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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended September 30, 2002.

                                       Or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from _________ to _________.

                         Commission File Number: 0-22401

                              BIONX IMPLANTS, INC.
             (Exact name of registrant as specified in its charter)

        Pennsylvania                                      22-3458598
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                       Identification No.)

                            1777 Sentry Parkway West
                             Gwynedd Hall, Suite 400
                          Blue Bell, Pennsylvania 19422
           (Address of principal executive office, including zip code)

                                  215-643-5000
              (Registrant's telephone number, including area code)

              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes  [X]  No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

At November 14, 2002 there were 10,770,377 shares of Common Stock, par value
$.0019 per share, outstanding.
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<PAGE>

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES

                                      INDEX
                                                                            Page



Part I.   Financial Information


Item 1.   Consolidated Financial Statements

            Consolidated Balance Sheets at December 31, 2001 and
            September 30, 2002 (Unaudited)                                   3

            Consolidated Statements of Operations for the Three and
            Nine Months Ended September 30, 2001 and 2002 (Unaudited)        4

            Consolidated Statements of Cash Flows for the Nine Months
            Ended September 30, 2001 and 2002 (Unaudited)                    5

            Notes to Consolidated Financial Statements (Unaudited)           6

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                8

Item 3.   Quantitative and Qualitative Disclosures about Market Risk        13

Item 4.   Controls and Procedures                                           14

Part II.  Other Information

Item 6.   Exhibits and Reports on Form 8K                                   14

Signatures                                                                  15

Certifications                                                              16

                                        2
<PAGE>

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
<TABLE><CAPTION>
                                                               December 31,   September 30,
                                                                  2001            2002
                                                              ------------    ------------
                                                                              (Unaudited)
ASSETS

Current assets:
<S>                                                           <C>             <C>
Cash and cash equivalents                                     $      4,985    $      4,534

Trade accounts receivable, net of allowance of $246 as of
      December 31, 2001 and $170 as of September 30, 2002            2,467           2,201

Inventory, net                                                       3,704           3,280

Grants receivable                                                       95              24

Related party receivables                                              529              47

Other receivables                                                        8              10

Prepaid expenses and other current assets                              340             386

Deferred tax assets                                                    798             798
                                                              ------------    ------------
Total current assets                                                12,926          11,280

Plant and equipment, net                                             2,062           1,992

Goodwill, net (Note 4)                                               2,905           2,905

Intangibles, net (Note 4)                                              922           1,036
                                                              ------------    ------------
Total assets                                                  $     18,815    $     17,213
                                                              ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Trade accounts payable                                        $      1,777    $      1,327
Related Party Payables                                                --                20
Long - term debt, current portion                                       35              35
Accrued and other current liabilities                                1,392           1,254
                                                              ------------    ------------
Total current liabilities                                            3,204           2,636
Long-term debt                                                         349             424
Subordinated debt                                                      145             184
                                                              ------------    ------------
Total liabilities                                                    3,698           3,244
                                                              ------------    ------------
STOCKHOLDERS' EQUITY

Preferred stock, par value $0.001 per share,
   8,000,000 shares authorized, none issued and outstanding           --              --
Common stock, par value $0.0019 per share,
   31,600,000 authorized, 10,864,906 and 10,869,113 shares
   issued as of December 31, 2001 and September 30, 2002,
   respectively                                                         21              21
Treasury stock, 2,779 and 98,736 shares as of December 31,
   2001 and September 30, 2002, respectively                            (8)           (535)
Additional paid-in-capital                                          39,986          39,993
Accumulated deficit                                                (23,819)        (24,476)
Amounts due from employees related to stock purchases                  (38)             (9)
Accumulated other comprehensive loss                                (1,025)         (1,025)
                                                              ------------    ------------
Total stockholders' equity                                          15,117          13,969
                                                              ------------    ------------
Total liabilities and stockholders' equity                    $     18,815    $     17,213
                                                              ============    ============
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                        3
<PAGE>

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)
<TABLE><CAPTION>

                                              Three Months Ended           Nine Months Ended
                                                 September 30                September 30
                                           ------------------------    ------------------------
                                              2001          2002          2001          2002
                                           ----------    ----------    ----------    ----------
Revenues:
<S>                                        <C>           <C>           <C>           <C>
Product sales                              $    4,347    $    4,293    $   14,041    $   13,593
Other revenues                                     40             8           169            35
                                           ----------    ----------    ----------    ----------
Total Revenues                                  4,387         4,301        14,210        13,628

Cost of goods sold                              1,210         1,304         4,647         3,998
                                           ----------    ----------    ----------    ----------

Gross profit                                    3,177         2,997         9,563         9,630

Selling, general and administrative             3,017         2,675         9,353         7,969
Research and development                          793           773         2,524         2,124
Restructuring costs                               343          --             343          --
Patent and litigation expense                      17          --             102            28
                                           ----------    ----------    ----------    ----------
Total operating expenses                        4,170         3,448        12,322        10,121
                                           ----------    ----------    ----------    ----------
Operating loss                                   (993)         (451)       (2,759)         (491)


