**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, 2005******
 
 o
                TRANSITION
                    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                    OF
                    1943.
 
 For the Transition period from
                  ____________________ to
                  ________________________
 
 **Commission file number
333-126394**




**BIOLOK
      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)**368
                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: Common Stock Shares





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o





Note
      -
      Checking the box will not relieve any registrant required to file reports
      pursuant to Section 13 or 15(d) of the Exchange Act from their obligations
      under
      those Sections.








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 o 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




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No
x





State
      issuer’s revenues for its most recent fiscal year. $7,246,238.





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. (See definition of affiliate in Rule 12b-2 of
      the
      Exchange Act.) December 29, 2005: $
      17,025,028 .










**(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)**





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date. As of December 29, 2005, a total of
      15,318,337 Common Stock shares where outstanding.




**DOCUMENTS
      INCORPORATED BY REFERENCE**





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




-
      None
      -




Transitional
      Small Business Disclosure Format (Check one): o  Yes x No




**RISK** **S
      AND UNCERTAINTEES**





Current
      and potential shareholders should consider carefully the risk factors described
      below. Any of these factors, or others, many of which are beyond the Company’s
      control, could negatively affect the Company’s revenues, profitability or cash
      flows in the future. These factors include:





·
            The
                Company is substantially dependent, and will be dependent for the
                foreseeable future, upon the continuation and availability of our
                principal officers.





·
            The
                Company has a $2,750,000 working capital line of credit facility,
                which
                contains covenants related to the Company’s financial coverage. If the
                Company expands too fast or for reasons not now anticipated, the
                Company
                may not be in compliance with these loan covenants in which event
                its
                lender or lenders will have the right to require the Company to repay
                its
                loan.





·
            The
                formulation, manufacturing, packaging and sale of the Company’s products
                are subject to regulation by federal and foreign agencies, and accordingly
                its ability to develop, manufacture, market and sell products is
                substantially subject to governmental
                regulation.





·
            The
                Company is subject to competition from companies that have greater
                marketing, public relations and technical
                resources.





·
            The
                Company may not be able to protect its trade secrets, patents, trademarks
                and other intellectual property.








2




**FORWARD-LOOKING
      STATEMENTS**





This
      report on Form 10-KSB includes forward-looking statements within the meaning
      of
      Section 27A of the Securities Act of 1933 and Section 21E of the Securities
      Exchange Act of 1934. All statements other than statements of historical facts
      contained in this report, including statements regarding our future financial
      position, business strategy and plans and objectives of management for future
      operations, are forward-looking statements. The words “believe,” “may,”
“estimate,” “continue,” “anticipate,” “intend,” “expect” and similar
      expressions, as they relate to us, are intended to identify forward-looking
      statements. We have based these forward-looking statements largely on our
      current expectations and projections about future events and financial trends
      that we believe may affect our financial condition, results of operations,
      business strategy and financial needs. These forward-looking statements are
      subject to a number of risks, uncertainties and assumptions described in “Risk
      Factors” and elsewhere in this prospectus. These risks are not exhaustive. Other
      sections of this prospectus include additional factors which could adversely
      impact our business and financial performance. Moreover, we operate in a very
      competitive and rapidly changing environment. New risk factors emerge from
      time
      to time and it is not possible for our management to predict all risk factors,
      nor can we assess the impact of all factors on our business or the extent to
      which any factor, or combination of factors, may cause actual results to differ
      materially from those contained in any forward-looking statements. You should
      not rely upon forward-looking statements as predictions of future events. We
      cannot assure you that the events and circumstances reflected in the
      forward-looking statements will be achieved or occur and actual results could
      differ materially from those projected in the 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.




3





**TABLE
      OF CONTENT** **S**


**PART
                  I**Item
                  1.
              
              Description
                  of Business
              4Item
                  2.
              
              Description
                  of Property
              9Item
                  3.
              
              Legal
                  Proceedings
              10Item
                  4.
              
              Submission
                  of Matters to a Vote of Security Holders
              10**PART
                  II**Item
                  5.
              
              Market
                  for Common Equity and Related Stockholder Matters
              10Item
                  6.
              
              Management’s
                  Discussion and Analysis or Plan of Operation
              11Item
                  7.
              
              Financial
                  Statements
              15Item
                  8.
              
              Changes
                  in and Disagreements with Accountants on Accounting andFinancial
                  Disclosures
              15Item
                  8A
              
              Controls
                  and Procedures
              15Item
                  8B
              
              Other
                  Information
              16**PART
                  III**Item
                  9.
              
              Directors,
                  Executive Officers, Promoters and Control Persons;
                  ComplianceWith
                Section 16(a) of the Exchange
                Act
              16Item
                  10.
              
              Executive
                  Compensation
              17Item
                  11.
              
              Security
                  Ownership of Certain Beneficial Owners and Management andRelated
                Stockholder Matters
              18Item
                  12.
              
              Certain
                  Relationships and Related Transactions
              19Item
                  13.
              
              Exhibits
              19Item
                  14.
              
              Principal
                  Accountant Fees and Services
              20Signatures
              20Consolidated
                  Financial Statements as of October 31, 2005 and 2004
              F-1
                  to F-24Certifications
                  Section 302Certifications
                  Section 906




4





**PART
      I**








**Item
      1.**   **DESCRIPTION
      OF BUSINESS**





***Overview***





We
      are
      engaged in the research, development, manufacture and marketing of dental
      implants and bio-medical products and biomaterials. We manufacture and
      distribute the Bio-Lok Precision Dental Implant System, which is a line of
      dental implants, their prosthetic components, tools, devices, irrigate spade
      drills, and bone augmentation materials for use around implants. This system
      constitutes an all-inclusive product line that we manufacture ourselves and
      which is augmented by a few products which we purchase for resale. The majority
      of our products maintain patent coverage and incorporate proprietary technology.
      Our products are marketed domestically directly to the end market and
      internationally on a country-by-country basis through select distributors or
      a
      majority-owned Company distributor. We conduct our research and development
      activities primarily through our wholly-owned subsidiary, Orthogen Corporation.
      We manufacture most of our products at our headquarters facilities in Deerfield
      Beach, Florida.





We
      were
      incorporated as a Delaware corporation on October 6, 1987, under the name
      Colfax, Inc. We were originally organized for the purpose of acquiring companies
      with long-term growth potential. In 1988 we acquired an operating company,
      Minimatic, Inc., a Florida corporation organized in 1987 to manufacture dental
      implant parts and other products as a subcontractor. We changed our name to
      Minimatic Implant Technology, Inc., in 1988, to American BioDental Corporation
      in 1995, and to our current name, BioLok International Inc. in August 1996.
      In
      1997, our Minimatic, Inc., subsidiary (then called Minimatic Implant Technology,
      Inc.) was merged into our Company.





From
      1987
      to 1991 we developed a dental implant product line while, at the same time,
      acted as a subcontractor for entities that marketed dental implants, blade
      implant products, and other dental parts. Commencing in 1991, we changed our
      corporate focus to the development of our own proprietary product line,
      specifically the development, improvement, marketing and distribution of a
      dental implant system, together with related and associated parts. In 1996,
      we
      commenced the reorganization of both our Company and our Minimatic subsidiary
      through separate proceedings under Chapter 11 of the United States Bankruptcy
      Code. In April 1997 our Minimatic subsidiary was merged into our company. We
      were discharged from bankruptcy in January 1998.





Our
      principal executive offices are located at 368 S. Military Trail, Deerfield
      Beach, Florida 33442. Our telephone number is (954) 698-9998. Our website is
      located at www.biolok.com .





***Implant
      Market Environment***





The
      dental implant market dates back many centuries. Originally, some implants
      were
      made of materials as diverse as wood and ivory via very crude processes. Today’s
      implants originated in the early 19 th century
      as pins, posts, and blade implants made of metal. A dentist in the 1930’s
      implanted subperiosteal (on the bone) hardware that would permanently anchor
      dentures to the bone. By the late 1940’s implant direction and focus had shifted
      to endosteal (in the bone) devices. Practitioners who used implants were seen
      as
      mavericks. Over the following decades the market for blade type implants grew,
      but never to any appreciable size. The market languished until the 1970’s,
      during which time most prosthetics were developed by practitioners for their
      own
      use.





By
      1977
      Dr. Branemark, a Swedish orthopedic surgeon, had developed and brought to market
      a product line of dental implants composed of titanium. Since that time the
      marketplace for implants has flourished and has grown continually, been refined
      and improved considerably, and has captured practitioners due to the ease of
      placing an implant unit over the blade implant process.





Today
      there are dozens of fixtures marketed. Some are made of pure titanium or one
      of
      its alloys, many are coated with different materials and processes to stimulate
      bone growth - osseointegration. By 1990 implants had moved to the mainstream
      of
      dentistry. Over the last 15 years the placement of implants has grown
      considerably. Primarily, oral surgeons and periodontists perform the placement
      of implants, but there are a growing number of general dentists who perform
      implant procedures. Today, the increase in the number of both specialty
      practitioners and general dentists placing implants is continuing, due in part
      to the continued success rate of implants, the aging population, and continued
      refinements and improvements being made to implant systems.





5


Implants
      are beneficial for patients and very profitable to practitioners, so it is
      understandable that this segment of professional dentistry is becoming one
      of
      the fastest growing and wisely publicized. A dentist does not have to be an
      oral
      surgeon to put dental implants in patients. In fact, dental implantology is
      now
      taught in the last year of dental school. The implant industry is closely linked
      with the evolution of dentistry towards more sophisticated diagnosis and
      procedures. During 2004 in excess of $400 million was spent in the U.S. alone
      on
      dental and oral care. There are in excess of forty million patients in this
      country who are potential candidates for dental implants and associated
      attachments. The domestic and international implant markets are estimated at
      $1
      Billion annually.





The
      merits of having implants instead of conventional bridge and denture plates
      are
      as follows:





-  dental
      implants can provide support for a full denture, making it more secure and
      comfortable


-  dental
      implants support a fixed bridge eliminating the need for a removable partial
      denture


-  implants
      can assist in the replacement of a single tooth without the need to alter
      adjacent teeth


-  advantages
      are that they can support replacement teeth in much the same way as tooth roots
      support natural teeth. Many dentures wobble, click or cause pain, and dental
      implants provide a sound alternative


-  dental
      implants can prevent embarrassment about spaces from missing teeth; instead,
      you
      can enjoy foods again, smile, and speak with confidence





***Business
      of Issuer***





BioLok’s
      principal product consists of a line of dental implants, their prosthetic
      components, tools, devices, irrigated spade drills, 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,” passivation ,
      and
      other like processes) which are bonded to the implant or improve surface texture
      to enhance the bonding and bone growth process, resulting in improved
      osseointegration or attachment.





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.





BoneGen TM ,
      a
      calcium sulfate hemihydrate bone graft material, was introduced to the dental
      market in 2005. The product is registered with the FDA via a 510(k) filing.
      The
      product is bioresorbable and osteoconductive, hemostatic, soft tissue barrier,
      easy to handle and place, and cost effective. Extensive research and use have
      demonstrated that calcium sulfate hemihydrate enhances bone regeneration by
      releasing calcium ions, which combine with phosphorus ions from body fluid
      to
      form calcium phosphate trellis, a bioactive and osteoconductive bone scaffold.
      BoneGen promotes bone regeneration in a wide range of clinical indications.
      Several studies have shown calcium sulfate to be highly biocompatible,
      biodegradable, non-toxic and angiogenic. Calcium sulfate has been utilized
      for
      post-extractions, infra-osseous defects, apicoectomy, dehiscence and
      fenestrations, sinus lifts and implant placement.





