,000 shares of
common stock at $.10 per share was issued to an entity for services rendered.

On February 28, 2002, the Company registered with the SEC under Form S-8
500,000 shares of common stock. The shares requested are common stock shares
it reserved for issuance under the Companys stock plan titled Stock
Compensation Plan 2002. Under the plan, shares are allocated for employee
compensation, the Bio-Lok 401(k) Plan, and shares to be awarded to
institutions, consultants and other entities that provide service, assistance
and support.

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Effective May 2, 2002, the Board of Directors authorized the increase of the
common stock shares outstanding from 15,000,000 to 20,000,000. Stockholders
had previously approved the authorization of common stock shares to be
increased to 30,000,000, which increase was to be authorized by the Board of
Directors, as it deemed necessary.

During the fiscal year ending October 31, 2002, 577,794 shares of common stock
were issued for services and 401(k) company matching contribution valued at an
aggregate amount of $147,625; and, 17,327 shares of treasury stock were
acquired in lieu of an account receivable on the books for $7,277 (no gain or
loss was recognized since the A/R was settled at the trading price of the stock
on the date of acquisition).

During the fiscal year ending October 31, 2003, 490,549 shares of common stock
were issued for services and 401(k) company matching contribution valued at an
aggregate amount of $75,992.

As of October 31, 2003, there where 20,000,000 shares of common stock
authorized and 7,153,701 shares of common stock issued and outstanding; and
500,000 shares of Preferred Stock authorized and none outstanding.

Dividends

The Company paid no dividends during the fiscal year ended October 31, 2003.
The declaration and payment by the Company of dividends, if any, in the future
rests within the discretion of its Board of Directors and will depend, among
other things, upon the Companys earnings, its capital requirements and its
financial condition, as well as other relevant factors.

The Company does not anticipate the payment of any dividends in the near future
and is restricted from paying a dividend under its current Revolving Loan Bank
agreement and EximBank US credit insurance guarantee. The Board of Director
adheres to a policy of retaining earnings for growth and development.

Recent Sales of Unregistered Securities

There has been no sale of unregistered securities sold by the Company within
the last three years.

Equity Compensation Plan Information

Securities authorized for issuance under equity compensation plans are as
follows:

|                                                           |       |     |                                      |           |                      |     |                                 |        |                         |  |                      |     | 
|---------------------------------------------------------- | ----- | --- | ------------------------------------ | --------- | -------------------- | --- | ------------------------------- | ------ | ----------------------- |  | -------------------- | --- | 
|                                                           |       |     | Equity Compensation Plan Information
|                                                           |       |     |                                     
|                                                           |       |     |                                      |           |                      |     |                                 |        |                         |  | Number of securities
|                                                           |       |     | Number of securities                 |           |                      |     |                                 |        | remaining available for
|                                                           |       |     | to be issued upon                    |           | Weighted-average     |     | future issuance under          
|                                                           |       |     | exercise of outstanding              |           | exercise price of    |     | equity compensation plans      
|                                                           |       |     | options, warrants                    |           | outstanding options, |     | (excluding securities reflected
|                                                           |       |     | and rights (1)                       |           | warrants and rights  |     | in column (a))                 
|Plan category                                              |       | (a) |                                      | (b)       |                      | (c)
|                                                           |       |     |                                      |           |                      |    
|Equity compensation plans
approved by security holders     |       |     | 1,812,000                            |           |                      | $   | 0.1300                          |        |                         |  | -0-                  |    
|Equity compensation plans not
approved by security holders |       |     | 1,535,000                            |           |                      | $   | 0.3360                          |        |                         |  | -0-                  |    
|                                                           |       |     |                                      |           |                      |     |                                 |        |                         |  |                      |    
|                                                           | Total |     |                                      | 3,347,000 |                      |     | $                               | 0.3360 |                         |  |                      | -0- | 
|                                                           |       |     |                                      |           |                      |     |                                 |        |                         |  |                      |    

(1)  See Note 13 to the Consolidated Financial Statements for information with
respect to the identity of option holders and the terms of their options.




ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with the
Financial Statements appearing elsewhere herein. The information that follows
includes results for the fiscal years ended October 31, 2003 and 2002.

7



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Sales and Profits. [2003 vs. 2002]Net revenues for 2003 increased by
$1,386,180, or approximately 48%, over prior year results. The increase was
due to gains in both the domestic and international markets. The domestic
market grew by 74% while international grew by 40%. The domestic market is
expected to continue grow at over 50% while the international market is
expected to expand and grow at over 30% due to the potential addition of new
distributors.

Gross margins on net sales decreased from 64% in 2002 to 63% in 2003. The
decrease was due to the continued development of new products  tapered chimney
abutment, laser-lok implants, scalpels, and etc.

Selling expenses for the year decreased by $49,524 or 4%, from prior year
results. The decreased costs incurred are attributed to lower payroll costs
incurred. These costs are expected to increase as management continues to
develop the domestic market and expand its international presence. During
2004, individuals will be added to the domestic staff, and internationally
added distributors are anticipated to be brought on-line in Europe, South and
Central America, and Asia.

General and administrative expenses increased by $93,995, or 7%, over prior
year results. The increased costs incurred are a direct result of the domestic
market growth and development support. Expenses are anticipated to continue to
increase as the business grows and objectives are met.

Income from operations increased by $798,282, from a loss of $763,700 in 2002
to a gain of $34,582 in 2003. The increased results are a direct result of
management electing stop hiring a domestic sales staff for a period of time.
The development of the domestic market will continue over the ensuing years.
Management is actively attempting to penetrate the dental implant market to
achieve 10% of total market.

Other income increased in 2003 by $145,586 over prior year results. The
increase realized was for recovery of administrative and personnel costs
realized for NIH Grant.

Interest expenses totaled $149,745 in 2003 compared to $104,519 in 2002,
reflecting greater borrowings outstanding for 2003 and an increase in the
interest rate for the revolving loan from 1% to 2% over the prime rate..

In 2003, the Company incurred only $16,533 of other expenses compared to
$126,284 in 2002. The costs incurred reflected expenses incurred and common
stock issued to third parties for services rendered to the Company.

Other gains realized consist of added funds obtained in 2002 for the machine
fire in 2001, which resulted in a non-taxable gain of over $1 million in 2001.

The Companys net income for the year totaled $9,304, compared to net loss of
$939,077 in the prior year.

In 2003, the Company had a net income per common share of $.0014 compared to a
loss of $.14 per share in 2002 based on 6,820,355 and 6,493,904 average number
of shares outstanding, respectively. In 2003, incremental shares relating to
stock options was $.0011 and anti-dilutive for 2002.

Liquidity and Capital Resources.On March 26, 2003, the Company replaced its
$1,500,000 asset-based credit facility with a working capital line of credit of
$2,000,000 utilizing CommerceBank NA at an interest rate 2% above the Prime
Rate. This new facility is secured by substantially all of the Companys
assets. This line of credit is an asset based line of credit to finance
foreign accounts receivable and inventory destined for export. The amount
available under this line of credit is subject to a monthly borrowing base, as
defined in the agreement. EximBank US is guaranteeing 90% of the loan. Under
the second facility, CommerceBank, N.A. commits to issue a revolving line of
credit in the amount of $250,000. This line of credit is an asset based line
of credit to finance domestic accounts receivable. The amount available under
this line of credit is subject to a monthly borrowing base, as defined in the
agreement. The interest rate for both of these facilities will be the Wall
Street Journal Prime Rate plus two percent and is due monthly. The principal
under these lines of credit will be due on demand with an annual financial
review date of December 31. The collateral for these facilities will consist
of a blanket, first priority UCC-1 lien on all of the Companys assets. As of
December 31, 2003, the current line has been extended to April 29, 2004, to
permit the Bank to process a renewal and increase of the line to 2,500,000.

On November 26, 2001, the Company entered into an equipment loan of $300,000
from a lender at an interest rate of 7.5% for a term of five years. The loan
was collateralized with existing equipment and repayable over the initial 12
months at interest only and equal payments over the remaining 48 months.

8



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##### Table of Contents



The Companys current ratio increased to 1.23 on October 31, 2003, from 1.18 on
October 31, 2002, due to sales growth. During 2003, the Companys revolving
loan payable increased by $515,703 and this increase was due to the domestic
market development initiated by management. As market penetration and related
sales growth are achieved, the current ratio is expected to increase in fiscal
year 2004.

In an effort to increase sales related to the Companys business, the Company
has actively been developing its sales force since 2002. The management plan
has improved sales by 48% for the fiscal year 2003. Management plans to
continue its efforts to increase sales at a comparable rate for the rest of
fiscal year 2004 while maintaining the same level of selling and administrative
expenses incurred during fiscal year 2003. The Company has enough machine
capacity in the short-run but anticipates leasing added equipment in the near
future.

The Company, being a small cap, closely held, public company, has experienced
extremely large added expenditures payable to its auditing company due to the
large amount of additional information and changes they have required, to be in
compliance to the Sarbanes-Oxley Act (the Act) passed by Congress and with
the anticipated rule changes within the SEC, based on the Act. These costs,
added to additional legal fees associated with the Act, having to increase the
number of outside Board of Director members and having to have an outside Audit
Committee Chairman, have increased administrative expenditures to an outlandish
level for this size company. Management will continue its efforts to expand
sales and increase performance.

Deteriorating global economic conditions may cause prolonged declines in
investor confidence in and accessibility to capital markets. Deteriorating
global economic conditions may make it more difficult for the Company to secure
funding because, during times of deteriorating global economic conditions,
prospective lenders and investors generally have less funds to lend or invest.

Future financing may not be available on a timely basis, in sufficient amounts
or on terms acceptable to the Company. Future financing in the form of equity
transactions may result in dilution of equity. Any additional debt financing
may contain additional covenants.

If adequate funds are not available either through operations or financing
arrangements, the Company may be required to delay or scale back the growth of
operations and product and service development efforts. In addition, there is
no guarantee that current financing arrangements will continue indefinitely.

The Company anticipates having adequate capital and liquidity for the next 12
months. The Company had no material capital expenditure commitments at October
31, 2003.

Critical Accounting Policies.The Company believes the following are its most
critical accounting policies in that they are the most important to the
portrayal of the Companys financial condition and results and require
managements most difficult, subjective or complex judgments.

Allowance for Doubtful Accounts

The Company regularly monitors and assesses its risk of not collecting amounts
owed to it by its customers. This evaluation is based upon an analysis of
amounts currently and past due along with relevant history and facts particular
to the customer. Based upon the results of this analysis, the Company records
an allowance for uncollectible accounts for this risk. This analysis requires
the Company to make significant estimates, and changes in facts and
circumstances could result in material changes in the allowance for doubtful
accounts.

Asset Impairment

The Company reviews its long-lived assets and identifiable intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. In performing the review
for recoverability, the Company estimates the future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of
the expected future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset, an impairment loss is recognized.
Otherwise, an impairment loss is not recognized. Measurement of an impairment
loss for long-lived assets and identifiable intangibles would be based on the
fair value of the asset.

Outlook for fiscal year 2004.The development of the market was resumed in 2002
after management hired a number of domestic marketing individuals. Due to
increase in staff and market growth in 2003, net income in 2003 returned to a
positive mode and management as it continues to build the marketing and sales
expects it to achieve a break-even or be marginally profitable in 2004..
Additionally, the introduction of the state-of-the-art Laser-Lok Implant is
expected to dramatically increase the Companys recognition, market presence
and growth potential.

9



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Bio-Lok will bring to market new products throughout the year. New products
are expected to provide enhanced market penetration.