Other income and expense:
Interest income                                    41            17           178            53
Interest expense                                   (1)           (5)           (4)          (13)
Other, net                                        (20)           (2)          (77)         (206)
                                           ----------    ----------    ----------    ----------
Total other income and expense                     20            10            97          (166)
                                           ----------    ----------    ----------    ----------
Loss before provision for income taxes           (973)         (441)       (2,662)         (657)

Provision for income taxes                         (6)         --              (6)         --
                                           ----------    ----------    ----------    ----------

Net loss                                   $     (979)   $     (441)   $   (2,668)   $     (657)
                                           ==========    ==========    ==========    ==========

Loss per share (Note 3):
     Basic & Diluted                       $    (0.09)   $    (0.04)   $    (0.25)   $    (0.06)

Shares used in computing loss per share:
     Basic & Diluted                           10,826        10,770        10,822        10,812
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                        4
<PAGE>

                      BIONX IMPLANTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                 (In Thousands)
                                   (Unaudited)
<TABLE><CAPTION>
                                                                   Nine Months Ended
                                                                     September 30,
                                                               -------------------------
                                                                  2001           2002
                                                               ----------     ----------
Cash flow from operating activities:
<S>                                                            <C>            <C>
Net Loss                                                       $   (2,668)    $     (657)

Adjustments to reconcile net loss to net
  cash (used in) provided by operating activities:
     Depreciation and amortization                                    933            689
     Consignment amortization                                         516           --

Change in assets and liabilities:
Decrease in inventory, net                                            431            424
Decrease in accounts receivable, net                                   69            266
Decrease in grant receivable                                            7             71
(Increase) in related parties                                         (87)           (26)
(Increase) in prepaid expenses and other current assets              (223)           (48)
(Decrease) in trade accounts payable                               (1,215)          (450)
Increase (decrease) in accrued and other current liabilities          354           (137)
                                                               ----------     ----------
Net cash (used in) provided by operating activities                (1,883)           132
                                                               ----------     ----------
Cash flow from investing activities:
     Purchases of plant and equipment                                (487)          (466)
     Purchases of intangibles                                        (250)          (267)
                                                               ----------     ----------
Net cash (used in) investing activities                              (737)          (733)
                                                               ----------     ----------
Cash flow from financing activities:
     Borrowing of long-term and subordinated debt                     193            114
     Proceeds from employee investment plan                           114             29
     Stock options                                                   --                7
                                                               ----------     ----------
Net cash provided by financing activities                             307            150
                                                               ----------     ----------
Net (decrease) in cash and cash equivalents                        (2,313)          (451)
Cash and cash equivalents at beginning of period                    7,050          4,985
                                                               ----------     ----------
Cash and cash equivalents at end of period                     $    4,737     $    4,534
                                                               ==========     ==========
Supplemental disclosure of cash flow information:
     Cash paid for interest                                    $        3     $       10
     Cash paid for taxes                                       $        7     $     --
</TABLE>

      See accompanying notes to unaudited consolidated financial statements

                                        5
<PAGE>

                     BIONX IMPLANTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1. BASIS OF PRESENTATION

The accompanying financial statements have been prepared by Bionx Implants, Inc.
(the "Company") and are unaudited. In the opinion of the Company's management,
all adjustments (consisting solely of normal recurring adjustments) necessary to
present fairly the Company's consolidated financial position as of September 30,
2002, and the Company's consolidated results of operations and cash flows for
the three and nine months ended September 30, 2001 and 2002, have been made.
Certain information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted from the consolidated
financial statements and notes thereto presented herein pursuant to the rules
and regulations of the SEC. The consolidated financial statements and notes
thereto presented herein should be read in conjunction with the Company's
audited consolidated financial statements for the year ended December 31, 2001
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2001 filed with the SEC. The results of operations and
the cash flows for the nine months ended September 30, 2002 are not necessarily
indicative of the results to be expected for any other interim period or the
entire fiscal year.


2. INVENTORY

Inventory consists of the following components as of December 31, 2001 and
September 30, 2002 (in thousands):

                                         December 31, 2001    September 30, 2002
                                         -----------------    ------------------
Raw materials                                $    692              $    554
Finished goods - Implants                       2,301                 1,876
Finished goods - Instruments                    3,381                 2,530
Instruments on consignment                      2,269                 1,334
                                             --------              --------
                                                8,643                 6,294
  Less:
    Inventory reserve for obsolete
      and excess instruments and implants      (4,939)               (3,014)
                                             --------              --------
                                             $  3,704              $  3,280
                                             ========              ========

3. NET LOSS PER SHARE

Basic loss per share is computed using the weighted average number of shares of
common stock outstanding during the period. Diluted loss per share is computed
using the weighted average number of common plus dilutive potential common
shares outstanding during the period. Potential common shares consist of stock
options and warrants using the treasury stock method. For all periods presented
these options and warrants have been excluded from the dilutive losses per share
calculation as their effect would be antidilutive. Shares used for both the
basic loss per share and diluted loss per share were 10,825,885 and 10,770,377
for the quarters ended September 30, 2001 and 2002, respectively, and 10,821,628
and 10,812,381 for the nine months then ended, respectively.