Through
      its subsidiary, Orthogen Corporation, the Company is continually engaged in
      research and development of new or improved products for use in the medical
      industry, particularly the dental industry. The entity works with numerous
      institutions, has in the past and continiously been awarded NIH Grants for
      specific research. (see Section titled “Research and Development”)




***Products
      and Service*** ***s***





The
      primary product offered by the Company is a dental implant product line and
      system titled the " **Bio-Lok
      Precision Dental Implant System** ."
      This
      product line includes various styles of dental implants, their related
      prosthetics or armamentarium, devices, tools, irrigated spade drills, and items
      purchased for resale.





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 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. The
      titanium alloy utilized is of clinical grade, is inert to the body and
      represents a space age material that has the unique ability to form a permanent
      biological bond (biolok) with living tissue. 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.





6


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. Coatings
      and processes offered are as follows:





Osseo-Lok
      -- represents a surface roughening treatment of the implant - treating  the
      implant with resorbable blast media (calcium phosphates);





HA
      --
      coating consists of a synthetic bone mineral called hydroxylapatite along with
      a
      dense, nonresorbable calcium phosphate ceramic that stimulates the growth of
      bone to form with the implant.





Many
      patented features of the system provide a superior locking feature to prosthesis
      - hence the product line names of “Micro-Lok,” “Silhouette,” “Silhouette IC
      (Internal Connection),” “Silhouette Laser-Lok,” and “Silhouette Laser-Lok
      IC.”





**Micro-Lok** screw
      type implants: an implant style that has an external hex top and is offered
      either HA coated or Osseo-Lok treated. The implant has a straight wall design
      and is offered in various diameters and lengths.





**Silhouette** screw
      implants have a tapered body design which mirrors the root of a natural tooth
      and has an external hex top. These implants are offered in various diameters
      and
      lengths, and provide improved lateral compression of the osteotomy site to
      greatly improve primary stability.





**Silhouette
      IC** implants
      are similar to our Silhouette implants, but have an internal connection. They
      are offered in various diameters and lengths.





**Silhouette
      Laser-Lok** implants
      consist of an external hex top, tapered design and laser micro-machined collar
      implant. This implant line provides improved lateral compression of the
      osteotomy site to greatly improve primary stability, and has a two millimeter
      collar which is laser machined for improved tissue adhesion. Laser-Lok surface
      treatment has been applied to the collar portion of the implants for improved
      bone and soft-tissue interface performance. The implant is offered in various
      diameters and lengths.





**Silhouette
      IC Laser-Lok** implants
      are the same as our Silhouette Laser-Lok implants except they have an IC
      (internal connection) top design. These implants are offered in various
      diameters and lengths.





The
      Company also offers an extensive line of prosthetic armamentarium available
      to
      practitioners in eight distinct prosthetic styles, each style being marketed
      in
      various cuff heights and material composition (such as titanium, gold alloy,
      plastic and ceramics).





Other
      products offered by the Company for use in dental implantology are bone
      augmentation materials via its “BoneGen,” a calcium sulfate hemihydrate bone
      graft material; Mem-LokTM
      Collagen Resorbable Membrane in various dimensions; and surgical motors and
      hand
      pieces made by third party manufacturers.





The
      Company, along with its primary clinicians, constantly reviews current designs,
      evaluates new concepts, and develops improved and new products to replace or
      augment the Micro-Lok Implant System. Through
      its Orthogen Corporation subsidiary, the Company is engaged in research and
      development of new or improved products for use in the medical industry,
      particularly the dental industry. Orthogen works with numerous institutions
      and
      has in the past been awarded and continues today to be awarded NIH Grants for
      specific research.





7





***Distribution
      and Markets***





Domestically,
      the Company markets its products directly to the end market - to clinicians,
      dental specialists and institutions. The Company is expanding its market
      presence and is actively engaged in the development of its domestic (US) sales
      force.





Internationally,
      BioLok sells and markets its products via distributors and majority-owned
      subsidiaries. Presently, there are contracts outstanding with over sixteen
      (16)
      distributors and there exist three (3) majority-owned subsidiaries: Micro-Lok
      Chili SA; BioLok Int’l. Pty. Inc. (Australia); and, Micro-Lok Mexico S.A. DE
      C.V. The
      Company is continually soliciting and negotiating for the establishment of
      added
      international relationships.





The
      continued development of both markets is proceeding at an accelerated pace
      to
      meet management’s growth and development objectives.





***Competition***





The
      Company estimates the size of the domestic implant market to be approximately
      $400 million dollars and the international implant market to be $600 million
      dollars. We believe that the combined markets will grow annually at a rate
      of
      12-17% from 2005 to 2010. The expected growth is primarily from an aging
      population, better education of new dentists, and developing interest by, and
      education of, existing dentists. There are four companies that dominate the
      world-wide marketplace, with a second tier of five additional companies. The
      principal competition consists of Astra Zeneca International, Nobel Biocare,
      Zimmer Dental, Inc., BioMet Inc.and its 3i Implant Innovations, Inc. subsidiary,
      LifeCore Biomedical, Inc., and Straumann Holding AG. Many of these competitors
      are subsidiaries or divisions of larger companies, and many have substantial
      capital resources which are significantly larger than the Company’s capital
      resources. The Company believes that it can compete with all of such companies
      because it designs and manufactures in house a state-of-the-art product line
      based on new technology, primarily exemplified by the Company’s new Laser-Lok®
implant. Because of what the Company deems to be a technologically advanced
      and
      superior line of products, the Company believes that it will be able to increase
      its domestic and international sales and gain market share.





To
      compete and overcome the competitor(s)’ advantages in the marketplace, BioLok
      offers to the market a “State-of-the-Art” product line designed and manufactured
      in-house based on today's technology by having incorporated into the system
      unique and patented designs, including Laser-Lok micro-machined collar, upper
      and lower journal design, thread design, seals and other features which provide
      strength and fit. Due to these factors, BioLok anticipates being able to
      penetrate the existing dental implant market and gain market share as it
      completes the development and implementation of its business plan and
      objectives.





***Raw
      Materials***





The
      materials used in manufacturing the dental product line are medical grade
      titanium alloy (ASTM
      F1472 Rev: 02 [Ti 6AL4V]) ,
      gold
      alloy, stainless steel, ceramic (zirconia/alumina
      composite) and brass .
      Titanium is inert to body tissue and bone, and is an alloy which has the unique
      ability after being placed to form a permanent biological bond with living
      tissue. Research in the use of ceramic and other materials has been completed
      and is continually underway, particularly for use as abutments. The availability
      of these materials is good; however, titanium prices have risen 40% over the
      past year.





***Financial
      Information about Industry Segments***





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





***Patents
      and Trademarks***





The
      Company owns twenty-seven (27) patents and has eight (8) patents pending. The
      patents held by the Company were obtained by, or have been transferred and
      assigned to, the Company. In 2004, the Company received two significant patents,
      the first for its Laser-Lok® style implant and the second for its BoneGenTM-T/R
      calcium sulfate time release formulation. BoneGenTM-T/R consists


of
      a
      composition having a controlled resorbtion rate for stimulating bone growth
      from
      eight to twenty-four weeks, which substantially matches the rate of bone growth,
      and which can be utilized for the repair, augmentation and other treatments
      of
      bone. Presently, final clinicals are being completed and product registering
      of
      all claims with the FDA is in process.





8


The
      Laser-Lok TM implant
      technology, patent awarded and US FDA registration completed in 2004, and was
      introduced into the domestic and international markets late 2005.
      Laser-Lok TM style
      implant was accepted and is being marketed with the following
      claims:





**Soft
      tissue attachment to the Laser-Lok surface treatment and the alignment of its
      micro-grooves inhibits epithelial down-growth on** ***Silhouette
      Laser-Lok and Silhouette IC Laser-Lok Implants*** **.**





**The
      Laser-Lok treated collar on the Silhouette Laser-Lok and Silhouette IC Laser-Lok
      Implant has been shown to attach and retain bone adjacent to the
      implant.** **1,2** ****





**The
      Laser-Lok surface treatment on the collar does not reduce the safety and
      inflammation performance of Silhouette Implants.**





***Silhouette
      Laser-Lok and Silhouette IC Laser-Lok Implant*** **Description.**  Dental
      implants are hex top or IC (internal connection), incorporate a self-tapping
      tapered implant design that provides lateral compression of the osteotomy site
      to greatly improve primary stability, and have a two millimeter collar which
      is
      laser machined for improved tissue adhesion. The surface configuration of the
      implants has been carefully designed and should not be modified. Laser-Lok
      surface treatment has been applied to the collar portion of the implants for
      improved bone and soft-tissue interface performance. The technology consists
      of
      microscopic uniform pattern grooves applied to the collar of the implant at
      12
      micron grooves are applied for cortical bone section and 8 micron groves for
      soft tissue control.





The
      Company was awarded five (5) patents in 2005. A number of the new patents have
      dental applications and these products have been incorporated into the **BioLok
      Precision Dental Implant System** .
      Patents
      successfully prosecuted for the dental market were (i) “Method of Bone Expansion
      and Compression for Receiving a Dental Implant using Threaded Expanders,”
identified by the product titled “Ridge/Bone Expanders,” providing a method and
      devices for bone tissue expansion and compression utilizing a less invasive
      and
      traumatic process and (ii) “Surgical Implant for Promotion of
      Osseo-Integration,” an improved patent of the Laser-Lok TM technology of microgeometric random surface patterns applied over the repetitive
      Laser-Lok TM surface
      patterns, defining a multiplicity of micropits having dimensions in a range
      of
      about .0.1 to about 4 microns providing improved tissue attachment. Patents
      granted on the Laser-Lok TM machining technology process and applied to other medical mediums are (i)
“Intra-Ocular Implant Promoting Direction Guided Cell Growth,” (ii)
“Transcutaneous Port Having Micro-Textured Surfaces for Tissue and Bone
      Integration,” and (iii) “Surgical Stent having Micro-Geometric Patterned
      Surface.”





A
      number
      of other patents pertaining to the dental implant product line or dental
      technology that have application in other medical fields are still under
      prosecution. To this extent, new and innovative processes and products are
      continually evaluated and developed, and if patentable patented.





The
      Company has filed trademarks as feasible for its dental implant product line
      names and logos. To date five (5) trademarks have been awarded. Trademarks
      awarded are (1) **Laser-Lok** -
      for the
“Laser-Lok” implants, (2) **Bio-Cera** -
      for the
      ceramic abutments, (3) **Osseo Lok** -
      for the
      implant surface processed via remedial blast media, (4) **Mem-Lok** - name
      of the collagen membrane, (5) **Lok Screw** -
      for the
      screw utilized in locking the final screw in an abutment. The Company has two
      (2) trademarks in process.


_______________





1 *Bone
      Response to Laser Microtextured Surfaces* by
      Ricci, J.L., Charvet, J., Frenkel, S.R., Chang, R., Nadkarni, P., Turner, J.,
      Alexander, H.; Chapter 25 in: Bone Engineering, ed; JE Davies, 2000, Em2 Inc.,
      Toronto (pages 8 & 9).





***2*** *Advanced Surface Microtexturing Techniques to Enhance Bone and Soft Tissue
      Response to Dental Implants* by
      Weiner, S., Simmon, J., Ehrenberg, D.S., Zweig, B., Ricci, J.L.: presented
      at
      the Academy of Osseointegration 2003 Annual Meeting, Boston and pending
      publication in the International Journal of Oral and Maxillofacial
      Implants.




9


***Regulatory***





The
      Company has continually maintained and updated as necessary its ISO 9001 /
      EN
      13485:2001 and Annex II (CE mark) certification to continue to permit the
      Company to import and market its products within the European Economic Community
      (EEC). 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.