ITEM 7. FINANCIAL STATEMENTS

Reference is made to the Consolidated Financial Statements, the notes thereto,
and the Independent Accountants Report thereon, commencing on page F-1 of this
Report, which Consolidated Financial Statements, Notes and Report are included
herewith by their reference. Summary financial results are as follows:

BIO-LOK INTERNATIONAL INC.

|               |                             |  |             |           | 
|-------------- | --------------------------- |  | ----------- | --------- | 
|               |                             |  | October 31,
|               |                             |  | 2003       
|               |                             |  |            
|Balance Sheet: |                             |  |             |          
|               | Current assets              |  | $           | 2,995,476 | 
|               | Property and Equipment, Net |  |             | 1,126,834 | 
|               | Other assets                |  |             | 290,261   | 
|               | Total Assets                |  |             | 4,412,571 | 
|               | Current liabilities         |  |             | 2,594,232 | 
|               | Non-current liabilities     |  |             | 47,531    | 
|               | Stockholders Equity        |  |             | 1,770,808 | 

|                  |                               |  |            |           |          |  |   |           |  
|----------------- | ----------------------------- |  | ---------- | --------- | -------- |  | - | --------- | -
|                  |                               |  | YEAR ENDED
|                  |                               |  |           
|                  |                               |  | Oct. 31,   |           | Oct. 31,
|                  |                               |  | 2003       |           | 2002    
|                  |                               |  |            |           |         
|Income Statement: |                               |  |            |           |          |  |   |          
|                  | Net Sales                     |  | $          | 4,288,013 |          |  | $ | 2,901,833 |  
|                  | Gross Profit                  |  |            | 2,707,354 |          |  |   | 1,864,601 |  
|                  | Sales Expense                 |  |            | 1,190,596 |          |  |   | 1,240,120 |  
|                  | General & Admin. Exp          |  |            | 1,540,254 |          |  |   | 1,388,181 |  
|                  | (Loss) Income from Operations |  |            | (23,496   | )        |  |   | (763,700  | )
|                  | Other (Exp)/Inc               |  |            | 32,800    |          |  |   | (175,377  | )
|                  | Net (loss) income             |  |            | 9,304     |          |  |   | (939,077  | )




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

No changes in or disagreements with accountants on accounting and financial
disclosures exist for the years ended October 31, 2003 and 2002.




PART III




|        |  |                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------
|ITEM 9. |  | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Directors of Bio-Lok hold offices for either one (1) or two (2) year terms.
Terms are set each year as Directors are nominated and subsequently elected at
the Companys Annual Meeting of Shareholders, last held on April 30, 2003.

Directors and Executive Officers

10



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##### Table of Contents



The following is a list of the names and ages of all Board of Directors and
Executive Officers of the Company, their positions and offices held by each
such person, and each such persons principal occupation(s) or employment(s)
during the past five years. Each such person has been elected to serve until
the next annual election of officers of the Company scheduled for April 28,
2004.

|                          |  |                                                                                                                                                          
|------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|                          |  | Positions and Offices Held and Principal                                                                                                                 
|                          |  | Occupations or Employment During                                                                                                                         
|Name and Age              |  | Past Five Year                                                                                                                                           
|                          |  |                                                                                                                                                          
|Bruce L. Hollander (65)   |  | Chairman of the Board, CEO and President; with the
Company since December 1995; Director since 1995;
present term as Director expires 2005;              
|                          |  |                                                                                                                                                          
|Ingo K. Kozak (62)        |  | Director, CFO and VP-Finance & Administration;
with the Company since February 1994; Director since
February 1995; present term as Director expires 2005;
|                          |  |                                                                                                                                                          
|Neil H. Smith (62)        |  | Director; retired and past Co-Chairman & CFO of
Express Shade, Inc.; Director since 1996; present term
as Director expires 2004;                         
|                          |  |                                                                                                                                                          
|Harold Weisman, Esq. (70) |  | Director; Attorney at Law, Delray Beach, FL; Director
since 1996; present term as Director expires 2004.                                                 
|                          |  |                                                                                                                                                          
|Patricio Nilo (40)        |  | Vice President Sales and Marketing; with the Company
since May 1995; previously Director of International
Sales & Marketing.                             

There is no understanding or arrangement between any Director or any person or
persons pursuant to which such individual was or is to be selected as a
Director or nominee of the Company.

No event listed in Subparagraphs (1) through (4) of Subparagraph (d) of Item
401 of Regulations S-B, has occurred with respect to any present executive
officer or Director of the Company during the past five years, which event is
material to an evaluation of the ability or integrity of such Director or
officer.




ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth the annual compensation attributable to the CEO,
CFO and VP of the Company for the fiscal years 2003, 2002 and 2001:

|                      |                      |                      |      |                     |  |        |         |         |  |              |        |           |  |      |     |              |  |              |        |                        |  |            |        |            |  |  |     |     |  |  |     |     |  | 
|--------------------- | -------------------- | -------------------- | ---- | ------------------- |  | ------ | ------- | ------- |  | ------------ | ------ | --------- |  | ---- | --- | ------------ |  | ------------ | ------ | ---------------------- |  | ---------- | ------ | ---------- |  |  | --- | --- |  |  | --- | --- |  | 
|                      |                      |                      |      |                     |  |        |         |         |  |              |        |           |  |      |     |              |  |              |        | Long-Term Compensation |  |            |        |           
|                      |                      |                      |      |                     |  |        |         |         |  |              |        |           |  |      |     |              |  |              |        |                        |  |            |        |           
|                      |                      |                      |      | Annual Compensation |  | Awards |         | Payouts |  |              |        |          
|                      |                      |                      |      |                     |  |        |         |         |  |              |        |          
|                      |                      |                      |      |                     |  |        |         |         |  |              |        |           |  |      |     |              |  |              |        |                        |  |            |        | Securities |  |  |     |     |  |  |     |    
|                      |                      |                      |      |                     |  |        |         |         |  |              |        |           |  |      |     |              |  |              |        | Restricted             |  | underlying |        |            |  |  |     |     |  | 
|                      |                      |                      |      |                     |  |        |         |         |  |              |        |           |  |      |     | Other Annual |  | Stock        |        | options/               |  | LTIP       |        | All Other 
|Name and              |                      |                      |      |                     |  | Salary |         | Bonus   |  | Compensation |        | Awards(s) |  | SARs |     | Payouts      |  | Compensation
|principal position(s) |                      | Year                 |      | ($)                 |  | ($)    |         | ($)     |  | ($)          |        | (#)       |  | ($)  |     | ($)         
|                      |                      |                      |      |                     |  |        |         |         |  |              |        |           |  |      |     |             
|Hollander, Bruce L.   |                      |                      | 2003 |                     |  |        | 150,000 |         |  |              | 20,000 |           |  |      | -0- |              |  |              | -0-    |                        |  |            | -0-    |            |  |  | -0- |     |  |  | -0- |    
|                      | President and CEO    |                      |      | 2002                |  |        |         | 150,000 |  |              |        | 15,000    |  |      |     | -0-          |  |              |        | -0-                    |  |            |        | 100,000    |  |  |     | -0- |  |  |     | -0- | 
|                      |                      |                      | 2001 |                     |  |        | 150,000 |         |  |              | 15,000 |           |  |      | -0- |              |  |              | -0-    |                        |  |            | 50,000 |            |  |  | -0- |     |  |  | -0- |    
|Kozak, Ingo K.        |                      |                      | 2003 |                     |  |        | 105,000 |         |  |              | 15,000 |           |  |      | -0- |              |  |              | -0-    |                        |  |            | -0-    |            |  |  | -0- |     |  |  | -0- |    
|                      | VP-Finance & Admin., |                      |      | 2002                |  |        |         | 100,000 |  |              |        | 10,000    |  |      |     | -0-          |  |              |        | -0-                    |  |            |        | 70,000     |  |  |     | -0- |  |  |     | -0- | 
|                      | CFO and Secretary    |                      |      | 2001                |  |        |         | 95,000  |  |              |        | 15,000    |  |      |     | -0-          |  |              |        | -0-                    |  |            |        | 30,000     |  |  |     | -0- |  |  |     | -0- | 
|Nilo, Patricio        |                      |                      | 2003 |                     |  |        | 95,000  |         |  |              | 10,500 |           |  |      | -0- |              |  |              | 20,000 |                        |  |            | 50,000 |            |  |  | -0- |     |  |  | -0- |    
|                      |                      | VP-Sales & Marketing |      |                     |  |        |         |         |  |              |        |           |  |      |     |              |  |              |        |                        |  |            |        |            |  |  |     |     |  |  |     |     |  | 

Compensation of Directors

11



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Compensation of Directors has been limited to issuing individuals common stock
shares of Bio-Lok for services and support of the company and to cover any
out-of-pocket expenses.

Employment Contracts and Termination of Employment and Change-in-Control
Arrangements

Employment contracts are detailed in the Consolidated Financial Statements
hereto under Note 10. (B) Employment Agreements.




|         |  |                                                                                                
|-------- |  | -----------------------------------------------------------------------------------------------
|ITEM 11. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS

Security Ownership of Certain Beneficial Owners

The following table sets forth the number of shares of the Companys common
stock beneficially owned by any person or group who is known to the Company to
be the beneficial owner of more than five percent of any class of the Companys
voting securities:

|                 |  |              |  |             
|---------------- |  | ------------ |  | ------------
|                 |  | Beneficial   |  | Percent of  
|Name and address |  | Shares owned |  | Common Stock
|                 |  |              |  |             
|NONE             |  |              |  |             

Security Ownership of Management

The following table sets forth the number of shares of the Companys common
stock beneficially owned by the CEO and by all Directors and Officers of the
Company as a group on October 31, 2003, unless otherwise indicated in
footnotes. Each person and member of the group has sole voting and investment
power with respect to the shares shown:

|                                                                      |  |              |            |         |  |  |    |   |  |  |      | 
|--------------------------------------------------------------------- |  | ------------ | ---------- | ------- |  |  | -- | - |  |  | ---- | 
|                                                                      |  | Beneficial   |            |         |  | 
|Name and Office                                                       |  | Shares owned |            | Percent
|                                                                      |  |              |            |        
|Hollander, Bruce L. (Director, CEO and President)                     |  |              | 3,612,052  |         |  |  | (a | ) |  |  | 33.7 | 
|Kozak, Ingo K. (Director, CFO and VP-Finance & Admin.)                |  |              | 1,287,252  |         |  |  | (b | ) |  |  | 12.0 | 
|Alexander, Harold (Director and President of Orthogen)                |  |              | 525,233    |         |  |  | (c | ) |  |  | 4.9  | 
|Smith, Neil H. (Director)                                             |  |              | 108,000    |         |  |  | (d | ) |  |  | 1.1  | 
|Weisman, Harold (Director)                                            |  |              | 100,000    |         |  |  | (e | ) |  |  | 0.9  | 
|Nilo, Patricio A. (VP-Sales and Marketing)                            |  |              | 328,180    |         |  |  | (f | ) |  |  | 3.1  | 
|All Directors and Officers of the Company                             |  |              | 5,960,717  |         |  |  | (g | ) |  |  | 55.5 | 
|Total Common Stock Shares outstanding at October 31, 2003             |  |              | 7,153,701  |         |  |  |    |   |  |  |      | 
|Total Common Stock Shares and Options outstanding at October 31, 2003 |  |              | 10,732,518 |         |  |  |    |   |  |  |      | 
|Total Common Stock Shares authorized                                  |  |              | 20,000,000 |         |  |  |    |   |  |  |      | 
|Total Preferred Stock Shares authorized                               |  |              | 500,000    |         |  |  |    |   |  |  |      | 



|(a) |  | Includes 400,000 of Options granted in 2000 and 1,170,000 of Options
granted in 2003 under a Stock Option Plan                                                  
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Includes 200,000 of Options granted in 2000 and 376,000 of Options granted
in 2003 under a Stock Option Plan                                                    
|   
|(c) |  | Includes 200,000 of Options granted in 2000 as a part of the acquisition
of Orthogen Corporation and 20,000 of Options
granted in 2003 under a Stock Option Plan
|   
|(d) |  | Includes 20,000 of Options granted in 2003 under a Stock Option Plan                                                                                            
|   
|(e) |  | Includes 20,000 of Options granted in 2003 under a Stock Option Plan                                                                                            
|   
|(f) |  | Includes 100,000 of Options granted in 2000 and 80,000 of Options granted
in 2003 under a Stock Option Plan                                                     
|   
|(g) |  | Includes a total of 2,586,000 of Options                                                                                                                        




ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Bio-Lok has and continually is negotiating with a number of clinicians and
individuals to provide continued consulting, collaboration, clinical services,
marketing, promotional and sales support to the Company.