                                        6
<PAGE>

4. GOODWILL AND INTANGIBLES

At September 30, 2002, the Company has net goodwill of $2.9 million and net
intangibles (patents) of $1.0 million. The Company has adopted Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets ("FAS 142"),
effective January 1, 2002, and accordingly no longer amortizes goodwill. FAS 142
requires the Company to complete a test for goodwill impairment within six
months from the date of adoption. The Company has completed the impairment test
and determined that goodwill has not been impaired. The following table is
provided to disclose what net income would have been had FAS 142 been adopted in
prior periods:
<TABLE><CAPTION>

                                         For the three              For the nine
                                          months ended              months ended
                                          September 30,             September 30,
                                        2001         2002         2001         2002
                                     ---------    ---------    ---------    ---------
<S>                                  <C>          <C>          <C>          <C>
Reported net loss                    $    (979)   $    (441)   $  (2,668)   $    (657)
Add back:  goodwill amortization            49         --            147         --
                                     ---------    ---------    ---------    ---------
Adjusted net loss                    $    (930)   $    (441)   $  (2,521)   $    (657)
                                     =========    =========    =========    =========


Basic loss per share as reported     $   (0.09)   $   (0.04)   $   (0.25)   $   (0.06)
Adjusted basic loss per share            (0.09)       (0.04)       (0.23)       (0.06)
Diluted loss per share as reported       (0.09)       (0.04)       (0.25)       (0.06)
Adjusted diluted loss per share          (0.09)       (0.04)       (0.23)       (0.06)
</TABLE>

5. INTEREST AND OTHER INCOME AND EXPENSE

In the three months ended September 30, 2001 the Company generated interest
income of approximately $41,000, interest expense of approximately $1,000, and
foreign exchange losses of approximately $20,000, resulting in net other income
of $20,000. In the three months ended September 30, 2002, the Company generated
interest income of approximately $17,000, interest expense of approximately
$5,000, and foreign exchange losses of approximately $2,000 resulting in net
other income of $10,000.


6. SUPPLEMENTAL CASH FLOW DISCLOSURE

On April 10, 2002, a stockholder transferred 95,957 shares of the Company's
common stock with a value of $527,764 to the Company as payment in full for an
outstanding indebtedness of $479,000 and for future services to be rendered by
the Company. At September 30, 2002 the Company maintained an approximately
$20,000 Related Party Payable balance.

                                        7
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

Statements regarding future performance in this Quarterly Report on Form 10-Q
constitute forward-looking statements under the Private Securities Litigation
Reform Act of 1995 ("Forward looking Statements"). The Company's actual results
could differ materially from those anticipated by such forward-looking
statements as a result of certain factors, including those set forth in Exhibit
99.1 to the Company's Annual Report on Form 10-K for the year ended December 31,
2001.

The Company was founded in 1984 to develop certain resorbable polymers for
orthopedic uses. The Company has incurred substantial operating losses since its
inception and as of September 30, 2002 had an accumulated deficit of
approximately $24.5 million. Such losses have resulted to a large extent from
expenses associated with the development and patenting of the Company's
Self-Reinforcing(TM) technologies and resorbable implant designs, pre-clinical
and clinical studies, the write off and reserve of impaired inventory,
preparation of submissions to the FDA and foreign regulatory agencies, the
development of sales, marketing and distribution channels, the write-off of
acquired in-process research and development and the development of the
Company's manufacturing capabilities.

The Company's mission is to be a leading provider of procedural specific
orthopedic surgical products that improve surgical technique and patient care.
We have established a world class Surgeon Advisory Board to provide guidance and
direction to our product development and marketing programs. In order to develop
new products, and to satisfy the needs of surgeons, Bionx is committed to
developing strong surgeon relationships and supporting medical education. The
Company continues its commitment to medical organizations by remaining a
Founding Donor to AANA (Arthroscopy Association of North America), which is one
of the largest Sports Medicine associations in North America. During the first
quarter of 2002, Bionx also joined ASMI (American Sports Medicine Institute),
whose mission is to improve the understanding, prevention, and treatment of
sports-related injuries through research and education. The Company has
continued its new product introductions with the release of the 1.5 mm Bone
Fixation Kit(TM), Contour Meniscus Arrow(TM), Biocuff C(TM), and Duet Suture
Anchor(TM) since September 2001. These new product introductions highlight the
Company's ability to leverage its technology in resorbable polymers across
varied product lines and offerings. There is no assurance that these actions
will result in increased revenues or result in profitable third party
agreements.

The Company believes that many of its non-orthopedic businesses have significant
market size, a well-defined regulatory pathway, and therapeutic outcome
characteristics that may favor resorbable products. However, given the Company's
limited cash resources, management has decided to cease spending on these
non-orthopedic opportunities as of December 31, 2002 and has begun negotiating
agreements to license technology and distribution of these non-orthopedic
products, including Stents, Urology, Cardiovascular and Craniofacial (in the
U.S.) surgical products. For the first nine months of 2002 the Company has spent
$0.3 million on these non-orthopedic opportunities. The Company's Surgeon
Advisory Board continues to assist in the development of procedure-specific
resorbable products.