The
      Company has registered its products with the Federal Drug Administration (FDA)
      as required, obtained numerous 510(k’s), and adheres to the good manufacturing
      practices (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***





The
      Company continually evaluates new ideas and concepts relating to dental
      implantology. New products will be, and are currently being, brought to market
      as clinical evaluations, studies and testing are completed and FDA registration,
      if required and necessary, is obtained. In addition, product research is
      continually being done on the Company’s existing product line.





BioLok
      is
      one of the few companies in its industry that has a subsidiary solely focused
      on
      research and development. In March 2000 the Company acquired New Jersey-based
      Orthogen Corporation. Orthogen is primarily engaged in the conception, research
      and development of bio-material technology, which has already led to marketing
      its Laser-Lok® product and anticipates, in 2006, bringing to market its
      BoneGenTM-T/R calcium sulfate time release bone augmentation product. Through
      Orthogen, the Company is exploring the application of its biomaterial laser
      machining technology to other products and materials for the management of
      tissue and bone. The Company believes that its Laser-Lok® technology can be
      applied in circumstances other than dental implants, such as applications that
      connect severed nerves, cardiovascular stint applications, transcutaneus
      implants, and ophthalmology. Orthogen currently has a funded, two-year National
      Institutes of Health (“NIH”) grant of $200,000 for research into a
      mechanical/neural limb prosthetic interface for upper limb amputees. This
      research will be done with neurological and orthopedic partners and, together
      with other technologies being explored by the Company, is anticipated to enhance
      the Company’s expansion into products outside of its primary dental implantology
      business.





***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 the Company’s competitive position.





***Employees***





We
      currently employ sixty-three (63) full time employees world wide. Six (6) of
      our
      employees are management, twenty (20) are sales and marketing, six (6) are
      international sales, seventeen (17) are support personnel, eleven (11) work
      in
      manufacturing our products, and three (3) are exclusively involved in research
      and development.





**Item
      2.**   **DESCRIPTION
      OF PROPERTY**





The
      Company’s principal executive office and manufacturing facility are located in
      Deerfield Beach, Florida. The facilities are considered to be in good condition
      and consist of 18,820 sq. ft. of leased factory and office space.





The
      Company’s manufacturing facility consists of numerous automated CNC Swiss,
      manual lathe and other select machinery. Current equipment on hand permits
      the
      Company to meet its goals and objectives.





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





The
      Company’s subsidiary facilities located in Australia, Mexico and Chile are
      minimal and not material. They
      consist of sales office space and product storage facilities.





10





**Item
      3.**   **LEGAL
      PROCEEDINGS**





No
      legal
      proceedings exist.








**Item
      4.**   **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





-
      None
      -







**PART
      II**





**Item
      5.**   **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





**Market
      Information**





The
      Company’s common stock has traded 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, 2003 to 2005, as reported on the OTC Bulletin Board.




BID
                PRICESHIGH
            
            LOWQuarter
                Ended October 31, 2003
            
            $
            0.23
            
            $
            0.19Quarter
                Ended January 31, 2004
            
            $
            0.59
            
            $
            0.51Quarter
                Ended April 30, 2004
            
            $
            1.15
            
            $
            0.48Quarter
                Ended July 31, 2004
            
            $
            0.97
            
            $
            0.51Quarter
                Ended October 31, 2004
            
            $
            1.45
            
            $
            0.45Quarter
                Ended January 31, 2005
            
            $
            1.10
            
            $
            0.60Quarter
                Ended April 30, 2005
            
            $
            1.50
            
            $
            0.66Quarter
                Ended July 31, 2005
            
            $
            1.50
            
            $
            0.66Quarter
                Ended October 31, 2005
            
            $
            1.98
            
            $
            1.00





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. As of October 31, 2005, there were
      approximately 1,100 stockholders of record of the Company’s common stock. A
      number of these shares are held in “street” name and may, therefore, be held by
      several beneficial owners.





**Dividends**





The
      Company paid no dividends during the fiscal years ended October 31, 2004 and
      2005. 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 Bank Loan agreement
      and
      EximBank US credit insurance guarantee. The Board of Director adheres to a
      policy of retaining earnings for growth and development.





11


**Equity
      Compensation Plans**





The
      following table sets forth certain information concerning shares of our common
      stock issuable and available for issuance under our equity compensation plans
      not approved by our stockholders, in each case as of October 31, 2005.





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





Equity
                Compensation Plan InformationNumber
                of securities
              to
                be issued upon
              exercise
                of outstanding
              options,
                warrants
              and
                rights (1)
            
            Weighted-average
              exercise
                price of
              outstanding
                options,
              warrants
                and rights
            
            Number
                of securities
              remaining
                available for
              future
                issuance under
              equity
                compensation plans
              (excluding
                securities reflected in
              First
                column)Plan
                categoryEquity
                compensation plans
              approved
                by security holders
            
            
            -0-
            
            $
            -0-
            
            
            -0-Equity
                compensation plans not
              approved
                by security holders
            
            
            400,000
            
            $
            -0-
            
            
            -0-Total
            
            
            400,000
            
            $
            -0-
            
            
            -0-





(1)
            Represents
                400,000 shares issuable to an employee and a consultant of the Company’s
                Orthogen Corporation subsidiary on the Company’s attaining certain
                performance milestones.





**Item
      6.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





**Overview**





We
      are a
      dental implant, bio-medical, and bio-materials company based in Deerfield Beach,
      Florida. We manufacture and distribute the Bio-Lok Precision Dental Implant
      System, which is a line of dental implants, prosthetic components, tools,
      devices, irrigated spade drills, membranes and bone augmentation materials
      for
      use around implants. Most of our revenues have historically been generated
      from
      international sales, but since 2002 we have aggressively developed marketing
      programs to expand our domestic sales operation. The Company has grown its
      domestic sales from 8% to over 35% of total sales over the past three years,
      and
      based on management’s continued effort to grow the domestic market, domestic
      sales over the coming three years are expected to continue to become a larger
      portion of total sales. Until 1997, BioLok’s primary focus was on the production
      of dental implants which were similar in technology and design to competing
      dental implant products. In 1998, we changed our business strategy to focus
      on
      the research, development, design, patenting and sale of
      technologically-advanced implant products. In 2000, we acquired Orthogen
      Corporation, a New Jersey-based research and development company which developed
      the laser micro machining technology behind our Laser-Lok® system. In 2004, we
      received a patent for our Laser-Lok® system, and the system received FDA 510(k)
      approval in October 2004. The Company began marketing the product in the United
      States and internationally in calendar 2005.





Both
      our
      focus on research and development and our plans to increase our share of the
      domestic dental implant market have required us to spend a substantial amount
      of
      capital and management resources, and in all probability will continue to do
      so
      in the future. We believe that our business strategy will enable us to increase
      our share of the domestic and foreign implant markets in 2006.





During
      the fiscal year ended October 31, 2005, the Company expended significant
      management and financial resources on the clinical trial and FDA approval
      process of its Laser-Lok® implant system and the clinical trial of its
      BoneGenTM-T/R product. Also during this period, and particularly commencing in
      the second quarter of fiscal 2005, the Company began to accelerate the
      implementation of its domestic marketing programs while continuing to grow
      its
      international sales. Because of its relationship with its international
      distributors, the Company’s focus has traditionally been on its international
      market. As the Company’s operating results improved and as it has increased the
      amount available under its credit facilities and from private equity financing,
      the Company has become increasingly capable of implementing its domestic
      marketing strategy. As a consequence, the Company anticipates spending
      substantial capital resources on hiring executive-level and other marketing
      personnel, and substantially increasing its advertising and promotion budget,
      in
      fiscal 2006 and succeeding years. The Company also intends to increase its
      international distribution network by actively soliciting relationships in
      Japan, China, France, Canada, Germany and other countries. The Company
      anticipates that it will realize losses through the fiscal year ending October
      31, 2006, as a consequence of the costs associated with its market development
      programs.





12


In
      March
      2000, we acquired a New Jersey-based corporation, Orthogen Corporation
      (“Orthogen”), our wholly-owned subsidiary engaged primarily in the research and
      development of certain bio-material technology.





BioLok
      is
      the manufacturer and distributor of the “BioLok Precision Dental Implant
      System,” an all-inclusive product line augmented by a few products we purchase
      for resale. Our products are marketed domestically directly to the end market
      and internationally on a country-by-country basis through selected distributors.
      BioLok is compliant with good manufacturing practices (“GMP”), submits its
      products for regulatory approvals required by the FDA, and is ISO 9001:2000,
      ISO
      14385:2001, and Annex II (EU Council Directive 94/42/EEC) certified, which
      allows us to export and market our products within the European economic
      community. We hold twenty-seven (27) patents and have eight (8) patent
      applications pending. We have filed trademarks for our dental implant product
      line names.





BioLok
      intends to grow through the application of cellular biology and biomaterials
      to
      the creation of innovative implant dentistry products that produce long-term
      aesthetic results. BioLok intends to be one of the leaders in the dental implant
      industry through the use of science and practical innovation to simplify implant
      dentistry and deliver improved patient outcomes.





**Critical
      Accounting Policies**





Our
      financial position, results of operation and cash flow are impacted by the
      accounting policies which we have adopted. A summary of our critical accounting
      policies follows:





**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.





**Off
      Balance Sheet Arrangements**


We
      have
      not entered into any transactions with unconsolidated affiliates in which we
      have financial guarantees, subordinated retained interest, derivative
      instruments or other contingent arrangements that expose us to material
      continuing risks, contingent liabilities or any other obligations under variable
      interest in an unconsolidated entity that provides us with financing, liquidity,
      market risk or credit risk support.





**Results
      of Operations for the Fiscal Year Ended October 31, 2005, compared to the Fiscal
      Year Ended October 31, 2004**





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, 2005 and
      2004.





13


***Revenues***  Net
      revenues for 2005 increased by $2,296,912, or approximately 46%, over prior
      year
      results. The increase was due to gains in both the domestic and international
      markets. The domestic market grew by 38% while international grew by 50%. Both
      markets are expected to continue to grow at an accelerated pace in the following
      years.





***Gross
      Profit***  Gross
      margins on net sales increased from 64% in 2004 to 67% in 2005. The increase
      was
      due to the continued sales growth, new market penetration, and production
      efficiencies achieved through retrofitting of all machines with automatic fire
      suppressant equipment to permitting longer production cycles.




***Selling
      Expense***  Costs
      for
      the year increased by $955,234, or 75%, from prior year results. The increased
      costs incurred are attributed to staff additions, related commissions paid,
      and
      general increases from higher sales realized. These costs are expected to
      increase as management continues to develop the domestic market and expand
      the
      Company’s international presence. During 2006, individuals will be added to the
      domestic staff, and, internationally, additional distributors are anticipated
      to
      be brought on line in Europe, South and Central America, and Asia.





***General
      and Administrative Expenses***  General
      and administrative expenses increased by $944,029, or 64%, over prior year
      results. The increased costs incurred are a direct result of domestic and
      international market growth and development support. General and administrative
      expenses are anticipated to increase as the Company grows and management’s sales
      and marketing objectives are met.





***Research
      and Development***  Research
      and development expenses for the year ended October 31, 2005, increased by
      $121,706, or 41%, over prior year results. The increase was due to research
      and
      development on the Laser-Lok implant and BoneGen - TR calcium sulfate
      hemihydrate - time/release products.





***Income
      from Operations***  Income
      from operations decreased by $328,521, or 237%, from prior year results of
      an
      income from operations of $138,511. The decrease is a direct result of
      management’s election to continue to hire a domestic sales staff, increase
      research and development costs and grow revenues by 46%.