The Company continually enters into distribution agreements with select
international entities for the sale of its product line.

The Company has employment agreements outstanding since 1997 with its
President, Vice President and marketing executive.

12



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##### Table of Contents



These contracts are automatically renewed annually on October 31 for five, four
and two years, respectively.

The Company, at the time of the acquisition of Orthogen Corporation, entered
into an employment agreement with its elected President and a consulting
agreement with a doctor and associate professor. These contracts expire March
2005.

No other contracts had been entered into and were outstanding as of October 31,
2003.

Management from time-to-time utilizes their personal credit cards for the
purchase of goods and services. (See Note 8, Related Parties, of the
Consolidated Financial Statements attached hereto for added detail.)




ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | Exhibits
|--- |  | --------

|            |  |                                                                                                    
|----------- |  | ---------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                        
|            |  |                                                                                                    
|3.1         |  | Articles of Incorporation *                                                                        
|            |  |                                                                                                    
|3.2         |  | By-Laws*
Amendment to By-Laws*                                                                     
|            |  |                                                                                                    
|5           |  | Opinion re legality *                                                                              
|            |  |                                                                                                    
|21          |  | Subsidiaries of the Registrant included in the Consolidated Financial Statements of the Issuer are:

|                              |  |                |  |                       
|----------------------------- |  | -------------- |  | ----------------------
|                              |  | Incorporation  |  | Organization          
|Name of entity                |  | State or Cntry |  | type                  
|                              |  |                |  |                       
|Orthogen Corporation          |  | New Jersey     |  | research & development
|Micro-Lok Mexico S.A. DE C.V. |  | Mexico DF      |  | sales & marketing     
|Micro-Lok Chile S.A.          |  | Chile          |  | sales & marketing     
|Bio-Lok Intl. Pty. Inc.      |  | Australia      |  | sales & marketing     



|* |  | Filed previously
|- |  | ----------------



|(b) |  | Reports on FORM 8-KNEW AUDITORS
|--- |  | -------------------------------




ITEM 14. CONTROLS AND PROCEDURES

Controls already implemented are the appointment of an Audit Committee of the
Board of Directors, with all members of the Audit Committee being outside
individuals. The Audit Committee is responsible for the appointment,
compensation, and oversight of the work of the Companys public accounting
auditors.

The Company, with the Audit Committee, is establishing procedures for (1) the
receipt, retention, and treatment of complaints received regarding accounting,
internal accounting controls, or auditing matters; and (2) the confidential,
anonymous submission by employees of concerns regarding questionable accounting
or auditing matters.

Management Assessment of Internal Controls

It is managements responsibility to establish and maintain an adequate control
structure and procedures for financial reporting. Management believes that its
internal control structures and procedures for financial reporting as of the
end of the most recent fiscal year of the Company are sufficient to meet all of
the obligations of the financial reporting process required of its by the
Security Exchange Act of 1934.

Disclosure Controls and Procedures

The Company maintains controls and procedures designed to ensure that it is
able to collect the information it is required to disclose in the reports it
files with the SEC, and to process, summarize and disclose this information
within the time periods specified in the rules of the SEC. The Companys Chief
Executive and Chief Financial Officers are responsible for establishing and
maintaining these procedures, and, as required by the rules of the SEC,
evaluate their effectiveness. Based on their evaluation of the Companys
disclosure controls and procedures, which took place as of the date within 90
days of the filing date of this Report, the Chief Executive and Chief Financial
Officers believe that these procedures are effective to ensure that the Company
is able to

13



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collect, process and disclose the information it is required to disclose in the
reports it files with the SEC within the required time periods.

Internal Controls

The Company maintains a system of internal controls designed to provide
reasonable assurance that transactions are executed in accordance with
managements general or specific authorization and that transactions are
recorded as necessary (1) to permit preparation of financial statements in
conformity with generally accepted accounting principles, and (2) to maintain
accountability for assets; access to assets is permitted only in accordance
with managements general or specific authorization; and the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any difference.

Since the date of the most recent evaluation of the Companys internal controls
by the Chief Executive and Chief Financial Officers, there have been no
significant changes in such controls or in other factors that could have
significantly affected those controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Code of Ethics for Senior Financial Officers

The code of ethics established by the Company for its Senior Financial
Officers is required to be signed by each, is maintained on file by the
Company, and incorporates the following:



| |  | The Financial Officer shall maintain a code of ethics which reasonably
promotes (1) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of
interest between personal and professional relationships; (2) fully, fair, accurate, timely, and
understandable disclosure in the periodic
reports required to be filed by the issuer; and, (3) compliance with
applicable governmental rules and regulations.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




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.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                        |                                         |                        |                              
| | ---------------------- | --------------------------------------- | ---------------------- | -----------------------------
| |                        | BIO-LOK INTERNATIONAL INC. (Registrant)
| |                        |                                         |                        |                              
| | Date: February 2, 2004 | By                                      | /s/ Bruce L. Hollander
| |                        |                                         |                       
| |                        |                                         |                        | Bruce L. Hollander, President



| |  | Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the date indicated per
the final audit report issued by accountants.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                       |  |                                         |  |                       
|---------------------- |  | --------------------------------------- |  | ----------------------
|Signature              |  | Title                                   |  |                       
|                       |  |                                         |  |                       
|/s/ Bruce L. Hollander |  | President, CEO and Director             |  | Date: February 2, 2004
|                       |  |                                         |  |                       
|Bruce L Hollander      |  |                                         |  |                       
|                       |  |                                         |  |                       
|/s/ Ingo K. Kozak      |  | VP  Finance & Admin., CFO and Director |  | Date: February 2, 2004
|                       |  |                                         |  |                       
|Ingo K. Kozak          |  |                                         |  |                       

14



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##### Table of Contents






BIO-LOK INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2003 AND 2002

CONTENTS

|      |  |              |  |                                                                                                        
|----- |  | ------------ |  | -------------------------------------------------------------------------------------------------------
|PAGE  |  | F  1  F -2 |  | INDEPENDENT AUDITORS REPORTS                                                                          
|PAGE  |  | F  3        |  | CONSOLIDATED BALANCE SHEET AS OF OCTOBER 31, 2003                                                      
|PAGE  |  | F  4        |  | CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
YEARS ENDED OCTOBER 31, 2003 AND 2002                    
|PAGE  |  | F  5        |  | CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY FOR THE YEARS ENDED OCTOBER 31, 2003 AND
2002
|PAGES |  | F-6  F-7    |  | CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
YEARS ENDED OCTOBER 31, 2003 AND 2002                    
|PAGES |  | F-8  F-25   |  | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF
OCTOBER 31, 2003                                      





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|                              |                          |                               
|----------------------------- | ------------------------ | ------------------------------
|Michael I. Daszkal, CPA, P.A. | (DASZKALBOLTON LLP LOGO) | 2401 N.W. Boca Raton Boulevard
|Jeffrey A. Bolton, CPA, P.A.  | Boca Raton, FL 33431    
|Timothy R. Devlin, CPA, P.A.  | t: 561.367.1040         
|Michael S. Kridel, CPA, P.A.  | f: 561.750.3236         
|Marjorie A. Horwin, CPA, P.A. | www.daszkalbolton.com   
|Patrick D. Heyn, CPA, P.A.    |                         

INDEPENDENT AUDITORS REPORT

To the Board of Directors
Bio-Lok International, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Bio-Lok
International, Inc. and Subsidiaries (the Company) as of October 31, 2003 and
the related consolidated statements of operations, changes in stockholders
equity and cash flows for the year ended October 31, 2003. These consolidated
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Oversight Board in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above,
present fairly, in all material respects, the financial position of Bio-Lok
International, Inc. and Subsidiaries as of October 31, 2003, and the results of
their operations and their cash flows for the year ended October 31, 2003, in
conformity with accounting principles generally accepted in the United States
of America.

/s/ DASZKAL BOLTON LLP

Boca Raton, Florida
February 10, 2004

|                                                                                                           |        |            |                             
|---------------------------------------------------------------------------------------------------------- | ------ | ---------- | ----------------------------
|Member of American Institute of
Certified Public Accountants  SEC and Private Companies Practice Sections | Member | (AGN LOGO) | Affiliated Offices Worldwide





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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors of
Bio-Lok International, Inc. and Subsidiaries

We have audited the accompanying consolidated statements of operation, changes
in stockholders equity and cash flows for the year ended October 31, 2002 of
Bio-Lok International Inc. and Subsidiaries (the Company). These
consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above,
present fairly, in all material respects, the results of operations and cash
flows of Bio-Lok International, Inc. and Subsidiaries for the year ended
October 31, 2002, in conformity with accounting principles generally accepted
in the United States of America.

WEINBERG & COMPANY, P.A.

Boca Raton, Florida
February 26, 2003

F-2



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BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF OCTOBER 31, 2003

|                                                  |                                                                                                     |                             |           |           |           | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------------- | --------------------------- | --------- | --------- | --------- | 
|                                                  |                                                                                                     |                             |           | 2003     
|                                                  |                                                                                                     |                             |           |          
|ASSETS                                            |                                                                                                     |                             |           |          
|CURRENT ASSETS                                    |                                                                                                     |                             |           |          
|                                                  | Cash                                                                                                |                             | $         | 40,852    |          
|                                                  | Accounts receivable, net                                                                            |                             |           | 1,001,525 |          
|                                                  | Inventory                                                                                           |                             |           | 1,879,505 |          
|                                                  | Prepaid expenses and other current assets                                                           |                             |           | 73,594    |          
|                                                  |                                                                                                     |                             |           |           |          
|                                                  |                                                                                                     | Total Current Assets        |           |           | 2,995,476 | 
|                                                  |                                                                                                     |                             |           |          
|PROPERTY AND EQUIPMENT  NET                      |                                                                                                     |                             | 1,126,834 |          
|                                                  |                                                                                                     |                             |           |          
|OTHER ASSETS                                      |                                                                                                     |                             |           |          
|                                                  | Patents, net                                                                                        |                             |           | 115,144   |          
|                                                  | Inventory                                                                                           |                             |           | 159,816   |          
|                                                  | Deposits and other assets                                                                           |                             |           | 15,301    |          
|                                                  |                                                                                                     |                             |           |           |          
|                                                  |                                                                                                     | Total Other Assets          |           |           | 290,261   | 
|                                                  |                                                                                                     |                             |           |           |          
|TOTAL ASSETS                                      |                                                                                                     | $                           | 4,412,571 |          
|                                                  |                                                                                                     |                             |           |          
|LIABILITIES AND STOCKHOLDERS EQUITY              |                                                                                                     |                             |           |          
|CURRENT LIABILITIES                               |                                                                                                     |                             |           |          
|                                                  | Revolving loans payable                                                                             |                             | $         | 1,765,704 |          
|                                                  | Notes and loans payable                                                                             |                             |           | 407,343   |          
|                                                  | Capital lease obligations  current portion                                                         |                             |           | 66,069    |          
|                                                  | Accounts payable                                                                                    |                             |           | 119,296   |          
|                                                  | Accrued expenses and other payable                                                                  |                             |           | 233,526   |          
|                                                  | Due to stockholders                                                                                 |                             |           | 2,294     |          
|                                                  |                                                                                                     |                             |           |           |          
|                                                  |                                                                                                     | Total Current Liabilities   |           |           | 2,594,232 | 
|                                                  |                                                                                                     |                             |           |          
|LONG-TERM LIABILITIES                             |                                                                                                     |                             |           |          
|                                                  | Capital lease obligations  non-current                                                             |                             |           | 47,531    |          
|                                                  |                                                                                                     |                             |           |           |          
|                                                  |                                                                                                     | Total Long-Term Liabilities |           |           | 47,531    | 
|                                                  |                                                                                                     |                             |           |          
|COMMITMENTS AND CONTINGENCIES (NOTES 6, 7 AND 10) |                                                                                                     |                             |           |          
|STOCKHOLDERS EQUITY                              |                                                                                                     |                             |           |          
|                                                  | Preferred stock, $.75 par value, 500,000 shares authorized,
none issued and outstanding             |                             |           |          |          
|                                                  | Common stock, $.01 par value, 20,000,000 shares authorized,
6,663,152 shares issued and outstanding |                             |           | 71,536    |          
|                                                  | Additional paid-in capital                                                                          |                             |           | 2,513,455 |          
|                                                  | Accumulated deficit                                                                                 |                             |           | (806,906  | )        
|                                                  | Treasury stock (17,327 common shares), at cost                                                      |                             |           | (7,277    | )        
|                                                  |                                                                                                     |                             |           |          
|                                                  |                                                                                                     | Total Stockholders Equity  |           |           | 1,770,808 | 
|                                                  |                                                                                                     |                             |           |          
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY        |                                                                                                     | $                           | 4,412,571 |          
|                                                  |                                                                                                     |                             |           |          

See accompanying notes to the consolidated financial statements.