During the twelve months ended December 31, 2001 Meniscus Arrow sales
represented 46% of total Company product and product-related sales. For the
three and nine months ended September 30, 2002 non-Arrow sales as a percentage
of total Company sales increased to 60% and 58%, respectively, reflecting the
Company's focus on expanding its Sports Medicine product line and lessening its
dependence on the Meniscus Arrow. No assurance can be given that revenues will
grow in the future or that revenues will exceed expenses. There can be no
assurance that the Company will be able to successfully commercialize its
products or that the Company will be profitable again.

The Company has been focusing on expanding its market share within the procedure
specific Sports Medicine market. The Company experienced a decline from 1999 to
2002 in its Meniscus Arrow market share to approximately 42% as a result of the
introduction of competitive products and a decrease in the number of Arrows used
by surgeons per procedure. Anticipating these conditions, the Company made a
strategic decision to emphasize new product development in Orthopedics,
particularly in Sports Medicine, resulting in the introduction of 10 new
products since January 2000. These new products achieved sales of $1.5 million
in 2000, $3.4 million in 2001 and $3.6 million through September 30, 2002. New
product sales offset the decline in Arrow sales that we experienced as a result
of the decline in market share due to competition and Arrow usage and the
strategic decision to discontinue Craniofacial marketing in the U.S.

The Company has one business segment - bioabsorbable implants and associated
specialized stainless steel surgical instruments for orthopedic surgical use in
bone and bone to soft tissue procedures. Its two primary product lines for these
orthopedic applications are Sports Medicine and Fracture Fixation. The Company
sells its products to hospitals and surgery centers in the United States and to
distributors in international locations. In certain more limited cases the
Company consigns implants to hospitals in the United States, primarily during an
introductory period when surgeons are evaluating these products. In order to
support implant sales efforts in the United States the Company will, in limited
cases, provide instruments free of charge to hospitals and surgery centers. The
sale and provision of these instruments results in margins which are typically
lower than the margins applicable to the Company's implant products. For
financial statement purposes, revenues from the sale of instrumentation systems
are included within product sales and costs associated with such systems are
included within cost of goods sold.

During the three and nine months periods ended September 30, 2001 and 2002,
implants as a percentage of the Company's product revenue was approximately 93%,
with the remaining approximately 7% related to the sale of associated
instruments and other product

                                        8
<PAGE>

sales. The instruments are specially designed for surgical procedures involving
the Company's implants and are therefore inextricably linked to implant sales.
Other product-related sales include instrument loaner fees and outgoing freight
billings to customers.

As part of the Company's marketing efforts, the Company's marketing staff and
business development managers participate in conventions attended by surgeons at
which they demonstrate the products in models of human bone and show surgeons
how to use the products. These individuals may also attend a surgical procedure
to answer any questions the surgeon may have. None of these efforts are
obligations related to a contract or a sale but are done to enhance customer
relationships at the discretion of the Company. The Company is not obligated on
any sale of product to support or train. The Company sells its products through
managed networks of independent sales agents, distributors and dealers. In the
U.S. the Company handles all invoicing functions directly and pays commissions
to its independent sales agents or representatives. Outside the U.S. the Company
sells its products directly to distributors and dealers at discounts that vary
by product and by market. Accordingly, the Company's U.S. sales result in higher
gross margins than international sales.

The Company has made the strategic decision to discontinue Craniofacial sales
and marketing efforts in the United States. As a result of that decision Bionx
is negotiating the formation of strategic partnerships for its Craniofacial
products in the United States. The Company believes that, with the appropriate
strategic partner who has a focused marketing and sales effort coupled with key
surgeon champions and a unique product portfolio, resorbable fixation products
can effectively penetrate the U.S. Craniofacial market.

During 2002 the Company continued to implement initiatives to refocus its
business, to reduce operational costs and to streamline operations. Cost
improvements in operating expenses over the past year have resulted in a savings
of $2.2 million during the first nine months of 2002, as compared to the same
period in 2001. The Company will continue to implement cost improvement programs
to further decrease the cost of operations, while making investments in areas
that will support the future growth of our business. Management is continuing to
focus on and to evaluate monthly the effects of these operational improvement
plans. No assurances can be given that the Company's initiatives will result in
profitable operations.