***Other
      Income and Expenses***  Interest
      expenses totaled $148,134 in fiscal 2005 compared to $162,648 in fiscal 2004,
      reflecting lower borrowings outstanding for fiscal 2005 due to funds raised
      from
      the Company’s private placement completed in March 2005 (See “Liquidity and
      Capital Resources,” below). The Company received $103,397 of insurance proceeds
      in fiscal 2005 from the loss by fire of a CNC machine. In fiscal 2004 the
      insurance proceeds realized by the Company were from business interruption
      insurance from the 2001 machine fire. All insurance claims and benefits for
      the
      2001 fire have now been received. The Company also recorded $149,713 in
      forgiveness of debt in 2005 for the elimination of the remaining debt balances
      outstanding from the Chapter XI bankruptcy filing.





***Net
      Income***  The
      Company had a net loss of $77,661, or $(.01) per share, in fiscal 2005 compared
      to a gain of $51,537, or $.01 per share, in the prior year. The loss is
      attributed to marketing, staffing and other costs of growing the Company on
      an
      accelerated basis.





**Liquidity
      and Capital Resources**





BioLok
      has met its consolidated working capital requirements and funded debt repayments
      primarily from cash provided from operations and revolving lines of credit.
      Capital requirements for machinery and related expenditures have been funded
      via
      leasing and loan arrangements. Going forward, management intends to continue
      to
      use the same funding methods in growing the Company.





During
      the year ended October 31, 2005, the Company’s liquidity position continued to
      improve until the fourth quarter, when the “Laser-Lok” implant promotional and
      marketing activities commenced. The Company, by the end of the year, generated
      a
      negative cash flow from operating activities of $1,090,960 and had a net loss
      of
      $77,661 due to increases in accounts receivable and other operating assets
      arising from growth in both domestic and international sales, and net loss
      due
      to sales force expansion. As of the end of fiscal 2005, the Company had $545,762
      in cash, $1,576,521 cash available under its revolving line of credit,
      $2,237,511 in net accounts receivable, and $2,278,993 in inventory (consisting
      of work-in-progress and finished goods). The Company had accounts payable,
      accrued expenses and other payables in the aggregate of $546,713, revolving
      loans payable of $592,000, and notes, equipment leases and loans payable current
      of $175,239. At October 31, 2005, the Company had an accumulated deficit of
      $833,030, positive working capital of $4,155,756 and positive stockholders’
equity of $5,994,450.





14


The
      Company has a $2,500,000 asset-based line of credit from CommerceBank NA 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 Company’s loan agreement with its lender. EximBank US
      guarantees 90% of the loan. The Company also has a $250,000 domestic receivables
      credit line with CommerceBank, NA. Both loans are secured by a pledge of the
      Company’s assets. Interest is payable on the international line of credit at
      prime plus 1%, while the domestic line of credit bears interest at 2% over
      the
      prime rate. Interest is payable monthly. The Company pays EximBank $0.80 for
      each $100 of invoices issued and reported. Principal on both loans is due on
      demand. Both credit facilities are subject to an annual financial review date
      of
      December 31. The line has been extended to March 31, 2006, by CommerceBank
      NA
      and EximBank US.





The
      Company’s current ratio increased to 4.16 on October 31, 2005, from 1.26 as of
      October 31, 2004, due to receivables outstanding, inventory growth, and the
      proceeds of a private placement completed in March 2005. At October 31, 2005,
      the Company’s revolving loan payable decreased by $1,307,432 for the year due to
      management letting receivables collect and paying the Company’s principal on the
      loan, and utilizing the funds raised from the Company’s March 2005 private
      placement for continued growth and market development programs initiated by
      management. As
      cash
      from the private placement is utilized, the revolving loan is used and growth
      continues, the current ratio will decline.





To
      increase sales, the Company has been actively developing its sales force since
      2002. The increase in sales force is substantially responsible for the Company’s
      improvement in sales of 46% in fiscal 2005, compared to fiscal 2004. Management
      plans to continue its efforts to increase sales at a comparable rate in fiscal
      year 2006.





The
      Company has experienced substantial expenses due to Sarbanes-Oxley Act (“SOX”)
      compliance. These costs (which include audit fees, legal fees, and changes
      in
      the Company’s board of directors for compliance and corporate governance
      purposes) have increased the Company’s administrative expenses significantly
      and, consequently, have imposed a significant economic burden. The Company
      anticipates that the costs of compliance will increase significantly in the
      immediate future as the Company becomes subject to additional regulatory
      controls, including compliance with SOX Section 404 (controls and procedures)
      and requirements imposed by the Company’s registration of its common stock under
      Section 12(g) of the Securities Exchange Act of 1934, as amended.





Deteriorating
      global economic conditions may cause prolonged declines in investor confidence
      in, and accessibility to, capital markets and may make it more difficult for
      the
      Company to secure funding. 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 that restrict
      the
      Company’s business activities.





On
      March
      2, 2005, the Company completed a $3,750,000 private offering of 5,000,000 shares
      of its common stock to institutional and other accredited investors at a price
      of $.75 per share. The Company intends to use the net offering proceeds of
      $3,447,000 to pay for additional sales and marketing personnel, for research
      and
      development, and for operating expenses.





The
      Company anticipates having adequate capital and liquidity for the next 12
      months. However, i f
      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.





**Outlook
      for Fiscal Year 2006**





Management’s
      primary objective is the development of the dental implant market both domestic
      and international. The Company’s growth potential has been enhanced due to the
      introduction of new products and, anticipated by the summer 2006, the
      introduction to the market of a BoneGen TM - T/R
      (calcium sulfate-time/release) bone augmentation product. Management will
      continue to reinvest profits to continue to grow the Company. The Company
      expects to continue to operate on a break-even basis to marginal profitability
      in fiscal 2006.





15




**Item
      7.**   **FINANCIAL
      STATEMENTS**





Reference
      is made to the Consolidated Financial Statements, the notes thereto, and the
      Independent Accountants’ Reports 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,
                  2005**Balance**
                **Sheet:**
              Current
                  assets
              $
                  5,469,709Property
                  and Equipment, Net
              1,581,507Other
                  assets
              579,255Total
                  Assets
              7,630,472Current
                  liabilities
              1,313,953Non-current
                  liabilities
              322,069Stockholders’
                  Equity
              5,994,450
 
 
 YEAR
                  ENDEDOct.
                  31,2005
              Oct.
                  31, 2004**Income Statement:**
              ****Net
                  Sales
              $
                  7,246,238
              $
                  4,949,326Gross
                  Profit
              4,881,609
              3,189,161Sales
                  Expense
              2,230,730
              1,275,496General
                  & Admin. Exp
              2,418,712
              1,474,683Research
                  & Development
              422,177
              300,471Income
                  (loss) from Operations
              (190,010)
              138,511Other
                  Income (Expenses)
              112,349
              (86,974)Net
                  Income (loss)
              (77,661)
              51,537
  **Item
      8.**   **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND** **FINANCIAL
      DISCLOSURE**





None.





**Item
      8A.**  **CONTROLS
      AND PROCEDURES**





As
      required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive
      Officer and our Chief Financial Officer carried out an evaluation of the
      effectiveness of the design and operation of the Company's disclosure controls
      and procedures as of October 31, 2004. Their evaluation was carried out with
      the
      participation of other members of management. Based upon their evaluation,
      the
      Chief Executive Officer and our Chief Financial Officer concluded that the
      Company's disclosure controls and procedures were effective.





Our
      Chief
      Executive Officer and Chief Financial Officer have concluded, based on their
      evaluation as of October 31, 2005 (the "Evaluation Date"), that the design
      and
      operation of our "disclosure controls and procedures" (as defined in Rules
      13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
      Act),” are effective to ensure that information required to be disclosed by us
      in the reports filed or submitted by us under the Exchange Act is accumulated,
      recorded, processed, summarized and reported to our management, including our
      principal executive officer and principal financial officer, as appropriate
      to
      allow timely decisions regarding whether or not disclosure is required.





During
      the fiscal year ended October 31, 2005, there were no changes in our internal
      controls over financial reporting (as defined in Rule 13a-15(f) under the
      Exchange Act) that have materially affected, or are reasonably likely to
      materially affect, our internal controls over financial reporting.





16





**Item
      8B.**   **OTHER
      INFORMATION**





None.


**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 May 1, 2005. Each officer has
      been
      elected to serve at the discreation of the Board.





**Directors
      and Executive Officers**


The
      following is a list of the names and ages of all Board of Directors and Officers
      of the Company, the positions and offices held by each such person, and each
      such person's principal occupation(s) or employment(s) during the past five
      years.


**Name
                and
                Age**
              **Positions
                  and Offices Held and Principal********Occupations
                  or Employment During****Past
                  Five Year**Bruce
                  L. Hollander (67)
              Chairman
                  of the Board, CEO and President; with the Company since December
                  1995;
                  Director since 1995; present term as Director expires
                  2007;Ingo
                  K. Kozak (64)
              Director,
                  CFO and VP-Finance & Administration; with the Company since February
                  1994; Director since February 1995; present term as Director expires
                  2007;Neil
                  H. Smith (64)
              Director;
                  Audit Committee Chairman, retired and past Co-Chairman & CFO of
                  Express Shade, Inc.; CPA; Director since 1996; present term as
                  Director
                  expires 2007;Harold
                  Weisman, Esq. (72)
              Director;
                  Attorney at Law, Delray Beach, FL; Director since 1996; present
                  term as
                  Director expires 2006.Dan
                  Lubin (45)
              Director;
                  Managing Partner of Radius Ventures, LLC; present term as Director
                  expires
                  2006.Cary
                  Shapoff, DDS (58)
              Director;
                  Periodontist in private practice since 1977; present term as Director
                  expires 2006.Johnny
                  J. Postell (49)
              Vice
                  President Domestic Sales; with the Company since July 2005; previously
                  employed as National Sales Director, Dental Division at CollaGenex
                  Pharmaceuticals, Inc.Patricio
                  Nilo (42)
              Vice
                  President International Sales; with the Company since May 1995;
                  previously
                  Director of International Sales & Marketing.Oliver
                  (“Chip”) Jones, (38)
              Vice
                  President Marketing; with the Company since April2005; previously
                  employed
                  as President/Founder of Leverage, Inc. from 4/02 to 4/05 and Director,
                  Business Operations Pacific Rim, Canada, Mexico and Brazil at Implant
                  Innovations, Inc.
 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.





17


There
      are
      no family relationships among the directors and executive officers of the
      Company.





The
      CEO
      and President of the Company has declared that he will be selling approximately
      200,000 common stock shares annually over the next two years.





**Board
      Committees**


The
      Board
      of Directors has three committees:




Finance
      Committee


Audit
      and
      Accounting Committee


Compensation
      and Employee Benefits Committee





Neil
      Smith is the sole member of the Board's Audit and Accounting Committee. He
      is an
      audit committee financial expert within the meaning of Securities and Exchange
      Commission Regulation S-B, Item 401(e). See the information under the caption
      "Directors and Executive Officers," above, for information concerning Mr.
      Smith's professional background.





The
      Audit
      and Accounting Committee met four times during the last fiscal year. The other
      Board committees each met twice during that year.





**Code
      of Ethics**


On
      May
      26, 2005, the Board of Directors adopted a Code of Ethics that applies to all
      of
      our officers and managers, including our principal executive officers and
      principal financial officer. Our Code of Ethics establishes standards and
      guidelines to assist the directors, officers, and employees in complying with
      both our corporate policies and with the law.





**Compensation
      of Directors**


The
      directors have not been paid cash compensation for their services. Each director
      is reimbursed for his actual out-of-pocket expenses after submission and
      acceptance of an expense account. The Company paid its directors stock
      compensation of 10,000 shares of common stock each in calendar year 2002, 15,000
      shares each in calendar year 2003, and 20,000 shares each in calendar year
      2004.
      Effective with the May 1, 2005 Annual Stockholders Meeting, Directors are
      reimbursed at $5,000 per meeting attended and any out-of-pocket expenses.