F-3



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|                                                                 |                                                  |                              |           |           |           |      |           |           |           |  
|---------------------------------------------------------------- | ------------------------------------------------ | ---------------------------- | --------- | --------- | --------- | ---- | --------- | --------- | --------- | -
|                                                                 |                                                  |                              |           | 2003      |           | 2002
|                                                                 |                                                  |                              |           |           |           |     
|SALES  NET                                                      |                                                  | $                            | 4,288,013 |           |           | $    | 2,901,833 |          
|COST OF SALES                                                    |                                                  |                              | 1,580,659 |           |           |      | 1,037,232 |          
|                                                                 |                                                  |                              |           |           |           |      |           |          
|GROSS PROFIT                                                     |                                                  |                              | 2,707,354 |           |           |      | 1,864,601 |          
|                                                                 |                                                  |                              |           |           |           |      |           |          
|OPERATING EXPENSES                                               |                                                  |                              |           |           |           |      |           |          
|                                                                 | Selling expenses                                 |                              |           | 1,190,596 |           |      |           | 1,240,120 |          
|                                                                 | General and administrative expenses              |                              |           | 1,540,254 |           |      |           | 1,388,181 |          
|                                                                 |                                                  |                              |           |           |           |      |           |          
|                                                                 |                                                  | Total Operating Expenses     |           |           | 2,730,850 |      |           |           | 2,628,301 |  
|                                                                 |                                                  |                              |           |           |           |      |           |          
|(LOSS) INCOME FROM OPERATIONS                                    |                                                  |                              | (23,496   | )         |           |      | (763,700  | )        
|                                                                 |                                                  |                              |           |           |           |      |           |          
|OTHER (EXPENSE) INCOME                                           |                                                  |                              |           |           |           |      |           |          
|                                                                 | Other income                                     |                              |           | 182,661   |           |      |           | 37,075    |          
|                                                                 | Interest expense                                 |                              |           | (149,745  | )         |      |           | (104,519  | )        
|                                                                 | Other expense                                    |                              |           | (116      | )         |      |           | (126,284  | )        
|                                                                 | Gain from involuntary conversion of fixed assets |                              |           |          |           |      |           | 18,351    |          
|                                                                 |                                                  |                              |           |           |           |      |           |          
|                                                                 |                                                  | Total Other (Expense) Income |           |           | 32,800    |      |           |           | (175,377  | )
|                                                                 |                                                  |                              |           |           |           |      |           |          
|NET INCOME (LOSS)                                                |                                                  | $                            | 9,304     |           |           | $    | (939,077  | )        
|                                                                 |                                                  |                              |           |           |           |      |           |          
|Net income (loss) per common share:                              |                                                  |                              |           |           |           |      |           |          
|                                                                 | Basic                                            |                              | $         | .00       |           |      | $         | (.14      | )        
|                                                                 |                                                  |                              |           |           |           |      |           |          
|                                                                 | Diluted                                          |                              | $         | .00       |           |      | $         | (.14      | )        
|                                                                 |                                                  |                              |           |           |           |      |           |          
|Weighted average number of shares outstanding
during the period: |                                                  |                              |           |           |           |      |           |          
|                                                                 | Basic                                            |                              |           | 6,820,355 |           |      |           | 6,493,904 |          
|                                                                 |                                                  |                              |           |           |           |      |           |          
|                                                                 | Diluted                                          |                              |           | 8,355,355 |           |      |           | 6,493,904 |          
|                                                                 |                                                  |                              |           |           |           |      |           |          

See accompanying notes to the consolidated financial statements.

F-4



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BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|                                                           |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   |            |        |          |   |          |   |  |   |        |   |  |   |           |        | 
|---------------------------------------------------------- | ---------------------- |  | --------------- | - | ------------ | - | ------- | - | ------------ |  | --------- | ------ | -------- | - | ------ | --- | ----- | - | ---------- | ------ | -------- | - | -------- | - |  | - | ------ | - |  | - | --------- | ------ | 
|                                                           |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   |            |        |          |   | Retained |   |  |   |        |   |  |   |          
|                                                           |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   | Additional |        | Earnings |   |          |   |  |   |        |   | 
|                                                           |                        |  | Preferred Stock |   | Common Stock |   | Paid-In |   | (Accumulated |  | Treasury  |        |          |   |       
|                                                           |                        |  | Stock           |   | Amount       |   | Stock   |   | Amount       |  | Capital   |        | Deficit) |   | Stock  |     | Total
|                                                           |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |      
|Balance, October 31, 2001                                  |                        |  |                |   |              | $ |        |   |              |  | 6,085,358 |        |          | $ | 60,854 |     |       | $ | 2,221,586  |        |          | $ | 122,867  |   |  | $ |       |   |  | $ | 2,405,307 |       
|Issuance of stock for services                             |                        |  |                |   |              |   |        |   |              |  | 381,000   |        |          |   | 3,810  |     |       |   | 66,990     |        |          |   |         |   |  |   |       |   |  |   | 70,800    |       
|Issuance of common stock                                   |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   |            |        |          |   |          |   |  |   |        |   |  |   |           |       
|                                                           |  401(k) Plan for 2000 |  |                 |  |              |   |         |  |              |  |           | 12,541 |          |   |        | 126 |       |   |            | 9,280  |          |   |          |  |  |   |        |  |  |   |           | 9,406  | 
|                                                           |  401(k) Plan for 2001 |  |                 |  |              |   |         |  |              |  |           | 36,420 |          |   |        | 364 |       |   |            | 33,871 |          |   |          |  |  |   |        |  |  |   |           | 34,235 | 
|Issuance of common stock for
sign-on bonuses               |                        |  |                |   |              |   |        |   |              |  | 117,500   |        |          |   | 1,175  |     |       |   | 22,009     |        |          |   |         |   |  |   |       |   |  |   | 23,184    |       
|Issuance of common stock to an
employee as bonus           |                        |  |                |   |              |   |        |   |              |  | 30,333    |        |          |   | 303    |     |       |   | 9,697      |        |          |   |         |   |  |   |       |   |  |   | 10,000    |       
|Treasury stock acquired                                    |                        |  |                |   |              |   |        |   |              |  |          |        |          |   |       |     |       |   |           |        |          |   |         |   |  |   | -7,277 |   |  |   | -7,277    |       
|Stock Option amortization - issued
for services            |                        |  |                |   |              |   |        |   |              |  |          |        |          |   |       |     |       |   | 16,897     |        |          |   |         |   |  |   |       |   |  |   | 16,897    |       
|Net loss, 2002                                             |                        |  |                |   |              |   |        |   |              |  |          |        |          |   |       |     |       |   |           |        |          |   | -939,077 |   |  |   |       |   |  |   | -939,077  |       
|                                                           |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   |            |        |          |   |          |   |  |   |        |   |  |   |           |       
|Balance October 31, 2002                                   |                        |  |                |   |              | $ |        |   |              |  | 6,663,152 |        |          | $ | 66,632 |     |       | $ | 2,380,330  |        |          | $ | -816,210 |   |  | $ | -7,277 |   |  | $ | 1,623,475 |       
|Issuance of shares for services                            |                        |  |                 |   |              |   |         |   |              |  | 90,000    |        |          |   | 900    |     |       |   | 16,300     |        |          |   |          |   |  |   |        |   |  |   | 17,200    |       
|Issuance of shares for services                            |                        |  |                 |   |              |   |         |   |              |  | 54,000    |        |          |   | 540    |     |       |   | 7,370      |        |          |   |          |   |  |   |        |   |  |   | 7,910     |       
|Issuance of shares per employment
& consulting agreement   |                        |  |                 |   |              |   |         |   |              |  | 200,000   |        |          |   | 2,000  |     |       |   | 28,000     |        |          |   |          |   |  |   |        |   |  |   | 30,000    |       
|Issuance of common stock per
- 401(k) Plan for 2002        |                        |  |                 |   |              |   |         |   |              |  | 116,549   |        |          |   | 1,165  |     |       |   | 16,317     |        |          |   |          |   |  |   |        |   |  |   | 17,482    |       
|Issuance of shares - promotion                             |                        |  |                 |   |              |   |         |   |              |  | 20,000    |        |          |   | 200    |     |       |   | 2,200      |        |          |   |          |   |  |   |        |   |  |   | 2,400     |       
|Issuance of shares for exercise of
Purchase Warrant Option |                        |  |                 |   |              |   |         |   |              |  | 10,000    |        |          |   | 100    |     |       |   | 900        |        |          |   |          |   |  |   |        |   |  |   | 1,000     |       
|Stock Option amortization  issued
for services            |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   | 62,037     |        |          |   |          |   |  |   |        |   |  |   | 62,037    |       
|Net Income 2003                                            |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   |            |        |          |   | 9,304    |   |  |   |        |   |  |   | 9,304     |       
|                                                           |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   |            |        |          |   |          |   |  |   |        |   |  |   |           |       
|Balance  October 31, 2003                                 |                        |  |                 |   |              | $ |         |   |              |  | 7,153,701 |        |          | $ | 71,537 |     |       | $ | 2,513,454  |        |          | $ | -806,906 |   |  | $ | -7,277 |   |  | $ | 1,770,808 |       
|                                                           |                        |  |                 |   |              |   |         |   |              |  |           |        |          |   |        |     |       |   |            |        |          |   |          |   |  |   |        |   |  |   |           |       

See accompanying notes to the consolidated financial statements.