The majority of the Company's sales are in the United States, and most of the
sales to international markets are in Europe and Asia. The Company is actively
seeking to expand its international sales. During 2000, 2001 and the first nine
months of 2002, international product sales represented approximately 18%, 21%
and 21%, respectively, of the Company's total product sales. The Company has
foreign operations in Finland consisting primarily of manufacturing and certain
R&D and marketing functions. Approximately 85% of the Company's consolidated
revenues and 75% of its expenses are denominated in US Dollars. The majority of
the remaining sales and expenses are denominated in Euros, and Euro denominated
expenses exceed Euro denominated revenues. As the dollar is the functional
currency for the Company's Finnish operation, a weakening of the Euro has a
favorable impact on the Company when the Finnish operations experience a loss
and an unfavorable impact on the Company when the Finnish operations experience
a profit. Alternatively, a strengthening of the Euro has an unfavorable impact
on the Company when the Finnish operations experience a loss and a favorable
impact on the Company when the Finnish operations experience a profit.
Additionally, the effect on the Company of changes in the relative strength of
the Euro depends upon the extent of the Company's Euro denominated net expenses
and/or net assets for the period under evaluation. The Company may seek to
manage its foreign currency risk in the future through the purchase of foreign
currency options and forward contracts. There is a cost to such hedging. For the
nine months ended September 30, 2001 and September 30, 2002, the Company did not
hedge such exposures and the foreign exchange losses for these periods was
approximately $82,000 and approximately $205,000, respectively. No assurances
can be given that such hedging techniques, if implemented, will protect the
Company from exposure resulting from relative changes in the economic strength
of the Euro. Foreign exchange transaction gains and losses can vary
significantly from period to period.

Periodically the Company has evaluated constructing or leasing manufacturing
facilities in the United States to supplement its Finnish manufacturing
capabilities. At this time the Company has decided to supplement its Finnish
manufacturing by using third party contract manufacturers, primarily in the
United States, to produce specific implants or instruments.

The Company's operating losses have resulted in net operating loss carryforwards
("NOL") of approximately $8.6 million in federal NOL and $3.3 million in state
NOL, through 2001, which are available to offset future federal and state
taxable income, if any, through 2021, with the state NOL expiring in various
years beginning in 2006 and the federal NOL expiring in various years beginning
in 2011. Additionally, the Company had an NOL of approximately $4.3 million for
foreign income tax purposes which is available to offset future foreign taxable
income, if any, through 2011. For federal, state and foreign income tax
reporting purposes as of December 31, 2001, the extent to which such
carryforwards are available to offset future U.S. and Finnish taxable income may
be limited as a result of various ownership changes in the Company that have
occurred in recent years. Additionally, because tax laws limit the time during
which these carryforwards may be applied against future taxable income, the
Company may not be able to take full advantage of these carryforwards for income
tax purposes. Furthermore, income earned by a foreign subsidiary may not be
offset against operating losses of U.S. entities. Tax rates have fluctuated in
the past and may do so in the future. As a result of the net operating loss
carryforwards, the Company has a deferred tax asset in the amount of $798,000
which the Company continually evaluates for realizability.

                                        9
<PAGE>

The Company's results of operations have fluctuated in the past on an annual and
quarterly basis and may fluctuate significantly from period to period in the
future, depending on many factors, many of which are outside of the Company's
control. Such factors include but are not limited to the timing of government
approvals, the medical community's acceptance of the Company's products, the
success of competitive products, the ability of the Company to enter into
strategic alliances with corporate partners, expenses associated with patent
matters, the results of regulatory inspections and the timing of expenses
related to product launches.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations (SFAS No. 143). SFAS No. 143 requires the Company to record the fair
value of an asset retirement obligation as a liability in the period in which it
incurs a legal obligation associated with the retirement of tangible long-lived
assets that result from the acquisition, construction, development and/or normal
use of the assets. The Company also records a corresponding asset which is
depreciated over the life of the asset. Subsequent to the initial measurement of
the asset retirement obligation, the obligation will be adjusted at the end of
each period to reflect the passage of time and changes in the estimated future
cash flows underlying the obligation. The Company is required to adopt SFAS No.
143 on January 1, 2003. Management believes that the adoption of this statement
will not have a material effect on the Company's future results of operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability is
incurred and nullifies EITF 94-3. The Company plans to adopt SFAS No. 146 in
January 2003. Management believes that the adoption of this statement will not
have a material effect on the Company's future results of operations.

RESULTS OF OPERATIONS

TOTAL REVENUES
Total revenues decreased by 1.9% from $4.4 million to $4.3 million for the three
months ended September 30, 2001 compared to the three months ended September 30,
2002. For the nine months ended September 30, 2001 and September 30, 2002 total
revenues decreased by 4.1% from $14.2 million to $13.6 million, respectively.
The decrease in both the three and nine month periods is a result of lower sales
in the Sports Medicine and Craniofacial product lines and a decline in
non-product revenue (primarily grants) partially offset by an increase in sales
of Orthopedic Trauma products.