**Compliance
      with Section 16(a) of the Exchange Act**


Based
      solely on a review of Forms 4 and 5 furnished to the Company and filed with
      the
      Securities and Exchange Commission under Rule 16a-3(e) promulgated under the
      Securities Exchange Act of 1934 with respect to 2005, the Company is not aware
      that any person was required to, but did not, comply with Section 16(a) in
      the
      fiscal year ended October 31, 2005.


**Item
        10.**   **EXECUTIVE
        COMPENSATION**
 
 The
        following table sets forth the annual compensation attributable to executive
        officers of the Company for the fiscal years 2005, 2004 and 2003:
 Long-Term
                    CompensationAnnual
                    Compensation
                
                
                Awards
                
                
                PayoutsYear
                
                
                Salary
                  ($)
                
                
                Bonus
                  ($)
                
                
                Other
                  Anuual
                    Compensation($)
                
                
                Restricted
                  Stock
                    Awards
                  ($)
                
                
                Securities
                    underlying
                    options/
                      SARs(#)
                
                
                LTIP
                  Payouts
                  ($)
                
                
                All
                    Other Compensation
                  ($)Hollander,
                    Bruce L.
                
                
                2005
                
                
                181,042
                
                
                30,000
                
                
                20,355
                      (1
                )
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                19,294
                    (2
                )CEO
                    and President
                
                
                2004
                
                
                165,000
                
                
                30,000
                
                
                19,476
                    (1
                )
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                15,705
                      (2
                )2003
                
                
                150,000
                
                
                20,000
                
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                14,455
                    (2
                )Kozak,
                    Ingo K.
                
                
                2005
                
                
                136,042
                
                
                25,000
                
                
                15,810
                      (1
                )
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                13,267
                      (2
                )CFO,
                    EVP-Finance &
                
                
                2004
                
                
                120,000
                
                
                25,000
                
                
                15,810
                    (1
                )
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                11,690
                      (2
                )Admin.
                    and Secretary
                
                
                2003
                
                
                105,000
                
                
                15,000
                
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                -0-
                
                
                9,752
                      (2
                )
 
 (1)
        Automobile allowance
 (2)
        Long-term care insurance and country club membership
 
 18
 Employment
        contracts are detailed in the Consolidated Financial Statements hereto under
        Note 9. (B) “Employment Agreements.”
 
 The
        Board
        of Directors granted Bruce Hollander, Ingo Kozak and Patricio Nilo long-term
        care insurance policy coverage. The policies have been in place since 2001
        and
        are to remain in place and be fully paid by the Company until termination
        from
        the Company or the death of the individual and his spouse after the employee
        retires from the Company.
 
 Effective
        January 1, 1997, the Company established a 401(k) Plan for the employees
        of the
        Company. The Plan authorizes the Company to match employee contributions
        in
        either cash or common stock. The maximum matching contribution that can be
        authorized is 50% of the first 10% of contributions of salary contributed
        by
        employees to the Plan. Matching Company contributions, if issued as common
        stock, have a three-year vesting period. The Board has approved a pay-out
        of the
        maximum contribution since 2000. Company contributions for the past three
        years
        were as follows:
  Year
                Amount
                Number
                    of Shares2004
                $
                    28,890
                34,9442003
                $
                    18,901
                80,8772002
                $
                    16,276
                116,549
  **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:
  Name
                  and
                  address
                
                Beneficial
                  Shares owned
                
                Percent of
                  Common StockRadius
                    Ventures Partners II, LP
                
                2,333,333
                
                15.2400
                    Madison Avenue, 8thFlr.New
                    York, NY 10017
  **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, 2005, unless otherwise indicated in footnotes.
        Each
        person and member of the group has sole voting and investment power with
        respect
        to the shares shown:
  Name
                  of
                  Beneficial Owners
                Beneficial
                  Shares owned
                PercentHollander,
                    Bruce L. (Director, CEO and President)
                3,300,367
                21.5Lubin,
                    Dan (Director) officer of Radius owner of stock
                2,333,333
                    (a)
                15.2Kozak,
                    Ingo K. (Director, CFO and VP-Finance & Admin.)
                1,283,030
                8.4Alexander,
                    Harold (Director and President of Orthogen)
                346,429
                2.3Shapoff,
                    Cary (Director)
                167,310
                1.1Smith,
                    Neil H. (Director)
                141,345
                0.9Weisman,
                    Harold (Director)
                133,345
                0.9Nilo,
                    Patricio A. (VP-International Sales)
                327,565
                2.1Jones,
                    Oliver (VP-Marketing)
                10,000
                0.0All
                    Directors and Officers of the Company
                8,042,684
                52.5
  (a) Includes
        2,333,333 shares owned by Radius Venture Partners II, L.P. (“Radius”). Mr. Lubin
        and Jordan S. Davis are the managing
        members of Radius Venture Partners II, LLC, the general partner of Radius.
        Pursuant to Securities and Exchange
        Commission Rule 13d-3, Mr. Lubin and Jordan S. Davis, as managing members
        of
        Radius, may be deemed beneficial
        owners of the shares held by Radius.
 
 19
 **Item
        12.**   **CERTAIN
        RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 The
        Company has employment agreements outstanding since 1997 with its President
        and
        Vice Presidents. 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 have been extended to March
        2007.
 
 Management
        from time-to-time utilizes 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**
 
 **(a)**  **Exhibits**
 No.
                Description2.1
                Stock
                    Purchase Agreement dated March 15, 2000, among Harold Alexander,
                    John
                    Ricci, Harriet Naiman, Margaret Miller and BioLok International
                    Inc.
                    (4)3.1
                Certificate
                    of Incorporation (1)3.2
                By-Laws
                    (1)3.3
                Certificate
                    of Amendment of Certificate of Incorporation dated December 12,
                    2000
                    (2)3.4
                Certificate
                    of Amendment of Certificate of Incorporation dated May 1, 2002
                    (4)4.1
                Specimen
                    Common Stock Certificate (4)4.2
                Form
                    of Placement Agent’s Warrant (4)10.1
                Stock
                    Compensation Plan 2002 (3)10.2
                Employment
                    Agreement of Bruce L. Hollander (4)10.3
                Employment
                    Agreement of Ingo K. Kozak (4)10.4
                Employment
                    Agreement of Patricio Nilo (4)10.5
                Clinical
                    Trial Agreement dated August 19, 2003, by and between BioLok
                    International
                    Inc. and New York University College of Dentistry (4)10.6
                Investment
                    Banking Agreement between Capitalink, L.C., and BioLok International
                    Inc.
                    (4)10.7
                Placement
                    Agent Agreement between Capitalink, L.C., and BioLok International
                    Inc.
                    (4)14.1
                Code
                    of Ethics (4)21.1
                Subsidiaries
                    of the Registrant (4)23.1
                Consent
                    of Daszkal Bolton, LLP (4)23.2
                Consent
                    of Siegel, Lipman, Dunay & Shepard, LLP (Included in Exhibit 5.1)31.1
                Certification
                    by Pres. & CEO pursuant to Sec. 30231.2
                Certification
                    by VP-Fin. & CFO pursuant to Sec. 30232.1
                Certification
                    pursuant to Sec 906 by CEO32.2
                Certification
                    pursuant to Sec 906 by CFO
  _____________
 
 *  Filed
        herewith.
 (1)  Previously
        filed as Exhibit 3.1 to Form S-8 filed on September 23, 1988, and incorporated
        herein by reference.
 (2)  Previously
        filed as Exhibit 3.2 to Form 10-KSB filed on February 5, 2001, and incorporated
        herein by reference.
 (3)  Previously
        filed as Exhibit 10.1 to Form S-8 filed on February 28, 2002, and incorporated
        herein by reference.
 (4)  Previously
        filed as an exhibit to Form SB-2 filed on July 5, 2005, and incorporated
        herein
        by reference.
 
 20
 
 **Item
        14.**   **PRINCIPAL
        ACCOUNTANT FEES AND SERVICES**
 
 The
        following table sets forth fees billed to the Company by the Company’s
        independent auditors for the years ended October 31, 2005 and 2004 for (i)
        services rendered for the audit of the Company’s annual financial statements and
        the review of the Company’s quarterly financial statements, (ii) services
        rendered that are reasonably related to the performance of the audit or review
        of the Company’s financial statements that are not reported as Audit Fees, and
        (iii) services rendered in connection with tax preparation, compliance, advice
        and assistance. Principal accounting and services fees incurred are as
        follows:
 
 2005
              
              2004Audit
                  Fees
              
              $
              53,000
              
              $
              44,000Audit
                  - Related Fees
              
              
              5,181
              
              
              0Tax
                  Fees
              
              
              0
              
              
              0All
                  Other Fees
              
              
              935
              
              
              13459,116
              
              $
              44,134
  **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:
                January 25, 2005
              By:
              /s/ Bruce
                L. HollanderBruce
                L. Hollander, President
  **In
        accordance with the Exchange Act, this Report has been signed below by the
        following persons on behalf of the registrant and in the capacities and on
        the
        date indicated.**
 Date:
                  January 25, 2005
                By:
                /s/ Bruce
                  L. HollanderBruce
                  L Hollander, CEO & Director
 Date:
                    January 25, 2005
                  By:
                  /s/ Ingo
                    K. KozakIngo
                    K Kozak, CFO and Director
  Date:
                    January 25, 2005
                  By:
                  /s/ Dan
                    LubinDan
                    Lubin, Director
  Date:
                      January 25, 2005
                    By:
                    /s/ Neil
                      SmithNeil
                      H. Smith, Director
  Date:
                        January 25, 2005
                      By:
                      /s/ Harold
                        WeismanHarold
                        Weisman, Esq.
 21




**BIOLOK
        INTERNATIONAL, INC.**
 **AND
        SUBSIDIARIES**
 **CONSOLIDATED
        FINANCIAL STATEMENTS**
 **AS
        OF OCTOBER 31, 2005 AND 2004**
 
 **CONTENTS**
 
 PAGE
              F
                  -
                  1
              CONTENTSPAGE
              F
                  -2
              REPORT
                  OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMPAGE
              F
                  -
                  3
              CONSOLIDATED
                  BALANCE SHEET AS OF OCTOBER 31, 2005PAGE
              F
                  -
                  4
              CONSOLIDATED
                  STATEMENTS OF OPERATIONS FOR THE YEARS ENDED OCTOBER 31, 2005 AND
                  2004PAGE
              F
                  -
                  5
              CONSOLIDATED
                  STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED OCTOBER
                  31, 2005 AND 2004PAGES
              F-6-
                  F-7
              CONSOLIDATED
                  STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED OCTOBER 31, 2005 AND
                  2004PAGES
              F-8-
                  F-24
              NOTES
                  TO CONSOLIDATED FINANCIAL STATEMENTS AS OF OCTOBER 31,
                  2005
   F-1
 
 
 
 F
          - 2
 
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEET**
 **AS
          OF OCTOBER 31, 2005**
 
 
 **ASSETS****CURRENT
                    ASSETS**Cash
                
                $
                545,762Accounts
                    receivable, net
                
                
                2,237,511Inventory
                
                
                2,278,993Prepaid
                    expenses and other current assets
                
                
                407,443Total
                    Current Assets
                
                
                5,469,709**PROPERTY
                    AND EQUIPMENT - NET**
                
                
                1,581,507**OTHER
                    ASSETS**Patents,
                    net
                
                
                277,812Inventory
                
                
                267,194Deposits
                    and other assets
                
                
                34,249Total
                    Other Assets
                
                
                579,255**TOTAL
                    ASSETS**
                
                $
                7,630,471**LIABILITIES
                    AND STOCKHOLDERS’ EQUITY****CURRENT
                    LIABILITIES**Revolving
                    loans payable
                