F-5



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BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |          |          |            |  
|------------------------------------------------- | ------------------------------------------------------------------------------------ | --------------------------------------------------- | --------------------------------------------------- | -------- | -------- | -------- | ------- | -------- | -------- | ---------- | -
|                                                  |                                                                                      |                                                     |                                                     |          | 2003     |          | 2002   
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |        
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                                                                      |                                                     |                                                     |          |          |          |         |         
|                                                  | Net Income (Loss)                                                                    |                                                     | $                                                   | 9,304    |          |          | $       | (939,077 | )       
|                                                  | Adjustments to reconcile net income (loss) to net cash used in operating activities: |                                                     |                                                     |          |          |          |         |          |         
|                                                  |                                                                                      | Depreciation and amortization                       |                                                     |          | 147,672  |          |         |          | 150,903  |           
|                                                  |                                                                                      | Provision for doubtful accounts  net of recoveries |                                                     |          | (20,933  | )        |         |          | 13,168   |           
|                                                  |                                                                                      | Issuance of common stock for services               |                                                     |          | 75,992   |          |         |          | 121,025  |           
|                                                  |                                                                                      | Amortization of stock options for services          |                                                     |          | 62,037   |          |         |          | 16,897   |           
|                                                  |                                                                                      | Gain from involuntary conversion                    |                                                     |          |         |          |         |          | (18,351  | )         
|                                                  | Changes in operating assets and liabilities:                                         |                                                     |                                                     |          |          |          |         |          |         
|                                                  |                                                                                      | Accounts receivable                                 |                                                     |          | (172,687 | )        |         |          | 4,970    |           
|                                                  |                                                                                      | Inventory                                           |                                                     |          | (120,388 | )        |         |          | (594,000 | )         
|                                                  |                                                                                      | Prepaid expenses and other current assets           |                                                     |          | (32,118  | )        |         |          | 53,315   |           
|                                                  |                                                                                      | Deposits and other assets                           |                                                     |          | 3,101    |          |         |          | (1,913   | )         
|                                                  |                                                                                      | Accounts payable and accrued expenses               |                                                     |          | (100,563 | )        |         |          | 101,846  |           
|                                                  |                                                                                      | Due to stockholders                                 |                                                     |          | (7,899   | )        |         |          | (30,116  | )         
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|                                                  |                                                                                      |                                                     | Net Cash Used In Operating Activities               |          |          | (156,482 | )       |          |          | (1,121,333 | )
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                                                      |                                                     |                                                     |          |          |          |         |         
|                                                  | Purchases of property and equipment                                                  |                                                     |                                                     | (34,446  | )        |          |         | (118,812 | )       
|                                                  | Proceeds received from insurance settlement                                          |                                                     |                                                     |         |          |          |         | 356,793  |         
|                                                  | Proceeds used to acquire patents                                                     |                                                     |                                                     | (75,310  | )        |          |         | (47,306  | )       
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|                                                  |                                                                                      |                                                     | Net Cash (Used In) Provided by Investing Activities |          |          | (109,756 | )       |          |          | 190,675    |  
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                                                      |                                                     |                                                     |          |          |          |         |         
|                                                  | Payment of capital lease obligations                                                 |                                                     |                                                     | (62,199  | )        |          |         | (59,329  | )       
|                                                  | Payment of notes and loans payable                                                   |                                                     |                                                     | (169,914 | )        |          |         | (67,961  | )       
|                                                  | Proceeds from notes and loans payable                                                |                                                     |                                                     |         |          |          |         | 300,000  |         
|                                                  | Proceeds from revolving loans payable, net                                           |                                                     |                                                     | 515,703  |          |          |         | 726,122  |         
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|                                                  |                                                                                      |                                                     | Net Cash Provided by Financing Activities           |          |          | 283,590  |         |          |          | 898,832    |  
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|NET INCREASE (DECREASE) IN CASH                   |                                                                                      |                                                     | 17,352                                              |          |          |          | (31,826 | )       
|CASH - BEGINNING OF YEAR                          |                                                                                      |                                                     | 23,500                                              |          |          |          | 55,326  |         
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|CASH - END OF YEAR                                |                                                                                      | $                                                   | 40,852                                              |          |          | $        | 23,500  |         
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                                                      |                                                     |                                                     |          |          |          |         |         
|Cash paid during the year for interest            |                                                                                      | $                                                   | 149,745                                             |          |          | $        | 104,519 |         
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         
|Cash paid during the year for income taxes        |                                                                                      | $                                                   |                                                    |          |          | $        |        |         
|                                                  |                                                                                      |                                                     |                                                     |          |          |          |         |         

See accompanying notes to the consolidated financial statements.

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

During 2002 an additional gain of $18,351 was recognized as other income for
the fire that occurred in 2001.

During 2002, 17,327 treasury stock shares were obtained in exchange for $7,277
of accounts receivable owed from a customer that was also a stockholder.

At October 31, 2003, the Company had accrued $18,900 for a matching
contribution to its 401(k) plan for 2003. During 2003, the Company settled its
2002 accrual by issuing 116,549 shares of its common stock under the plan.

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTE 1 |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | (A) Organization and Description of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | Bio-Lok International, Inc. (Bio-Lok or the Company) manufactures and
distributes the Bio-Lok Precision Dental Implant System. The Company
holds several patents and its products are sold internationally and
domestically. Domestic marketing and sales are direct to clinicians
and institutions, and internationally via Distributors to clinicians and
institutions. The Companys products are subject to various United States
and international regulatory laws that restrict their sale to licensed
medical practitioners and distributors. The Company manufactures its
products in a Federal Drug Administration (FDA) registered facility, and
is ISO 9001 and Annex II Certified. The Company guarantees and warrants
its products, subject to certain restrictions and requirements. As a
result of minimal returns, the Company does not maintain any reserve for
product warranties.
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | (B) Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | The consolidated financial statements include the accounts of the
Company, its majority owned subsidiaries (Micro-Lok Mexico S.A. and
Bio-Lok Intl. Pty. Inc.), and Micro-Lok Chile, S.A., which is 51% owned.
All significant intercompany balances and transactions have been
eliminated in consolidation. Foreign currency translation gains or
losses arising from the consolidation are not recorded as they are deemed
to be immaterial to the financial statements as a whole since the
subsidiaries have minimal activities.                                                                                                                                                                                                                                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | (C) Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, management
is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and revenues and
expenses during the reported period. Actual results could differ from
those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | (D) Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | Cash includes cash on deposit at financial institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | (E) Reclassification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |  | Certain amounts from prior periods have been reclassified to conform to
the current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (F) Inventory                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Inventory is stated at the lower of cost or market using the first-in
first-out method. Inventory, which is not expected to be sold in one
year, is classified as long term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Finished goods inventory consists of a wide variety of products for sale
to satisfy a market that requires specific types and sizes of products
for specialized surgical applications and immediate order fulfillment.
No back-orders are maintained, generally product ordered is shipped the
same day for domestic accounts and within 3 days for international
accounts.                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | (G) Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets (five to twelve years). Leasehold
improvements are amortized on a straight-line basis over the lesser of
the remaining useful life of the asset or the remaining term of the
lease. Expenditures for maintenance and repairs are charged to expense
as incurred. In July 2001, a majority of the Companys manufacturing
equipment was destroyed in a fire for which the Company was insured for
replacement value (See Note 16).                                                                                                                                                                            
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | (H) Patents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | The Company accounts for product and process patents by capitalizing the
costs associated with registration of the patent and other unrecovered
costs of a successful legal suit. Patents are amortized over the lesser
of 20 years or the estimated useful life of the patented product or
process.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | (I) Advertising Expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | Costs incurred for producing and communicating advertising of the Company
are charged to operations as incurred. Advertising expenses, including
promotional expenses, for the year ended October 31, 2003 and 2002 was
$40,809 and $101,868, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | (J) Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | In accordance with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of (SFAS 121), long-lived assets and certain
identifiable intangible assets held and used by the Company are reviewed
for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Determination of
recoverability is based on an estimate of undiscounted future cash flows
resulting from the use of the asset and its eventual disposition.
Measurement of an impairment loss for long-lived assets is based on the
fair value of the asset. Long-lived assets to be disposed of are reported
at the lower of carrying amount or fair value less

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | costs to sell. (See
Recent Accounting Pronouncements (S) SFAS 121 will be replaced by SFAS
144 effective for the fiscal year beginning after December 15, 2001.)                                                                                                                                                                                                                                                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | (K) Research and Development Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Expenditures relating to the development of new products and processes,
including significant improvements to existing products, are expensed as
incurred. Research and development expenses were $184,641 and $358,557
in fiscal years 2003 and 2002, respectively.                                                                                                                                                                                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | (L) Stock Options and Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | In accordance with Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, (SFAS 123), the Company has
elected to account for stock options issued to employees under Accounting
Principles Board Opinion No. 25, (APB 25), and related interpretations.
The Company accounts for stock options issued to consultants and for
other services in accordance with SFAS 123.                                                                                               
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | (M) Treasury Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Treasury stock is accounted for by the cost method. Issuance of treasury
shares is accounted for on a first-in, first-out basis. Differences
between the cost of treasury shares and the re-issuance proceeds are
charged to additional paid-in capital. During the year ended October 31,
2002, the Company acquired 17,327 shares of its common stock in exchange
for satisfaction of $7,277 in accounts receivable. No gain or loss was
recognized. No treasury shares have been reissued as of October 31,
2003.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | (N) Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | The Company recognizes revenues when goods are shipped.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | (O) Per Share Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Basic net income (loss) per common share is computed based on the
weighted average common shares outstanding during the year as defined by
Statement of Financial Accounting Standards No. 128, Earnings Per
Share, (SFAS 128). Diluted net income per common share is computed
based on the assumed exercise of stock options and warrants, if dilutive.                                                                                                                                                       

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|                                                                                 
|---------------------------------------------------------------------------------
|The following represents reconciliation from basic to diluted earnings
per share:

|                                                   |  |      |           |      |  |   |           |  
|-------------------------------------------------- |  | ---- | --------- | ---- |  | - | --------- | -
|                                                   |  | 2003 |           | 2002
|                                                   |  |      |           |     
|Numerator:                                         |  |      |           |      |  |   |           |  
|Income (loss) to common shareholders               |  | $    | 9,304     |      |  | $ | (939,077  | )
|                                                   |  |      |           |      |  |   |           |  
|Denominator:                                       |  |      |           |      |  |   |           |  
|Weighted average common shares outstanding         |  |      | 6,820,355 |      |  |   | 6,493,904 |  
|Assumed exercise of stock options                  |  |      | 1,535,000 |      |  |   |          |  
|                                                   |  |      |           |      |  |   |           |  
|Diluted weighted average common shares
outstanding |  |      | 8,355,355 |      |  |   | 6,493,904 |  
|                                                   |  |      |           |      |  |   |           |  
|Basic earnings (loss) per common share             |  | $    |          |      |  | $ | (.14      | )
|                                                   |  |      |           |      |  |   |           |  
|Diluted earnings (loss) per common share           |  | $    |          |      |  | $ | (.14      | )
|                                                   |  |      |           |      |  |   |           |  

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Options to purchase 1,535,000 and 1,705,000 shares of common stock at
prices between $.05 and $3.00 per share were outstanding at October 31,
2003 and 2002, respectively,
but were not included in the computation of diluted loss per share for
2002 because they are antidilutive.                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | (P) Fair Value of Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments, (SFAS 107), requires disclosures
of information about the fair value of certain financial instruments for
which it is practicable to estimate that value. For purposes of this
disclosure, the fair value of a financial instrument is the amount at
which the instrument could be exchanged in a current transaction between
willing parties other than in a forced sale or liquidation.                                                                                                                                                                                                       
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | The carrying amounts of the Companys financial instruments, including
accounts receivable, accounts payable and accrued liabilities, and notes
and loans payable approximates fair value due to the relatively short
period to maturity for these instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | (Q) Segment Accounting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information, (SFAS 131),
requires that a public business enterprise report a measure of segment
profit or loss, certain specific revenue and expense items, and segment
assets. It requires reconciliations of total segment revenues, total
segment profit or loss, total segment assets, and other amounts disclosed
for segments to corresponding amounts in the enterprises general-purpose
financial statements. It requires that all public business enterprises
report information about the revenues derived from the enterprises
products or services (or groups of similar products

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | and services), about the countries in which the enterprise earns revenues and holds assets,
and about major customers regardless of whether that information is used
in making operating decisions. However, this Statement does not require
an enterprise to report information that is not prepared for internal use
if reporting it would be impracticable. (See Note 15 for the Companys
percentage of sales to various geographical areas.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | The Company has only one product line consisting of its Bio-Lok
Precision Dental Implant System, which is sold both domestically and
internationally. It is practical to report by geographic area net sales
only, which has been included within this report. The
Company does not allocate assets and expenses between segments because
assets and expenses are used in more than one segment and any allocation
would be impractical.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | (R) Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure - an amendment of FASB
Statement No. 123. SFAS No. 148 amends SFAS No. 123, Accounting for
Stock Based Compensation and provides alternative methods for accounting
for a change by registrants to the fair value method of accounting for
stock-based compensation. Additionally, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require disclosure in the
significant accounting policy footnote of both annual and interim
financial statements of the method of accounting for stock
based-compensation and the related pro-forma disclosures when the
intrinsic value method continues to be used. The statement is effective
for fiscal years beginning after December 15, 2002, and disclosures are
effective for the first fiscal quarter beginning after December 15, 2002.                                                                                             
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | In April 2003, the FASB issued SFAS N0. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities. This Statement
amends Statement No. 133 to clarify the financial accounting and
reporting for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. This
Statement is effective for contracts entered into or modified after June
30, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments for with Characteristics of both liabilities and
equity. This Statement establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an
issuer classify a financial instrument that is within its scope as a
liability. The requirements of this Statement apply to issuers
classification and measurements of freestanding financial instruments.
This Statement is effective for financial instruments entered into or
modified after May 31, 2003 and otherwise effective at the beginning of
the first interim period beginning after June 15, 2003, except for
mandatorily redeemable financial instruments of nonpublic entities. For
nonpublic entities, mandatorily reemable financial instruments are
subject to the provisions of this Statement for the first fiscal period
beginning after December 15, 2003.