PRODUCT SALES
The Company's product and product-related sales decreased by 1.2% from $4.35
million to $4.29 million for the three months ended September 30, 2001 and 2002,
respectively, and by 3.2% from $14.0 million to $13.6 million, for the nine
months ended September 30, 2001 and 2002, respectively. The decrease in sales of
Craniofacial products, which principally resulted from managements decision to
cease sales and marketing efforts in the U.S., was partially offset by sales of
new products released since the second half of 2001. Sales of these products
contributed approximately $0.7 million to revenues for the quarter and
approximately $1.1 million to revenues for the nine months ended September 30,
2002

GLOBAL SPORTS MEDICINE
Consolidated sales of Sport Medicine products decreased 3.5% from $3.0 million
to $2.9 million for the three months ended September 30, 2001 and 2002,
respectively, and by 4.8% from $9.7 million to $9.2 million for the nine months
ended September 30, 2001 and 2002, respectively. When comparing the nine months
ended September 30, 2002 to the nine months ended September 30, 2001, Meniscus
Arrow sales declined by $0.8 million. When comparing the three months ended
September 30, 2002 to the three months ended September 30, 2001, Sports Medicine
sales remained constant at $2.8 million in the U.S. and Europe/Middle
East/Africa and declined $0.1 million in Asia/Canada/Latin America reflecting
the Company's efforts to bolster sales in the largest markets. Meniscus Arrow
sales declined by $0.3 million over the last three months due to increased
competition. As a result of new product development efforts, since January 2000,
the Company has released other Sports Medicine products that reduce its reliance
on the Arrow products. For the nine months ended September 30, 2001 and 2002,
non-Arrow Sports Medicine product sales increased by 9.1% from $3.2 million to
$3.5 million, respectively, and increased by 16.8% from $1.0 million to $1.2
million for the three months ended September 30, 2001 and 2002. The Company
intends to continue to expand its product lines, offering the surgeon improved
clinical solutions throughout all of its product families.

GLOBAL ORTHOPEDIC TRAUMA
Consolidated sales of Orthopedic Trauma products increased 10.9% from $.9
million to $1.0 million during the three months ended September 30, 2001 and
2002, respectively, and by 11.1% from $2.9 million to $3.2 million for the nine
months ended September 30, 2001 and 2002, respectively. Sales increased as a
result of greater acceptance of the Company's Orthopedic Trauma line in Europe,
Asia and the United States and the introduction of new products, such as the
Bone Fixation KitTM, in the second half of 2001.

                                       10
<PAGE>

GLOBAL CRANIOFACIAL
Consolidated sales of Craniofacial products decreased by 17.4% from
approximately $347,000 to approximately $287,000 for the three months ended
September 30, 2001 and 2002, respectively, and by 21.5% from $1.1 million to
$0.8 million for the nine months ended June 30, 2001 and 2002, respectively.
This decrease results from the Company's strategic decision to reduce its sales
and marketing efforts for this product line in the United States.

OTHER REVENUES
Other revenue consist of grant revenues totaling approximately $8,000 for the
three months ended September 30, 2002, compared with grant revenues of
approximately $40,000 for the three months ended September 30, 2001. Other
revenue for the nine months ended September 30, 2001 and 2002 decreased by 79.3%
from approximately $169,000 to approximately $35,000, respectively. Other
revenue is generated primarily from grants obtained from a Finnish government
research organization which funds certain research and development projects.
These grants have declined as the Company has decided to concentrate its
development efforts on projects which enable the Company to meet short-term
horizons for product introductions and which utilize internally generated
funding.

INTERNATIONAL SALES
International sales decreased by 10.3% from $0.9 million to $0.8 million, for
the three months ended September 30, 2001 and 2002, respectively, and decreased
by 1.5% from $2.89 million to $2.85 million for the nine months ended September
30, 2001 and 2002, respectively. As a percentage of total product sales
international sales decreased from 21% to 19% of total product sales for the
three months ended September 30, 2001 and 2002, respectively, however, it has
increased from 20% to 21% for the nine months ended September 30, 2001 and 2002,
respectively. Increased sales of Orthopedic Trauma products in all international
markets were partially offset by decreases in Sports Medicine and Craniofacial
product in some markets. The Company is continuing to concentrate its
international sales efforts on the development of new country-specific
distributors.

GROSS PROFIT
The Company's gross profit decreased from $3.2 million to $3.0 million, for the
three months ended September 30, 2001, and September 30, 2002, respectively;
however, it has increased from $9.56 million to $9.63 million, for the nine
months ended September 30, 2001 and 2002, respectively. For the three months
ended September 30, 2001 and 2002 gross profit fell from 72.4% of sales to 69.7%
of sales, respectively, primarily from increased product cost. For the nine
months ended September 30, 2001 and 2002, gross profit increased from 67.3% of
sales to 70.7% of sales, respectively. This improvement in gross profit
percentage is a result of productivity improvements and cost savings in the
Company's manufacturing and operational processes, lower promotion expenses and
the elimination of consignment amortization in 2002, offset by increased
physical inventory adjustments.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased 11.3%, from $3.0 million
to $2.7 million, for the three months ended September 30, 2001 and 2002,
respectively, and 14.8%, from $9.4 million to $8.0 million for the nine months
ended September 30, 2001 and 2002, respectively. As a percentage of revenues,
such expenses decreased from 68.8% to 62.2% of revenues for the three months
ended September 30, 2001 and 2002, respectively, and from 65.8% to 58.5% for the
nine months ended September 30, 2001 and 2002, respectively. The reduction in
SG&A expenses reflects the organizational changes the Company implemented during
the latter half of 2001.