                $
                592,000Notes
                    and loans payable - current portion
                
                
                103,584Capital
                    lease obligations - current portion
                
                
                71,655Accounts
                    payable
                
                
                259,800Accrued
                    expenses and other payable
                
                
                286,913Total
                    Current Liabilities
                
                
                1,313,952**LONG-TERM
                    LIABILITIES**Capital
                    lease obligations - non-current
                
                
                208,594Notes
                    and Loans payable - non-current
                
                
                113,475Total
                    Long-Term Liabilities
                
                
                322,069**TOTAL
                    LIABILITIES**
                
                
                1,636,021**COMMITMENTS
                    AND CONTINGENCIES (NOTES 6, 7 AND 9)****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,15,318,338
                    shares issued and outstanding
                
                
                153,183Additional
                    paid-in capital
                
                
                6,681,574Accumulated
                    deficit
                
                
                (833,030
                )Treasury
                    stock (17,327 common shares), at cost
                
                
                (7,277
                )Total
                    Stockholders’ Equity
                
                
                5,994,450**TOTAL
                    LIABILITIES AND STOCKHOLDERS’ EQUITY**
                
                $
                7,630,471
 
 
 See
          accompanying notes to the consolidated financial statements.
 F
          -
          3
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
 2005
                
                2004**SALES
                    - NET**
                
                $
                7,246,238
                
                $
                4,949,326**COST
                    OF SALES**
                
                
                2,364,629
                
                
                1,760,166**GROSS
                    PROFIT**
                
                
                4,881,609
                
                
                3,189,161**OPERATING
                    EXPENSES**Selling
                    & marketing expenses
                
                
                2,230,730
                
                
                1,275,496General
                    and administrative expenses
                
                
                2,418,712
                
                
                1,474,683Research
                    & Development
                
                
                422,177
                
                
                300,471Total
                    Operating Expenses
                
                
                5,071,619
                
                
                3,050,650**INCOME
                    (LOSS) FROM OPERATIONS**
                
                
                (190,010
                )
                
                138,511**OTHER
                    (EXPENSE) INCOME**Other
                    income - Forgiveness of Debt
                
                
                149,713
                
                
                -Interest
                    expense
                
                
                (148,134
                )
                
                (162,648
                )Other
                    expense
                
                
                (6,238
                )
                
                (272
                )Gain
                    from business insurance recovery
                
                
                117,008
                
                
                75,946Total
                    Other Income (Expense)
                
                
                112,349
                
                
                (86,974
                )**NET
                    INCOME (LOSS)**
                
                $
                (77,661
                )
                $
                51,537**Net
                    income (loss) per common share:****Basic**
                
                $
                (.01
                )
                $
                .01**Diluted**
                
                $
                (.01
                )
                $
                .01**Weighted
                    average number of shares outstanding during the
                    period:****Basic**
                
                
                12,648,591
                
                
                7,218,264**Diluted**
                
                
                12,648,591
                
                
                9,793,191
 
 
 See
          accompanying notes to consolidated financial statements.
 F
          -
          4
 
 
 
 **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  Preferred
                    Stock
                
                Common
                    Stock
                
                Additional
                    Paid-In
                
                Accumulated
                
                TreasuryStock
                
                Amount
                
                Stock
                
                Amount
                
                Capital
                
                Deficit
                
                Stock
                
                Total**Balance,
                    October 31, 2003**
                
                
                
                
                $
                
                
                
                7,153,701
                
                $
                71,537
                
                $
                2,513,454
                
                $
                (806,906
                )
                $
                (7,277
                )
                $
                1,770,808Issuance
                    of shares for services
                
                
                
                
                
                
                
                
                9,000
                
                
                90
                
                
                6,300
                
                
                
                
                
                
                
                
                6,390Issuance
                    of common stock-
                    401(k) Plan for 2003
                
                
                
                
                
                
                
                
                75,172
                
                
                752
                
                
                16,538
                
                
                
                
                
                
                
                
                17,290Issuance
                    of shares for service
                
                
                
                
                
                
                
                
                60,000
                
                
                600
                
                
                30,600
                
                
                
                
                
                
                
                
                31,200Issuance
                    of shares for service
                
                
                
                
                
                
                
                
                22,000
                
                
                220
                
                
                11,000
                
                
                
                
                
                
                
                
                11,220Stock
                    Option amortization
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                116,126
                
                
                
                
                
                
                
                
                116,126Net
                    Income 2004
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                51,537
                
                
                
                
                
                51,537**Balance
                    October 31, 2004**
                
                
                
                
                $
                
                
                
                7,319,873
                
                $
                73,199
                
                $
                2,694,018
                
                $
                (755,369
                )
                $
                (7,277
                )
                $
                2,004,571Stock
                    Option amortization
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                50,476
                
                
                
                
                
                
                
                
                50,476Issuance
                    of stock to officers andemployees
                    for services in 2004
                
                
                
                
                
                
                
                
                187,000
                
                
                1,870
                
                
                172,040
                
                
                
                
                
                
                
                
                173,910Issuance 
                    of  common stock in connection with 401(k)  PlanDistribution
                    (2004)
                
                
                
                
                
                
                
                
                34,944
                
                
                349
                
                
                32,149
                
                
                
                
                
                
                
                
                32,498Issuance
                    of stock for exerciseof
                    Options
                
                
                
                
                
                
                
                
                30,000
                
                
                300
                
                
                4,200
                
                
                
                
                
                
                
                
                4,500Conversion
                    of outstandingOptions
                    to common stock
                
                
                
                
                
                
                
                
                2,441,793
                
                
                24,418
                
                
                (24,418
                )
                
                
                
                
                
                
                
                0Issuance
                    of shares in a  PrivatePlacement
                
                
                
                
                
                
                
                
                5,000,000
                
                
                50,000
                
                
                3,397,000
                
                
                
                
                
                
                
                
                3,447,000Issuance
                    of stock to consultant forservices
                    ref. the Private Placement
                
                
                
                
                
                
                
                
                150,000
                
                
                1,500
                
                
                214,500
                
                
                
                
                
                
                
                
                216,000Issuance
                    of common stock in connection with - 401(k)Plan
                    for vested shares
                
                
                
                
                
                
                
                
                14,728
                
                
                147
                
                
                4,829
                
                
                
                
                
                
                
                
                4,976Issuance
                    of shares for services
                
                
                
                
                
                
                
                
                130,000
                
                
                1,300
                
                
                121,880
                
                
                
                
                
                
                
                
                123,180Issuance
                    of stock per hire in connection with employement letter
                
                
                
                
                
                
                
                
                10,000
                
                
                100
                
                
                14,900
                
                
                
                
                
                
                
                
                15,000Net
                    Loss 2005
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (77,661
                )
                
                
                
                
                (77,661
                )**Balance
                    - October 31, 2005**
                
                
                
                
                $
                
                
                
                15,318,338
                
                $
                153,183
                
                $
                6,681,574
                
                $
                (833,030
                )
                $
                (7,277
                )
                $
                5,994,450
 
 
 See
          accompanying notes to consolidated financial statements.
 F
          -
          5
 
 
 
 **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOW**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  2005
                
                2004**CASH
                    FLOWS FROM OPERATING ACTIVITIES:**Net
                    Income
                
                $
                (77,661
                )
                $
                51,537Adjustments
                    to reconcile net income to net cash provided by (used
                    in)operating
                    activities:Depreciation
                    and amortization
                
                
                251,930
                
                
                180,969Provision
                    for doubtful accounts - net of recoveries
                
                
                45,711
                
                
                13,067Issuance
                    of common stock for services
                
                
                565,565
                
                
                66,100Forgiveness
                    of debt
                
                
                (149,713
                )
                
                -Option
                    expense (amortization)
                
                
                50,476
                
                
                116,126Changes
                    in operating assets and liabilities:Accounts
                    receivable
                
                
                (1,179,336
                )
                
                (115,428
                )Inventory
                
                
                (401,232
                )
                
                (105,631
                )Prepaid
                    expenses and other current assets
                
                
                (343,706
                )
                
                9,854Deposits
                    and other assets
                
                
                (4,367
                )
                
                (14,582
                )Accounts
                    payable and accrued expenses
                
                
                151,373
                
                
                42,518Due
                    to stockholders
                
                
                -
                
                
                (2,294
                )Net
                    Cash Provided by (Used In) Operating Activities
                
                
                (1,090,960
                )
                
                242,236**CASH
                    FLOWS FROM INVESTING ACTIVITIES:**Purchases
                    of property, plant and equipment
                
                
                (357,313
                )
                
                (139,706
                )Proceeds
                    from sale of property and equipment
                
                
                6,000
                
                
                35,000Insurance
                    settlement
                
                
                103,297
                
                
                -Investment
                    in Patents & related intangibles
                
                
                (93,486
                )
                
                (107,610
                )Net
                    Cash Used In Investing Activities
                
                
                (341,502
                )
                
                (212,316
                )**CASH
                    FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                    from Stock sale
                
                
                3,447,000
                
                
                -Proceeds
                    from exercise of Options
                
                
                4,500
                
                
                -Payment
                    of capital lease obligations
                
                
                (88,536
                )
                
                (78,987
                )Payment
                    of notes and loans payable
                
                
                (101,441
                )
                
                (101,380
                )Proceeds
                    from payment of revolving loans payable, net
                
                
                (1,307,432
                )
                
                133,728Net
                    Cash Provided (Used In) by Financing Activities
                
                
                1,954,091
                
                
                (46,639
                )**NET
                    INCREASE (DECREASE) IN CASH**
                
                
                521,629
                
                
                (16,719
                )**CASH
                    - BEGINNING OF YEAR**
                
                
                24,133
                
                
                40,852**CASH
                    - END OF YEAR**
                
                $
                545,762
                
                $
                24,133**SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                    paid during the year for interest
                
                $
                148,134
                
                $
                162,648Cash
                    paid during the year for income taxes
                
                $
                -0-
                
                $
                -0-**NON
                    CASH FINANCING AND INVESTING ACTIVITIES:**Capital
                    Lease obligations
                
                $
                175,359
                
                $
                158,813Note
                    Payable issued for equipment
                
                $
                162,250
                
                $
                -0-
  See
          accompanying notes to consolidated financial statements.
 F-6
 
 
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOW**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
 **SUPPLEMENTAL
          DISCLOSURE OF NON-CASH ACTIVITIES:**
 
 At
          October 31, 2005, the Company had accrued $25,092 for a matching contribution
          to
          its 401(k) plan for 2005.
 During
          2005 the Company settled its 2004 accrual by issuing 34,944 shares of its
          common
          stock under the plan.
 
 During
          the year ended October 31, 2005, the Company acquired $175,359 of equipment
          through the assumption of capital lease liabilities.
 
 During
          the year ended October 31, 2005, the Company acquired $162,250 of equipment
          through the assumption of note payable liabilities.
  F-7
 
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
  **NOTE
          1**  **SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES**
 
 ***(A)
          Organization and Description of Business***
 
 BioLok
          International, Inc. (BioLok or the "Company") manufactures and distributes
          the
          "BioLok Precision Dental Implant System” along with related bone augmentation
          and regenerative products. The Company holds many patents and its products
          are
          sold world wide. Domestic marketing and sales activities are direct to
          clinicians and institutions; internationally via Distributors and Subsidiaries
          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. The Company manufactures its products in
          a
          Federal Drug Administration (FDA) registered facility, and is ISO 9001,
          EN
          13485:2001 and Annex II Certified. The Company guarantees and warrants
          its
          products, subject to certain restrictions and requirements. As a result
          of
          minimal product returns, the Company at present does not maintain reserves
          for
          product warranties.
 