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  | On January 17, 2003, the FASB issued FIN 46, Consolidation of Variable
Interest Entities,an interpretation of Accounting Research Bulletin No.
51. The primary objectives of FIN 46 are to provide guidance on how to
identify entities for which control is achieved through means other than
through voting rights (variable interest entities VIE) and how to
determine when and which business enterprise should consolidate the VIE.
This new model for consolidation applies to an entity in which either (1)
the equity investors do not have a controlling financial interest or (2)
the equity investment at risk is sufficient to finance that entitys
activities without receiving additional subordinated financial support
from other parties.
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |  | Management does not expect the impact from these pronouncements to have a
material impact on the Companys consolidated financial position or
results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|NOTE 2 |  | ACCOUNTS RECEIVABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |  | Accounts receivable as of October 31, 2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                                      |  |   |           | 
|------------------------------------- |  | - | --------- | 
|Accounts receivable, gross            |  | $ | 1,047,394 | 
|Less: Allowance for doubtful accounts |  |   | 45,869    | 
|                                      |  |   |           | 
|Accounts receivable, net              |  | $ | 1,001,525 | 
|                                      |  |   |           | 

|                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------
|The Company maintains an allowance for doubtful accounts based on
managements analysis of historical customer collections and risk (See
Note 14).

|       |  |                                                             
|------ |  | ------------------------------------------------------------
|NOTE 3 |  | INVENTORY                                                   
|       |  |                                                             
|       |  | Inventory consisted of the following as of October 31, 2003:

|                                        |  |   |           | 
|--------------------------------------- |  | - | --------- | 
|Raw materials                           |  | $ | 21,410    | 
|Tooling                                 |  |   | 1,936     | 
|Work in process                         |  |   | 634,424   | 
|Finished goods                          |  |   | 1,381,551 | 
|                                        |  |   |           | 
|                                        |  |   | 2,039,321 | 
|Less: Inventory classified as long-term |  |   | 159,816   | 
|                                        |  |   |           | 
|Total current inventory                 |  | $ | 1,879,505 | 
|                                        |  |   |           | 

|       |  |                                                                          
|------ |  | -------------------------------------------------------------------------
|NOTE 4 |  | PROPERTY AND EQUIPMENT                                                   
|       |  |                                                                          
|       |  | Property and equipment consisted of the following as of October 31, 2003:

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|                              |  |   |           | 
|----------------------------- |  | - | --------- | 
|Office equipment              |  | $ | 94,931    | 
|Machinery and equipment       |  |   | 681,927   | 
|Capital leases                |  |   | 541,675   | 
|Computer equipment            |  |   | 199,458   | 
|Leasehold improvements        |  |   | 65,101    | 
|                              |  |   |           | 
|                              |  |   | 1,583,092 | 
|Less accumulated depreciation |  |   | 456,258   | 
|                              |  |   |           | 
|                              |  | $ | 1,126,834 | 
|                              |  |   |           | 

|       |  |                                                                                                                                                                             
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  | Depreciation expense for the years ended October 31, 2003 and 2002 was
$141,546 and $149,557, respectively.                                                                 
|       |  |                                                                                                                                                                             
|NOTE 5 |  | PATENTS                                                                                                                                                                     
|       |  |                                                                                                                                                                             
|       |  | Patent expenses for attorneys fees and related registration costs and
other unrecovered costs of a successful legal suit consisted of the
following as of October 31, 2003:

|                                       |  |   |         | 
|-------------------------------------- |  | - | ------- | 
|Patents                                |  | $ | 122,616 | 
|Less: accumulated amortization expense |  |   | 7,472   | 
|                                       |  |   |         | 
|                                       |  | $ | 115,144 | 
|                                       |  |   |         | 

|       |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 
|------ | ---------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|       |            | Amortization expense on patents for the year ended October 31, 2003 and
2002 totaled $6,126 and $1,346, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 
|NOTE 6 |            | REVOLVING LOANS PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 
|       |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 
|       |            | The following schedule reflects revolving loans payable as of October 31,
2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 
|       |            | On November 26, 2001, the Company executed a revolving loan
agreement with CommerceBank, N.A., for a maximum loan amount of
$1,500,000, which effective March 26, 2003 was increased to
$2,000,000. The Company pledged essentially all of its assets
as collateral to secure the loan arrangement and the revolving
loan is guaranteed by the EximBank. The interest rate is the
prime rate in effect plus 2.0%. At October 31, 2003, the
effective rate was 6.00%.
Currently, the loan has been extended to April 29, 2004, then
the revolving loan is in the process of review and renewal.
Additionally, to provide added security to the Bank for the
above revolving loan, the Company also has obtained EximBank
credit guarantees on select international receivables at a
cost of $1.06 per $100 as invoices are issued and reported.
(See Note 18).
|       | $1,738,704

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | --------- | 
|       |  | On July 15, 1999, the Company entered into a $35,000 line of
credit agreement with Sovereign Bank. The agreement calls for
an interest rate based on the banks prime rate plus 1.50%. At
October 31, 2003, the effective rate was 5.50%. The loan is a
demand loan and calls for annual reviews.                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |   | 27,000    | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $ | 1,765,704 | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|NOTE 7 |  | NOTES AND LOANS PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |   |           | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  | The following schedule reflects notes and loans payable as of October 31,
2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  | On November 26, 2001, the Company entered into a promissory note
collateralized with existing equipment with CommerceBank N.A. at
an interest rate of 7.5%. The note requires payments of interest
only for the initial 12 months and interest plus principal for
the remaining 48 months from December 2002 through November 2006.                                                                                                                                                                                                                                                                                                                                                                                                 |  |   | 231,250   | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  | Chapter XI bankruptcy settlement obligations under the Amended
Plan of Reorganization dated February 12, 1997, with aggregate
monthly payments due to the creditors as determined by the
payment schedules incorporated into the agreement, including
interest at 9%. The Company is in arrears on some payments due
to general unsecured creditors under the plan of reorganization
primarily because of the Companys inability to locate and
forward payments to those creditors. These payments are included
in the current portion of notes and loans payable. As of the
date of this report, no actions have been presented to the
Company relating to non-payment of the missing creditors under
the plan of reorganization. |  |   | 176,093   | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  | TOTAL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | $ | 407,343   | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |   |           | 
|       |  | Required payments of principal on notes and loan payable, including
current maturities, are as follows as of October 31, 2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |           | 

|     |  |        |         | 
|---- |  | ------ | ------- | 
|Year |  | Amount
|     |  |       
|2004 |  | $      | 251,093 | 
|2005 |  |        | 75,000  | 
|2006 |  |        | 75,000  | 
|2007 |  |        | 6,250   | 
|     |  |        |         | 
|     |  | $      | 407,343 | 
|     |  |        |         | 

|                                                                                                       
|-------------------------------------------------------------------------------------------------------
|Interest expense for the years ended October 31, 2003 and 2002 was
$149,745 and $104,519, respectively.

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|       |  |                                                                                                                                                                                                                                                                                                                                                                      
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  | The Companys long-term debt agreements contain various loan covenants.
At October 31, 2003, the Company was not in compliance with these
covenants, hence the notes payables are classified as short-term debt.
The Company has received a waiver in writing from its bank for all loan
covenants through April 29, 2004 the annual review date of the
relationship.
|       |  |                                                                                                                                                                                                                                                                                                                                                                      
|NOTE 8 |  | RELATED PARTIES                                                                                                                                                                                                                                                                                                                                                      
|       |  |                                                                                                                                                                                                                                                                                                                                                                      
|       |  | Related party transactions consist of advances to the Company from
stockholders in the form of using personal credit cards for the purchase
of goods and services. As of October 31, 2003, $2,294 was due to
stockholders for the use of their personal credit cards.                                                                                                
|       |  |                                                                                                                                                                                                                                                                                                                                                                      
|NOTE 9 |  | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                         
|       |  |                                                                                                                                                                                                                                                                                                                                                                      
|       |  | For the years ended October 31, 2003 and 2002, taxable net income has
been adjusted to remove the gain from involuntary conversion of fixed
assets due to a fire loss that is not recognized for tax purposes.                                                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                                                      
|       |  | Income tax expense (benefit) for the years ended October 31, 2003 and
2002 is summarized as follows:                                                                                                                                                                                                                                                                 

|                             |                               |   |      |         |      |   |   |          |  
|---------------------------- | ----------------------------- | - | ---- | ------- | ---- | - | - | -------- | -
|                             |                               |   | 2003 |         | 2002
|                             |                               |   |      |         |     
|Deferred:                    |                               |   |      |         |      |   |   |         
|                             | Federal                       |   | $    | (32,975 | )    |   | $ | (258,465 | )
|                             | State                         |   |      | 2,777   |      |   |   | (48,064  | )
|                             | Change in valuation allowance |   |      | 30,198  |      |   |   | 306,529  |  
|                             |                               |   |      |         |      |   |   |          |  
|Income tax expense (benefit) |                               | $ |     |         |      | $ |  |         
|                             |                               |   |      |         |      |   |   |         

|                                                                                                                                                                                                                                   
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The Companys tax expense (benefit) differs from the expected tax
expense for the years ended October 31, 2003 and 2002 (computed by
applying the Federal Corporate tax rate of 37.63 percent to income before
taxes) as follows:

|                                                        |  |      |        |      |  |   |          |  
|------------------------------------------------------- |  | ---- | ------ | ---- |  | - | -------- | -
|                                                        |  | 2003 |        | 2002
|                                                        |  |      |        |     
|Computed expected tax (benefit) expense               |  | $    | 3,163  |      |  | $ | (296,558 | )
|State
income tax (benefit)  net of federal tax
benefit |  |      | 1,833  |      |  |   | (55,181  | )
|Non deduction expenses                                  |  |      | 14,003 |      |  |   |         |  
|                                                        |  |      |        |      |  |   |          |  
|                                                        |  | $    | 18,999 |      |  | $ | (351,739 | )
|                                                        |  |      |        |      |  |   |          |  

|                                                                                                                                                    
|----------------------------------------------------------------------------------------------------------------------------------------------------
|The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities are as follows at October
31:

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|                                   |                                 |   |          |         |      |   |          |         | 
|---------------------------------- | ------------------------------- | - | -------- | ------- | ---- | - | -------- | ------- | 
|                                   |                                 |   | 2003     |         | 2002
|                                   |                                 |   |          |         |     
|Deferred tax assets:               |                                 |   |          |         |      |   |          |        
|                                   | Depreciation                    |   | $        | 34,641  |      |   | $        | 29,260  | 
|                                   | Net operating loss carryforward |   |          | 456,353 |      |   |          | 431,536 | 
|                                   |                                 |   |          |         |      |   |          |         | 
|Total gross deferred tax assets    |                                 |   | 490,994  |         |      |   | 460,796  |        
|Less valuation allowance           |                                 |   | (490,994 | )       |      |   | (460,796 | )      
|                                   |                                 |   |          |         |      |   |          |        
|Net deferred tax assets            |                                 |   |         |         |      |   |         |        
|                                   |                                 |   |          |         |      |   |          |        
|Net deferred tax asset (liability) |                                 | $ |         |         |      | $ |         |        
|                                   |                                 |   |          |         |      |   |          |        