RESEARCH AND DEVELOPMENT
While the Company continues to be committed to providing cutting-edge products
for an increasingly competitive Sports Medicine environment, research and
development expenses decreased 2.6%, from $0.79 million to $0.77 million, for
the three months ended September 30, 2001 and 2002, respectively, and 15.8%,
from $2.5 million to $2.1 million for the nine months ended September 30, 2001
and 2002, respectively. As a percentage of revenues, such expenses remained
nearly constant at 18.0% of revenues for the three months ended September 30,
2001 and 2002, respectively, and decreased from 17.8% to 15.6% for the nine
months ended September 30, 2001 and 2002, respectively.

PATENT AND LITIGATION EXPENSE
Patent and litigation expenses decreased from approximately $17,000 to $0, for
the three months ended September 30, 2001 and 2002, respectively, and decreased
72.6%, from approximately $102,000 to approximately $28,000 for the nine months
ended September 30, 2001 and 2002, respectively. This is largely due to the
current status of the proceedings and to negotiations requiring less legal
assistance than previously required.

                                       11
<PAGE>

OTHER INCOME AND EXPENSE
Interest income decreased 58.5%, from approximately $41,000 to approximately
$17,000, for the three months ended September 30, 2001 and 2002, respectively,
and decreased 70.2%, from approximately $178,000 to approximately $53,000 for
the nine months ended June 30, 2001 and 2002. During the three months ended
September 30, 2001, the Company generated approximately $41,000 of interest
income, interest expense of approximately $1,000 and other expense of
approximately $20,000, resulting in net other income of approximately $20,000.
This compares to approximately $17,000 of interest income, approximately $5,000
of interest expense and approximately $2,000 of other expense, resulting in net
other income of approximately $10,000 for the three months ended September 30,
2002. During the nine months ended September 30, 2001, the Company generated
approximately $178,000 of interest income, interest expense of approximately
$4,000 and other expense of approximately $77,000, resulting in net other income
of approximately $97,000. This compares to approximately $53,000 of interest
income, approximately $13,000 of interest expense and approximately $206,000 of
other expense, resulting in net other expense of approximately $166,000 for the
nine months ended September 30, 2002. The decrease in interest income is a
result of lower cash balances and decreased market interest rates during the
three and nine month periods ended September 30, 2002 compared to September 30,
2001. Other expense primarily represents net foreign currency translation and
transaction losses as a result of unfavorable changes in the exchange rate
between Euros and US dollars.

INCOME TAXES
The Company recorded no tax benefit for any period presented, as there is no
assurance that tax benefits will be realized.

NET LOSS
Net loss decreased 55.1%, from $0.9 million or $0.09 per basic and diluted share
to $0.4 million or $0.04 per basic and diluted share for the three months ended
September 30, 2001 and 2002, respectively. For the nine months ended September
30, 2001 and 2002 net loss decreased 75.4%, from $2.7 million or $0.25 per basic
and diluted share to $0.7 million or $0.06 per basic or diluted share,
respectively. The decrease in net loss and net loss per share reflects lower
sales offset by a decrease in cost of goods sold; selling, general and
administrative expenses and research and development.


LIQUIDITY AND CAPITAL RESOURCES

The Company has relied primarily upon external (private and public) sources of
equity to fund operations and development. At September 30, 2002, cash and cash
equivalents totaled $4.5 million, which is a decrease of $0.5 million from $5.0
million at December 31, 2001. The decrease from December 31, 2001 is primarily a
result of purchases of plant, equipment and intangibles, partially offset by an
increase in long term and subordinated debt. At September 30, 2002, the
Company's net working capital position was $8.6 million compared to working
capital at December 31, 2001 of $9.7 million. The decrease in working capital
resulted primarily from the receipt of the Company's stock in payment of a $0.5
million receivable from Bionix B.V. At December 31, 2001 and September 30, 2002
the Company's ratio of current assets to current liabilities remained steady at
4:1.

At March 31, 2002 the Company was owed $0.479 million from Bionix B.V.
Sixty-eight percent of Bionix B.V. stock is owned by related parties and at
March 31, 2002 Bionix B.V. beneficially owned 24.9% of the Company's Common
Stock. On April 2, 2002, Pertti Tormala, a director of the Company, on behalf of
all of the Finnish shareholders of Bionix B.V. executed an agreement to transfer
95,957 shares of the Company's common stock to the Company at a price of $5.50
per share. The transfer was completed on April 10, 2002, and of the shares
received, 87,091 were used to satisfy the Bionix B.V.'s debt to the Company, and
the value of the remaining 8,866 shares is included in Other Current Liabilities
to offset future services to be provided by the Company for Bionix B.V. At
September 30, 2002 Bionix B. V. beneficially owns 24.0% of the Company's Common
Stock.