 ***(B)
          Principles of Consolidation***
 
 The
          consolidated financial statements include the accounts of the Company and
          its
          wholly and majority owned subsidiaries (Orthogen Corporation, 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 recorded at the subsidiary level then
          all
          sales from subsidiaries are accounted on a distributor basis and are required
          to
          remit payments for goods shipped at 50% of retail price. Foreign currency
          changes are still minor and immaterial to the financial statements as a
          whole.
 
 ***(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 may differ from those estimates.
 
 ***(D)
          Shipping Costs***
 
 All
          products sold are shipped FOB BioLok International Inc., charged to customers
          and included in gross revenue. Shipping charges are expensed as Cost of
          Goods
          Sold. All other shipping charges incurred by the Company are expensed to
          their
          respective operation.
 
 F-8
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
  ***(E)
          Cash***
 
 Cash
          includes cash on deposit at financial institutions.
 
 ***(F)
          Reclassification***
 
 Certain
          amounts from prior periods have been reclassified to conform to the current
          year
          presentations.
 
 ***(G)
          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 products ordered are shipped the same day for domestic
          accounts and within 3 to 5 days for international accounts.
 
 ***(H)
          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
          expensed as incurred.
 
 ***(I)
          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.
 
 ***(J)
          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, 2005 and 2004 was $222,454 and $137,774,
          respectively.
 
 ***(K)
          Impairment of Long-Lived Assets***
 
 In
          accordance with Statement of Financial Accounting Standards No. 144, “Accounting
          for the Impairment or Disposition of Long-Lived Assets”, 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 costs to sell the
          assets.
 
 F-9
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  ***(L)
          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 $422,177 and $300,471 in fiscal years 2005 and
          2004,
          respectively.
 
 ***(M)
          Stock Options and Warrants***
 
 The
          Company accounts for stock options issued to consultants and for other
          services
          in accordance with SFAS 123. Beginning in November 2002, the Company elected
          to
          account for all employee options under SFAS 123. As of March 1, 2005, all
          stock
          options outstanding except performance based grants/options (See Note 12)
          have
          been exercised and converted on a cashless exchange to common
          stock.
 
 ***(N)
          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, 2005.
 
 ***(O)
          Revenue Recognition***
 
 The
          Company recognizes revenues when goods and products are shipped. Returns
          and
          allowances are recorded as goods and products are returned and offset as
          a
          credit and reduction to revenues. Generally, all goods and products returned
          occurs in the same fiscal year (within 30 to 60 days) and are negligible
          if
          returned in the following year.
 
 ***(P)
          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.
 
 F-10
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  The
          following represents reconciliation from basic to diluted earnings per
          share:
  2005
                
                2004Numerator:Income
                    to common shareholders
                
                $
                (77,661
                )
                $
                51,537Denominator:Weighted
                    average common shares outstanding
                
                
                12,648,591
                
                
                7,319,873Assumed
                    exercise of stock options
                
                
                -0-
                
                
                2,473,318Diluted
                    weighted average common shares outstanding
                
                
                12,648,591
                
                
                9,793,191Basic
                    earnings per common share
                
                $
                (.01
                )
                $
                .01Diluted
                    earnings per common share
                
                $
                (.01
                )
                $
                .01
 
 ***(Q)
          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 approximate fair value due to the relatively short period to maturity
          for these instruments.
 
 ***(R)
          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 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 14 for the Company’s percentage of sales to various
          geographical areas.)
 
 F-11
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  The
          Company has only one product line consisting of its “BioLok 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 for both segments and any
          allocation would be impractical.
 
 ***(S)
          Recent Accounting Pronouncements***
 
 SFAS
          No.
          154, *Accounting
          Changes and Error Corrections,* was
          issued in May 2005 and replaces APB Opinion No. 20 and SFAS No. 3. SFAS
          No. 154
          requires retrospective application for voluntary changes in accounting
          principle
          in most instances and is required to be applied to all accounting changes
          made
          in fiscal years beginning after December 15, 2005.
 
 In
          December 2004, the FASB issued SFAS No. 123R “Share-Based Payment” (“SFAS
          123R”), a revision to SFAS No. 123 “Accounting for Stock-Based Compensation”
(“SFAS 123”), and superseding APB Opinion No. 25 “Accounting for Stock
          Issued to Employees” and its related implementation guidance. SFAS 123R
          establishes standards for the accounting for transactions in which an entity
          exchanges its equity instruments for goods or services, including obtaining
          employee services in share-based payment transactions. SFAS 123R applies
          to all
          awards granted after the required effective date and to awards modified,
          repurchased, or cancelled after that date. Adoption of the provisions of
          SFAS
          123R is effective as of the beginning of the first interim or annual reporting
          period that begins after June 15, 2005. The Statement is effective for
          us
          beginning in our third quarter of fiscal 2005.
 
 In
          November 2004, the FASB issued SFAS 151, *Inventory
          Costs—an amendment of ARB No. 43, Chapter 4* .
          The
          Statement amends the guidance of ARB No. 43, Chapter 4, *Inventory
          Pricing* ,
          by
          clarifying that abnormal amounts of idle facility expense, freight, handling
          costs, and wasted materials (spoilage) should be recognized as current-period
          charges and by requiring the allocation of fixed production overheads to
          inventory based on the normal capacity of the production facilities. The
          Statement is effective for us beginning in our fourth quarter of fiscal
          2006.
 
 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.
  F-12
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
 **NOTE
          2**  **ACCOUNTS
          RECEIVABLE**
 
 Accounts
          receivable as of October 31, 2005:
 Accounts
                    receivable, gross
                
                $
                2,342,158Less:
                    Allowance for doubtful accounts
                
                
                (104,647
                )Accounts
                    receivable, net
                
                $
                2,237,511
 
 The
          Company maintains an allowance for doubtful accounts based on management’s
          analysis of historical customer collections and risk (See Note 13).
 
 **NOTE
          3**  **INVENTORY**
 
 Inventory
          consisted of the following as of October 31, 2005:
 Raw
                    materials
                
                $
                51,701Work
                    in process
                
                
                712,992Finished
                    Goods
                
                
                1,570,074Finished
                    goods at foreign subsidiaries
                
                
                211,4202,546,187Less:
                    Inventory classified as long-term
                
                
                (267,194
                )Total
                    current inventory
                
                $
                2,278,993
 
 **NOTE
          4**  **PROPERTY
          AND EQUIPMENT**
 
 Property
          and equipment consisted of the following as of October 31, 2005:
 Office
                    equipment
                
                $
                231,929Machinery
                    and equipment
                
                
                1,137,594Equipment
                    acquired through Capital leases
                
                
                509,531Computer
                    equipment
                
                
                261,935Vehicle
                
                
                22,161Leasehold
                    improvements
                
                
                210,8292,373,979Less
                    accumulated depreciation and amortization
                
                
                (792,472
                )$
                1,581,507
 
 Depreciation
          expense for the years ended October 31, 2005 and 2004 was $228,648 and
          $165,823,
          respectively.
 
 **NOTE
          5**  **PATENT
          & REGISTRATION EXPENSES**
 
 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, 2005:
 
 Patents
                    & Registration Expenses
                
                $
                323,711Less:
                    accumulated amortization expense
                
                
                45,899$
                277,812
 
 F-13
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
  Amortization
          expense on patents and registration expenses for the year ended October
          31, 2005
          and 2004 totaled $23,282 and $15,146, respectively.
 
 The
          following is a schedule of future minimum expense amortization for patent
          and
          registration expenses as of October 31, 2005:
 
 Year
                
                Amount2006
                
                $
                26,9762007
                
                
                26,9762008
                
                
                26,9762009
                
                
                26,9762010
                
                
                26,976
 
 
 **NOTE
          6**  **REVOLVING
          LOANS PAYABLE**
 
 The
          following schedule reflects revolving loans payable as of October 31,
          2005:
 
 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 and $2,500,000
                    on
                    December 30, 2004. 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 1.0%. At October 31, 2005, the effective rate was 6.75%. To
                    provide added security to the Bank for the above revolving loan,
                    the
                    Company has obtained EximBank credit guarantees on select international
                    receivables at a cost of $.80 per $100 as invoices are issued
                    and
                    reported.
                $
                592,000$
                592,000
 
 The
          Company’s revolving loan agreement contains various loan covenants. At October
          31, 2005, the Company was in compliance with these covenants. Revolving
          loan has
          been extended to April 1, 2006. (See Note 17 Subsequent Events)
 
 F-14
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
  **NOTE
          7**  **NOTES
          AND LOANS PAYABLE**
 
 The
          following schedule reflects notes and loans payable as of October 31,
          2005:
 
 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.
                $
                81,250The
                    Company entered into a secured loan agreement with Diamond Lease
                    for the
                    purchase of a Nomura CNC NN20YB screw machine.
                  The
                    note is repaid over 60 months at 9.48% with first payment 1/05
                    at
                    $3,352.76 per month.
                
                135,809TOTAL
                $
                217,059Less:
                    Current Portion of Long Term Debt
                
                103,584Long
                    Term Debt
                
                113,475
 
 Required
          payments of principal on notes and loan payable, including current maturities,
          are as follows as of October 31, 2005:
 
 Year
                
                Amount2006
                $
                103,5842007
                
                37,6642008
                
                34,5232009
                
                37,9402010
                
                3,348$
                217,059
 
 Interest
          expense for the years ended October 31, 2005 and 2004 was $148,134 and
          $162,648,
          respectively.
 
 **NOTE
          8**  **INCOME
          TAXES**
 
 For
          the
          year ended October 31, 2005, 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, 2005 and 2004 is
          summarized as follows:
 
 2005
                
                2004Deferred:Federal
                
                $
                -0-
                
                $
                -0-State
                
                
                -0-
                
                
                -0-Income
                    tax expense (benefit)
                
                $
                -0-
                
                $
                -0-
 
 F-15
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  The
          Company’s tax expense (benefit) differs from the “expected” tax expense for the
          years ended October 31, 2005 and 2004 (computed by applying the Federal
          Corporate tax rate of 34.00 percent to income before taxes) as
          follows:
 
 2005
                
                2004Computed
                    “expected” tax expense
                
                $
                (26,405
                )
                $
                17,523State
                    income tax (benefit) - net of federal tax benefit
                
                
                558
                
                
                3,322Non
                    deductible expenses
                
                
                31,629
                
                
                13,600Change
                    in valuation allowance
                
                
                (5,782
                )
                
                (34,445
                )$
                -0-
                
                $
                -0-
 
 The
          tax
          effects of temporary differences that give rise to significant portions
          of
          deferred tax assets and liabilities are as follows at October 31:
 
 2005
                
                2004Deferred
                    tax assets:Provision
                    for doubtful accounts
                
                $
                17,201
                
                $
                22,178Depreciation
                
                
                (29,665
                )
                
                (34,155
                )Stock
                    based Compensation
                
                
                186,011
                
                
                68,572Net
                    operating loss carryforward
                
                
                277,220
                
                
                399,954Total
                    gross deferred tax assets
                
                
                450,767
                
                
                456,549Less
                    valuation allowance
                
                
                (450,767
                )
                
                (456,549
                )Net
                    deferred tax assets
                
                
                -
                
                
                -Net
                    deferred tax asset (liability)
                
                $
                -
                
                $
                -
 
 As
          of
          October 31, 2005, the Company had net operating loss carryforwards of $865,116
          for income tax purposes, available to offset future taxable income expiring
          on
          various dates ending in 2023.
 