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | As of October 31, 2003, the Company had net operating loss carryforwards
of $1,212,737, for income tax purposes, available to offset future
taxable income expiring on various dates beginning in 2021.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|NOTE 10 |  | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  | (A) Consulting Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  | On August 28, 2000, the Company entered into a consulting agreement with
a former stockholder of Orthogen Corporation, which was acquired in March
2000 and is primarily engaged in research and development of certain
technology, which the Company anticipates bringing to market. The
agreement is for a five-year period and is renewable. Compensation is
stated at $26,000 per year plus expenses, but is subject to review
annually by the Board of Directors. The agreement also grants the
consultant an option for 300,000 shares of common stock. The options are
to be issued upon the reaching of certain milestones by Orthogen. The
first milestone requires Orthogen to successfully provide a laser
machined dental implant that is ready for use in humans. The second and
third milestones are contingent on reaching certain sales levels of this
new product. The last milestone is based upon the next Orthogen
developed technology reaching financial break even. To date, the first
milestone had been met and 100,000 of the Option was issued in common
stock in 2003 (See Note 13(A)).
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  | (B) Employment Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  | On November 1, 1997 (the Effective Date), the Company entered into
three employment agreements (the Agreements) with executives (the
Employees) of the Company. The Employees were engaged as President and
Chief Executive Officer (CEO), as Vice President - Finance and Chief
Financial Officer (CFO) and as Director of International Sales &
Marketing (VP) of the Company (today VP Marketing & Sales). The
Agreements were established for terms of five years, four years, and two
years, respectively, from the Effective Date for the CEO, CFO and VP,
respectively. The Agreements automatically renew annually for a term of
five years, four years, and two years, respectively. The Agreements
contain a confidentiality and a non-compete clause. As consideration for
the Employees performances, the Company agreed                                                                                                                                                                                                                                                                  

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to pay as of the original
contract date an annual base salary detailed in the Companys annual
meeting proxy statement. In addition, the Company agreed to award the
Employees an annual bonus of not less than 10% of their respective base
salaries. At the discretion of the Employees, the portion of the
Employees salaries and bonuses that are not taken during a given
employment year will be paid in shares of the Companys common stock at a
value equal to the Companys net worth divided by the number of shares
issued and outstanding.                                                                                                                                                                                                      
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | In March 2000, the Company entered into an employment agreement with an
officer of Orthogen Corporation. The agreement specifies an annual base
salary as detailed in the Companys annual meeting proxy statement with a
10% bonus, both of which are reviewed annually by the Board of Directors.
The agreement also granted an option for 300,000 shares of common stock
as an added incentive to remain with the Company. The options are to be
issued upon the reaching of certain milestones by the Orthogen. To date,
the first milestone had been met and 100,000 of the Option was issued in
common stock in 2003 (See Note 13(A)).                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | (C) International Distributor Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | The Company enters into distributor agreements (the Agreements) with
all its foreign distributors (the Distributors). The Agreements are
established for a term of three to five years and renew automatically
after the initial term, unless canceled in writing by either party at
least 120 days prior to expiration. The Agreements may be terminated
earlier by the Distributors with or without cause upon ninety days
written notice and by the Company upon sixty days notice in case the
Distributors did not meet the specific requirements stipulated in the
Agreements. Under the terms of the Agreements, the Company grants to the
Distributors the exclusive right to sell to customers the Companys
product line in a specific territory.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | (D) Capital Lease Agreements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | The following is a schedule of future minimum lease payments under
capital leases together with the present value of the net minimum lease
payments as of October 31, 2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                                                    |                              |          |        |         |         |        | 
|--------------------------------------------------- | ---------------------------- | -------- | ------ | ------- | ------- | ------ | 
|Year                                                |                              |          | Amount
|                                                    |                              |         
|                                                    | 2004                         |          |        |         | $       | 75,370 | 
|                                                    | 2005                         |          |        |         |         | 45,734 | 
|                                                    | 2006                         |          |        |         |         | 4,853  | 
|                                                    |                              |          |        |        
|                                                    | Total minimum lease payments |          |        | 125,957 |        
|Less  amount representing interest                 |                              |          | 12,357 |        
|                                                    |                              |          |        |        
|                                                    |                              | Subtotal |        |         | 113,600 |       
|                                                    |                              |          |        |        
|Less  current portion of capital lease obligations |                              |          | 66,069 |        
|                                                    |                              |          |        |        
|Capital lease obligations, less current portion     |                              | $        | 47,531 |        
|                                                    |                              |          |        |        

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

| |  |                                                                                                                                                                                                                                            
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (E) Operating Lease Agreements                                                                                                                                                                                                             
| |  |                                                                                                                                                                                                                                            
| |  | The Company leases corporate office space and office equipment under
operating leases. The leases expire at various dates through November
2006. Future minimum lease payments for the operating leases are as
follows at October 31, 2003:

|     |            |        |   |         |        | 
|---- | ---------- | ------ | - | ------- | ------ | 
|Year |            | Amount
|     |            |       
|     | 2004       |        |   | $       | 82,626 | 
|     | 2005       |        |   |         | 17,250 | 
|     | 2006       |        |   |         | 17,250 | 
|     | Thereafter |        |   |         | 1,450  | 
|     |            |        |   |         |       
|     |            |        | $ | 118,576 |       
|     |            |        |   |         |       

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Rent expense under the operating leases for the years ended October 31,
2003 and 2002 was $94,221 and $79,053, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | (F) Royalty Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | Pursuant to a settlement agreement, the Company is obligated to make
royalty payments to a general creditor, in addition to payments on his
general unsecured claim, for the Companys continued sale of certain
dental implant products. These payments are to
continue for a period of ten years following confirmation of the
Companys Amended Plan of Reorganization dated February 12, 1997.
Payments will be made based upon a schedule as stipulated in the
settlement agreement up to a maximum of 2% of the total net sales of
certain products as defined in the settlement agreement. The Company
expensed $89,606 and $56,605 for royalties under this agreement for the
years ended October 31, 2003 and 2002, respectively.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | Pursuant to a License Agreement entered into with The New Jersey Center
and Medical Devices Consortium, the Company is obligated to make royalty
payments for the grant of a license for a certain laser technology
applied to dental products manufactured by the Company. Royalty payments
commenced with 2002 and each year thereafter with a minimum payment of
$15,000 for 2002, $20,000 for 2003, and $25,000 each year thereafter;
additionally, once product is sold into the marketplace the Company is to
pay 2% of net sales on product sold with the technology and 5% on any
license issued net of any minimums paid.                                                                                                        
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | (G) Gain Contingency                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | In July 2001, a fire occurred at the Companys manufacturing facilities
that destroyed a significant amount of machines, equipment and inventory.
The Company had insurance for the replacement value of the destroyed
equipment as well as business interruption (BI) insurance. While the
equipment has been replaced as of the date of these financial statements,
the BI insurance is still being negotiated with the insurance company.                                                                                                                                                                                                                                                                                          

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | Depending on the final outcome, the Company could incur additional gains
related to the fire. Currently, the amount of this potential gain is
indeterminable (See Note 16).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|NOTE 11 |  | 401(K) PLAN SUMMARY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | The Company set up and initiated a retirement 401(k) Plan effective
1/1/97 (the Plan). The Plan originally was managed by Prudential and
was transferred to Smith Barney Plan Services effective April 1998. The
Plan is open to all employees that have reached the age of 21, have
completed 90 days of service and are employed for 32 or more hours per
week. Participants can contribute from 1% to 15% of pay subject to
maximums as prescribed by the IRS. Matching contributions are
discretionary and must be designated by the Board of Directors on a
yearly basis. New participants vest 33%, 66% and 100% in their first,
second and third year of employment for any matching contributions.                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | The Board of Directors approved the issuance of a matching contribution
since 2001. Contributions awarded total 50% of the first 10% of
contributions by a participant. The cost to the Company was 69,156 and
116,549 shares of the Companys common stock having a fair value of
$18,900 and $17,482 for 2003 and 2002, respectively. The award for 2003
has been accrued and is expected to be issued in early 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|NOTE 12 |  | STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | (A) Authorized Common and Preferred Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | On May 2, 2002, the Company amended its certificate of incorporation to
20,000,000 authorized shares of $.01 par value common stock and 500,000
authorized shares of $.75 par value preferred stock. All share and per
share information in the financial statements herein give effect to these
capital stock transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | (B) Stock Issued for Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | During fiscal year 2003, the Company issued 490,549 shares of common
stock or $75,992 to a number of employees, officers, and directors for
services rendered, 116,549 shares of common stock or $17,482 to the
Bio-Lok 401(k) Plan as a matching contribution for the years ended 2002;
200,000 shares of common stock for contractual milestones achieved by
individuals related to the acquisition of Orthogen Corp. in 2000; 90,000
shares of common stock to Directors for services in 2002 and 2003; 54,000
shares of common stock to clinicians for services, 10,000 shares of
common stock for the exercise of a Purchase Warrant Option exercised;
and, 20,000 to an employee as a part of a promotion. The issued shares
of common stock were valued at the fair market value on the date of grant
based on the concurrent cash-offering price.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|NOTE 13 |  | STOCK OPTIONS AND WARRANTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (A) Stock Options Granted Under Employment and Consulting Agreements
During 2002 and prior, the Company granted stock options to certain
employees and consultants. A number of the options had been issued when
the Company had a negative net worth and prior to its stock trading.
Stock issued to employees has been recorded at intrinsic value in
accordance with APB 25 and options issued to third parties and clinicians
have been recorded at fair market value as calculated using the Black
Scholes model in accordance with SFAS 123. The proforma disclosure on
net income, had the Company used the fair value based method of
accounting for its stock options granted in 2002 and 2001 and charged
operations over the option vesting periods based on the fair value of
options at the date of grant, is minimal.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Included in the options granted above are 400,000 options issued as a
part of the acquisition of Orthogen Corporation. These options are
exercisable only if certain milestones are achieved (See (*) below and
Note 10(A) and (B)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | Options to purchase an aggregate of 1,602,000 common shares granted
during 2000 through 2002 to existing directors and employees under a
qualifying plan were cancelled effective September 16, 2002. It was
found that a qualifying plan had never been established by the Company.
A qualified plan for employees was issued, presented to stockholders,
approved by a majority of stockholders and approved by the Board of
Directors. In conjunction with the Plan approval 1,602,000 Options where
issued on April 8, 2003, to Officers and employees at market or higher
for service from 2000 to 2001, and another 210,000 Options on April 8,
2003, to Directors, Officers and select employees for services in 2002.                                                                                                      
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | The fair market value of each stock option granted to non-employees was
estimated on the date of grant using the Black-Scholes Option-Pricing
Model in accordance with SFAS 123 assuming: (1) a risk-free interest rate
of 5.82% to 6.0%, (2) an expected life of five to ten years, (3) an
expected volatility of 101% to 141% and (4) no expected dividends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  | A summary of the stock options issued is presented below as of October
31, 2003:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

|                                     |                                 |  |                   |           |                |   |                  |     | 
|------------------------------------ | ------------------------------- |  | ----------------- | --------- | -------------- | - | ---------------- | --- | 
|                                     |                                 |  |                   |           |                |   | Weighted Average
|                                     |                                 |  | Number of Options |           | Exercise Price
|                                     |                                 |  |                   |           |               
|Stock Options                        |                                 |  |                   |           |                |   |                  |    
|                                     | Balance at beginning of period  |  |                   | 1,735,000 |                |   | $                | .34 | 
|                                     | Granted                         |  |                   | 1,812,000 |                |   |                  | .13 | 
|                                     | Exercised (performance based *) |  |                   | 200,000   |                |   |                  |    | 
|                                     | Cancelled and rescinded         |  |                   |          |                |   |                  |    | 
|                                     | Expired                         |  |                   |          |                |   |                  |    | 
|                                     |                                 |  |                   |           |                |   |                  |     | 
|                                     | Balance at end of period        |  |                   | 3,347,000 |                |   | $                | .24 | 
|                                     |                                 |  |                   |           |                |   |                  |    
|Options exercisable at end of period |                                 |  | 1,535,000         |           |                | $ | .34              |    
|                                     |                                 |  |                   |           |                |   |                  |    

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|                                                                                   
|-----------------------------------------------------------------------------------
|The following table summarizes information about stock options at October 31, 2003:

|                    |   |                     |   |             |             |           |           |             |          |          |             |  |          |      |  |  |  |           |  |  |   |      | 
|------------------- | - | ------------------- | - | ----------- | ----------- | --------- | --------- | ----------- | -------- | -------- | ----------- |  | -------- | ---- |  |  |  | --------- |  |  | - | ---- | 
|Options Outstanding |   | Options Exercisable
|                    |   |                    
|                    |   |                     |   |             | Number      |           | Weighted  |             |          |          |             |  | Number   |      |  |  | 
|                    |   |                     |   |             | Outstanding |           | Average   |             | Weighted |          | Exercisable |  | Weighted
|                    |   |                     |   |             | at          |           | Remaining |             | Average  |          | at          |  | Average 
|Exercise            |   | October 31,         |   | Contractual |             | Exercise  |           | October 31, |          | Exercise
|Prices              |   | 2003                |   | Life        |             | Price     |           | 2003        |          | Price   
|                    |   |                     |   |             |             |           |           |             |          |         
|                    | $ | .05                 |   |             |             | 30,000    |           |             |          | 7.4      |             |  | $        | .05  |  |  |  | 30,000    |  |  | $ | .05  | 
|                    |   | .10                 |   |             |             | 100,000   |           |             |          | 5.1      |             |  |          | .10  |  |  |  | 100,000   |  |  |   | .10  | 
|                    |   | .12                 |   |             |             | 266,000   |           |             |          | 8.2      |             |  |          | .12  |  |  |  |          |  |  |   | .12  | 
|                    |   | .13                 |   |             |             | 1,546,000 |           |             |          | 8.2      |             |  |          | .13  |  |  |  |          |  |  |   | .13  | 
|                    |   | .25                 |   |             |             | 805,000   |           |             |          | 4.0      |             |  |          | .25  |  |  |  | 805,000   |  |  |   | .25  | 
|                    |   | .75                 |   |             |             | 100,000   |           |             |          | 1.6      |             |  |          | .75  |  |  |  | 100,000   |  |  |   | .75  | 
|                    |   | 3.00                |   |             |             | 100,000   |           |             |          | 1.6      |             |  |          | 3.00 |  |  |  | 100,000   |  |  |   | 3.00 | 
|                    |   | (*                  | ) |             |             | 400,000   |           |             |          | 3.2      |             |  |          |     |  |  |  | 400,000   |  |  |   |     | 
|                    |   |                     |   |             |             |           |           |             |          |          |             |  |          |      |  |  |  |           |  |  |   |      | 
|                    | $ | .05-3.00            |   |             |             | 3,347,000 |           |             |          | 6.1      |             |  | $        | .24  |  |  |  | 1,535,000 |  |  | $ | .34  | 
|                    |   |                     |   |             |             |           |           |             |          |          |             |  |          |      |  |  |  |           |  |  |   |      | 

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | (*) Performance based options consisting of 200,000 shares to each of
two individuals (aggregating 400,000 shares) that represented the sellers
of Orthogen Corporation to the Company; subsequent to the acquisition one
individual became an employee and the other a consultant. (See Note 10(A)
and (B)).                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  | (B) Stock Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  | During 1998, the Company issued warrants to purchase an aggregate of
20,000 shares of the Companys common stock to two consultants. The
warrants are exercisable between October 25, 1998 and September 30, 2003
at an exercise price of $0.10 per share. As of October 31, 2003, 10,000
of these warrants have been exercised and the remaining 10,000 have
expired.                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|NOTE 14 |  | CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  | During fiscal 2003 and 2002, 42% and 49%, respectively, of the Companys
total revenues were derived from sales to two customers. The Companys
international sales represent approximately 72% and 75% of the total
sales for 2003 and 2002, respectively. As of October 31, 2003, 54% of
accounts receivable were due from four customers (See Note 2). Financial
instruments that potentially subject the Company to concentrations of
credit risk consist of accounts receivable.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  | To insure against extraordinary losses on the major account
concentrations, the Company maintains receivable credit insurance
guarantees on its major international accounts. The policy is issued by
EximBank and is paid as invoices are issued. As of October 31, 2003,
$644,252 of receivables were insured. Credit limits are individually evaluated and                                                                                                                        

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | assigned in part by the Company and EximBank.
Additionally, credit and country risk is continually evaluated to assess
risk and additional collateral and guaranties are requested and/or
obtained accordingly.                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|NOTE 15 |  | SEGMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       
|        |  | During fiscal 2003 and 2002, the Company had net sales to Europe, North
America, South America and all other areas of approximately 42% and 45%,
28% and 25%, 18% and 22%, and 12% and 8%, respectively.                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|NOTE 16 |  | GAIN ON INVOLUNTARY CONVERSION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  | In July 2001, a fire occurred at the Companys manufacturing facilities
that destroyed a significant amount of machines, equipment and inventory.
The Company had insurance for the replacement value of the destroyed
equipment and inventory, as well as business interruption (BI)
insurance. The table below shows the amount of insurance claims, the net
book value of the assets destroyed, the resulting gain from involuntary
conversion and the funds received from the insurance company as of
October 31, 2002 and 2001:

|                                                   |  |           |           |          |  |      |         |  |  |   |           | 
|-------------------------------------------------- |  | --------- | --------- | -------- |  | ---- | ------- |  |  | - | --------- | 
|                                                   |  | Insurance |           | Net Book |  |      |         | 
|Asset Destroyed                                    |  | Claim     |           | Value    |  | Gain
|                                                   |  |           |           |          |  |     
|Manufacturing equipment                            |  | $         | 1,316,070 |          |  | $    | 343,088 |  |  | $ | 972,982   | 
|Inventory                                          |  |           | 161,617   |          |  |      | 127,642 |  |  |   | 33,975    | 
|BI                                                 |  |           | *         |          |  |      | *       |  |  |   | *         | 
|                                                   |  |           |           |          |  |      |         |  |  |   |           | 
|                                                   |  |           | 1,477,687 |          |  | $    | 470,730 |  |  | $ | 1,006,957 | 
|                                                   |  |           |           |          |  |      |         |  |  |   |           | 
|Less: proceeds received through October
31, 2001   |  |           | 1,139,245 | (A)      |  |      |         |  |  |   |           | 
|                                                   |  |           |           |          |  |      |         |  |  |   |           | 
|Insurance receivable at October 31, 2001           |  | $         | 338,442   |          |  |      |         |  |  |   |           | 
|                                                   |  |           |           |          |  |      |         |  |  |   |           | 
|Insurance proceeds received during 2002            |  | $         | 356,793   |          |  |      |         |  |  |   |           | 
|Less: insurance receivable at October
31, 2001     |  |           | 338,442   |          |  |      |         |  |  |   |           | 
|                                                   |  |           |           |          |  |      |         |  |  |   |           | 
|Additional gain recognized in other
income in 2002 |  | $         | 18,351    |          |  |      |         |  |  |   |           | 
|                                                   |  |           |           |          |  |      |         |  |  |   |           | 

| |  |                                                                                                                                                                                                                                                      
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Company was also reimbursed (or the insurance company paid funds
directly on behalf of the Company) for costs expended for cleaning of the
facility, air conditioner repair, restoration services and other
incidental costs related to the fire.
| |  |                                                                                                                                                                                                                                                      
| |  | (A) Of this amount, $161,617 was received for destroyed inventory
and $977,628 for destroyed fixed assets                                                                                                                                            
| |  |                                                                                                                                                                                                                                                      
| |  | * See Note 10(G)                                                                                                                                                                                                                                     

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NOTE 17 |  | LIQUIDITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  | During the year ended October 31, 2003, the Company position improved
considerably but still incurred a negative cash flow from operating
activities of $156,482 and net income of $9,304, and as of October 31,
2003 had an accumulated deficit of $806,906, positive working capital of
$557,494, and positive stockholders equity of $1,770,808. As of the
fiscal year-end, the Company had $40,852 in cash, $1,001,525 in net
accounts receivable, and $2,039,321 in inventory. The Company had
accounts payable, accrued expenses and other payables in the aggregate of
$355,116, revolving loans payable of $1,765,704, and notes and loans
payable  current of $407,343.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  | On March 26, 2003, the Company entered into a new financing arrangement
with CommerceBank, N.A. to provide a new revolving line of credit
facility. Under the facility, CommerceBank, N.A. committed to a
revolving loan payable to $2,000,000. This line of credit is an asset
based line of credit to finance international accounts receivable and
inventory destined for export. The amount available under the line of
credit is subject to a monthly borrowing base, as defined in the
agreement. EximBank US is guaranteeing 90% of the loan. Under the
facility, CommerceBank, N.A. also committed to a revolving line of credit
on domestic receivables in the amount of $250,000, and amount available
under the line of credit is subject to a monthly borrowing base. The
interest rate for both of these facilities will be the Wall Street
Journal Prime Rate plus two percent and is due monthly. The principal
under these lines of credit will be due on demand with an annual
financial review date of December 31. The collateral for these
facilities will consist of a blanket, first priority UCC-1 lien on all of
the Companys assets. Currently, the line has been extended to April 29,
2004, for finanlizing the annual review and continued extension of the
line of credit.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  | The increase in the domestic sales force in 2002 has improved sales in
2003 by 74%, and sales internationally increased 40% over the prior year.
Over all net sales increased 48%
in 2003. Management plans to continue its efforts to increase sales at
comparable rates while maintaining the same level of selling and
administrative expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  | Future financing may not be available on a timely basis, in sufficient
amounts or on terms acceptable to the Company. Future financing in the
form of equity transactions may result in dilution of equity. Any
additional debt financing may contain additional covenants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  | If adequate funds are not available either through operations or
financing arrangements, the Company may be required to delay or scale
back the growth of operations and product and service development
efforts. In addition, there is no guarantee that current financing
arrangements will continue indefinitely.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |  | Deteriorating global economic conditions may cause prolonged declines in
investor confidence in and accessibility to capital markets.
Deteriorating global economic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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##### Table of Contents



BIO-LOK INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED OCTOBER 31, 2003 AND 2002

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  | conditions may make it more difficult for the Company to secure funding because, during times of deteriorating
global economic conditions, prospective lenders and investors generally
have less funds to lend or invest.                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  | As reflected in the accompanying financial statements and as of October
31, 2003, the Company had an accumulated deficit of $806,906, a net loss
from operations of $23,496 and net cash outflows from operating
activities of $156,483, that raises some doubt about its ability to
continue as a going concern. The ability of the Company to continue as a
going concern is dependent on the Companys ability increase its line of
credit, raise additional capital and implement its business plan. The
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  | The Company anticipates an increase in sales volume and potentially
raising additional capital during 2004. Management believes that actions
presently taken to improve its future operations, increase its sales
volume, and current efforts in increasing the line of credit under the
revolving loan payable to $2,500,000 providing the opportunity for the
Company to continue as a going concern (See Note 18).                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|NOTE 18 |  | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  | On December 31, 2003, the Company received and was granted an extension
to April 29, 2004, of its current CommerceBank, N.A. and EximBank US
insurance support guarantees for inventory and receivables totaling
$2,000,000 (See Note 17).                                                                                                                                                                                                                                                                                                                                                                                                       

F-25