 **NOTE
          9**  **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. To
          date,
          the first milestone had been met and 100,000 of the Option was issued in
          common
          stock in 2003 (See Note 12(A)).
  F-16
 
  **BIOLOK
            INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
            THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 ***(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, and automatically renews 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 to pay as of the original contract date
          an
          annual base salary which has been adjusted by the Company’s Board of Directors
          on an annual basis as 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 which
          is
          reviewed annually by the Board of Directors and may be adjusted as detailed
          in
          the Company’s annual meeting proxy statement with a 10% bonus. 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
          12).
 
 ***(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. As of October 31, 2005
          the
          Company had fifteen (15) contracts enforce.
 
 ***(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, 2005:
  F-17
  
 **BIOLOK
            INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
            THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 Year
                
                Amount2006
                $
                99,7372007
                
                99,7372008
                
                94,1032009
                
                45,728Total
                    minimum lease payments
                
                339,305Less
                    - amount representing interest
                
                (59,056)Subtotal
                
                280,249Less
                    - current portion of capital lease obligations
                
                (71,655)Capital
                    lease obligations, less current portion
                $
                208,594
 
 ***(E)
          Operating Lease Agreements***
 The
          Company leases corporate office and manufacturing space under operating
          leases.
          The leases expire at June 30, 2008. Future minimum lease payments for the
          operating leases are as follows at October 31, 2005:
 
 Year
                
                Amount2006
                $
                173,1442007
                
                173,1442008
                
                115,429$
                461,717
 
 Rent
          expense under the operating leases for the years ended October 31, 2005
          and 2004
          was $142,302 and $113,383, respectively.
 
 ***(F)
          Royalty Agreement***
 Pursuant
          to a settlement agreement, the Company is obligated to make royalty payments
          to
          a general creditor 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 $115,463
          and $105,409 for royalties under this agreement for the years ended
          October 31, 2005 and 2004, respectively.
 
 Pursuant
          to a License Agreement entered into with the Hospital for Joint Diseases
          Orthopaedic Institute (“HJD”), 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.
          Royalty payments for 2004 was $25,000 and is $25,000 for 2005. To this
          extent,
          the Company has accrued $24,000 as of October 31, 2005. The Company is
          obligated
          to pay royalties of $25,000 per year until royalty on total net sales for
          laser-lok implants at 2.5% exceeds $25,000. Other royalties that may be
          paid to
          HJD is for medical licensed of the laser-lok technology at 5% of net sales,
          10%
          for licensed services and 15% for any monetary consideration
          realized.
  F-18
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  ***(G)
          Insurance Recovery***
 During
          2005 the Company lost a machine due to an internal machine fire which was
          fully
          contained to the machine. The Company had “replacement value” insurance on the
          destroyed equipment. The equipment was replaced by the Company with a new
          and
          different model (See Note 15).
 
 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 in
          2001 the business interruption insurance was settled in 2004. (See Note
          15).
  ***(H)
            Forgiveness of Debt***
 The
          Company in fiscal 2005 recorded $149,713 as forgiveness of debt. The amount
          represented the remaining debt obligation outstanding from the Chapter
          XI
          bankruptcy filing in 1996. All debt payments had been made according to
          the
          settlement agreement and plan payments terminated in March 2003. The balance
          remaining and amount recorded as forgiveness of debt represented the total
          amount unable to be remitted (i.e. checks returned due to change of address
          or
          business closed) due to no contact for over eight (8) years.
  **NOTE
          10**  **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 34,944 and 75,172 shares of the
          Company’s common stock having a fair value of $32,498 and $17,290 for 2005 and
          2004, respectively. The award for 2005 is being accrued and is expected
          to be
          issued in early 2006. As of October 31, 2005, $25,092 had been accrued
          towards
          the Company’s Plan participation.
 
 F-19
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
 **NOTE
          11**  **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***
 The
          Company issued stock to officers and employees for services in 2005 totaling
          187,000 common stock shares at a cost of $.93 per share. 34,944 common
          stock
          shares where issued for the 401k Plan participation for 2005 at a cost
          of $.93
          per share. Options exercised by individuals resulted in the issue of 30,000
          common stock shares at an exercise price averaging $.15 per share. The
          Company
          issued shares vested under the 401k Plan for 2000 and 2001 totaling 14,728
          common stock shares at an average price of $.34 per share. 10,000 common
          stock
          shares where issued per a hire agreement at a cost of $1.50 per share.
          130,000
          common stock shares where issued to third parties for services at an average
          cost of $.95 per share.
 
 March
          1,
          2005, the Board authorized the cashless exercise of all options outstanding.
          To
          this extent, 2,937,000 options where exchanged for the issue of 2,441,793
          common
          stock shares at a price of $1.45 per share.
 
 On
          March
          2, 2005, the Board authorized the issue of 5,000,000 common stock shares
          for the
          Private Placement Issue consummated at $.75 per share. The Company raised
          a net
          total of $3,447,000. Concurrently, the Company issued 150,000 common stock
          shares for consulting services reference the private placement and warrants
          to
          purchase 500,000 common stock shares at $.75 per share for investment banking
          services. (See Note 12)
 
 During
          fiscal year 2004, the Company issued 166,172 shares of common stock for
          $66,100.
          91,000 shares of common stock were issued for services rendered and 75,172
          shares of common stock were issued to the Bio-Lok 401(k) Plan as a matching
          contribution for the years ended 2003. 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
          12**  **STOCK
          OPTIONS AND WARRANTS**
 
 ***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.
 
 F-20
  
 **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  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 11(A) and
          (B)).
 
 A
          qualified plan for employees was 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.
 
 A
          summary
          of the stock options issued is presented below as of October 31,
          2005:
 
 Number
                    of Options
                
                Weighted
                    Average Exercise PriceStock
                    OptionsBalance
                    at beginning of period
                
                
                3,377,000
                
                $
                .34Granted
                
                
                20,000
                
                
                .05Exercised
                
                
                2,957,000
                
                
                .34Cancelled
                    and rescinded
                
                
                -0-
                
                
                .-Expired
                
                
                -0-
                
                
                -Balance
                    at end of period
                
                
                400,000*
                
                $
                .00
 
 *Note
          -
          Outstanding at October 31, 2005, are performance based grants/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 11(A) and (B)).
 
 During
          fiscal 2005 the Company issued warrants to purchase 500,000 common stock
          shares
          at $.75 per share for services rendered by its investment banking entity.
          The
          warrants have a five (5) year exercise period after which they shall expire
          and
          become void.
 
 **NOTE
          13**  **CONCENTRATIONS
          OF CREDIT RISK AND MAJOR CUSTOMERS**
 
 During
          fiscal 2005 and 2004, 27% and 34%, respectively, of the Company's total
          revenues
          were derived from sales to two customers. The Company's international sales
          represent approximately 74% and 73% of the total sales for 2005 and 2004,
          respectively. As of October 31, 2005 and 2004, 60% and 48%, respectively,
          of
          accounts receivable were due from four customers (See Note 2). Financial
          instruments that potentially subject the Company to concentrations of credit
          risks consist of accounts receivable.
  F-21
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
  To
          insure
          against 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, 2005 and 2004, approximately $1,181,775 and $805,276, respectively,
          of
          international receivables were insured. Credit limits are individually
          evaluated
          and 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.
 
 The
          Company’s credit risk concentration associated with cash and cash equivalents is
          minimized by maintaining its cash and cash equivalents with high quality
          federally insured financial institutions. Cash balances in excess of the
          FDIC
          insured limit of $100,000 and at risk as of October 31, 2005, was $431,515
          in
          excess of the FDIC insurance limit.
 
 **NOTE
          14**  **SEGMENTS**
 
 The
          Company segments its sales activity by maintaining revenue detail based
          on
          Domestic and International sales generated. Results for year 2005 and 2004
          where
          as follows:
 
 2005
                %
                
                2004
                %Domestic
                    Sales
                $
                1,857,277
                25.6
                $
                1,358,483
                27.4International
                    Sales
                
                5,388,961
                74.4
                
                3,590,844
                72.6$
                7,246,238
                
                $
                4,949,326
 
 **NOTE
          15**  **GAIN
          ON INVOLUNTARY CONVERSION AND BUSINESS INTERRUPTION**
 
 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 settled in 2004. The table
          below shows the amount of insurance claims realized as of October 31, 2005:
          (See
          Note 9(G)
 
 Asset
                    Destroyed
                
                Insurance
                    Claim
                
                Net
                    Book Value
                
                GainBI
                    (Business interruption insurance)
                
                $
                75,946
                
                $
                n/a
                
                $
                75,946Insurance
                    proceeds from loss of a machinein
                    2005
                
                
                207,137
                
                
                109,296
                
                
                117,008
  F-22
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
 
 **NOTE
          16**  **LIQUIDITY**
 
 During
          the year ended October 31, 2005, the Company’s position continued to improve
          until the fourth quarter when the new “Laser-Lok” implant promotional and
          marketing activities commenced. For the year the Company generated a negative
          cash flow from operations of $1,090,960 and a net loss of $77,661, positive
          working capital of $4,155,756, and positive stockholders’ equity of $5,994,450.
          As of the fiscal year-end, the Company had $545,762 in cash, $1,576,521
          available under its revolving line of credit, $2,237,511 in net accounts
          receivable, and $2,278,993 in current inventory. The Company had accounts
          payable, accrued expenses and other payables in the aggregate of $546,713,
          revolving loans payable of $592,000, and current notes, loans and leases
          payable
          - current of $175,239.
 
 On
          March
          26, 2003, the Company entered into a financing arrangement with CommerceBank,
          N.A. to provide a revolving line of credit facility. 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
          $2,500,000 and is subject to a monthly borrowing base, as defined in the
          Agreement. EximBank US is guaranteeing 90% of the loan. The current interest
          rate on the revolving loan is 1% over the prevailing prime rate as published
          by
          the Wall Street Journal. Under the facility, CommerceBank, N.A. also committed
          to a revolving line of credit on domestic receivables in the amount of
          $250,000,
          and the amount available under the line of credit is subject to a monthly
          borrowing base. The interest rate for the facilities is 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 total line of
          credit for $2,750,000 has been extended to December 31, 2005. Presently,
          the
          credit line is under an annual review for signing of an amendment to the
          line of
          credit renewing the line to December 31, 2006. (See Note 17)
 
 Overall
          net sales increased 46% in 2005. Management plans to continue its efforts
          to
          increase sales at an increased rate for 2006 and beyond by expanding both
          its
          domestic and international sales and marketing activities.
  As
          reflected in the accompanying financial statements and as of October 31,
          2005,
          the Company
          had an accumulated deficit of $833,030, a net loss from operations of $190,010
          and net cash outflow from operating activities of $1,090,960, and net proceeds
          from a private placement issue of $3,447,000. The funds where raised for
          the
          development of the domestic market and new product introduction - i.e.
          “Laser-Lok implants and “BoneGen” bone regenerative product.
 
 The
          Company anticipates an increase in sales volume and potentially raising
          additional capital in late 2006. 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.
 
 F-23
  
  **BIOLOK
          INTERNATIONAL, INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
          THE YEARS ENDED OCTOBER 31, 2005 AND 2004**
   
 Deteriorating
          global economic conditions may cause prolonged declines in investor’s confidence
          in and accessibility to capital markets. Unfavorable 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.
  **NOTE
          17**  **SUBSEQUENT
          EVENTS**
 
 In
          November 2005 the Company entered into a $105,000 lease arrangement with
          Orix
          Financial Services, Inc. for the leasing of two (2) used Nomura NN13SB
          Swiss
          Screw machines with bar feeds. The leases are for 48 months at a nominal
          annual
          rate of 10.65%.
 
 The
          Company’s revolving credit line with CommerceBank N.A. has been extended to
          April 1, 2006, by both the Bank and EximBank US to complete the review
          and
          documentation to extend the line a credit of $2,750,000, as requested by
          the
          Company, to December 31, 2006.
 
 F-24