The Company's liquidity is dependent primarily upon its ability to improve
operating results and thereby generate adequate cash flow from operations. The
Company is continuing to focus its sales and marketing efforts to achieve the
greatest impact, to maintain prudent control over the allocation of critical
resources, and to streamline operations. Management has continued to implement
operational improvement plans and during 2002 is continuing to focus on and
evaluate monthly the effects of these initiatives. These plans have included:
the addition of critical resources in areas that will have the greatest impact
on sales growth and profit improvement; consolidation of the sales organization
designed to improve sales efficiencies, increase market coverage, and reduce the
Company's cost of sales; reduction in sales administration to reduce the
Company's overall selling costs; a refocus of R&D investments on new product
introductions that will provide complementary product offerings in the
short-term; consolidation of global inventories to reduce the Company's overall
investment in inventories and improve customer service levels; reduction in
inventory levels to improve inventory turn rates thereby reducing the Company's
cash requirements to support inventory investments; increases in sales and
marketing efforts designed to expand sales contributions from markets outside of
the US; and the implementation of surgeon educational programs designed to
increase surgeon awareness and use of the Company's products. However, there can
be no assurance that these steps will be successful. The Company's operations
may not provide sufficient internally generated cash flows to meet the Company's
projected requirements. The Company's ability to continue to finance its
operations will depend on its ability to achieve profitability by improving
sales and margins, its ability to reduce cash outflows and, if necessary, its
ability to obtain other sources of funding sufficient to support the Company's
operations. No assurances can be given that such funding will be available on
satisfactory terms or at all.

                                       12
<PAGE>

The Company believes that existing capital resources together with cash flow
from operations (if, and to the extent, generated) will be sufficient to fund
its operations during 2002 and 2003. This statement constitutes a
Forward-Looking Statement. Actual results could differ materially from the
Company's expectations regarding its capital requirements and its sources of
capital. The Company's future capital requirements and the adequacy of available
capital resources will depend on numerous factors, including the Company's
ability to reverse recent trends and successfully perform management
initiatives, market acceptance of its existing and future products, the
successful commercialization of products in development, progress in its product
development efforts, the magnitude and scope of such efforts, acquisition
opportunities, progress with preclinical studies, clinical trials and product
clearances by the FDA and other agencies, the cost and timing of the Company's
efforts to expand its manufacturing capabilities, the cost of filing,
prosecuting, defending and enforcing patent claims and other intellectual
property rights, competing technological and market developments, and the
development of strategic alliances for the marketing of certain of the Company's
products.

Although the Company's net cash provided by operating activities was positive
for the nine months ended September 30, 2002, it did not produce positive cash
flows during 1994, 1995, 1996, 1998, 1999, or 2001. To the extent that funds
generated from the Company's operations, together with its existing capital
resources, and the net interest earned thereon, are insufficient to meet current
or planned operating requirements, the Company will be required to obtain
additional funds through equity or debt financing, strategic alliances with
corporate partners and others, or through other sources. The terms of any
further equity financing may be dilutive to stockholders and the terms of any
debt financing may contain restrictive covenants, which limit the Company's
ability to pursue certain courses of action. The Company does not have any
committed sources of financing and there can be no assurance that additional
funding, if necessary, will be available on acceptable terms, if at all.
Principal stockholders of the Company who previously provided funding to the
Company and provided guarantees to sources of credit have indicated that they do
not intend to continue furnishing such assistance. If adequate funds are not
available, the Company may be required to delay, scale-back or eliminate certain
aspects of its operations or attempt to obtain funds through arrangements with
strategic partners or others that may require the Company to relinquish rights
to certain of its technologies, product candidates, products or potential
markets. If adequate funds are not available, the Company's business, financial
condition and results of operations could be materially and adversely affected.
The sufficiency of the Company's capital reserves with respect to operations
beyond September 30, 2002 will depend primarily upon the Company's operating
results and the extent to which such results are capable of funding anticipated
growth.

No assurances can be given that the Company's initiatives will result in
profitable operations in the future.

The Company has been able to make substantial improvements in cash flow
management due to its continued efforts to complete its management initiatives,
while continuing to fund research and development at approximately 16% of sales
during 2002. This research funding consisted of investing in new treatment
modalities and product development that does not result in dramatic sales
increases initially and will only do so when products are released and gain
market acceptance.

The Company's total use of cash and cash equivalents for 2001 was $2.1 million.
During the nine months ended September 30, 2001 and 2002 the Company's total use
of cash and cash equivalents decreased from $2.3 million to $0.5 million,
respectively. The reduction in cash usage resulted primarily from the Company
realizing a lower net loss during the first nine months of 2002 compared to 2001
and from operations providing cash for the first nine months of 2002 compared to
using cash for the first nine months of 2001.

Earnings before interest, income taxes, depreciation and amortization (EBITDA)
for the nine months ended September 30, 2002 is a negative $8,000, compared to a
negative $1.9 million for the nine months ended September 30, 2001.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's functional currency is the US dollar. In Its Finnish operation,
the Company has revenues and expenses that are Euro-denominated. As the dollar
is the functional currency for the Company's Finnish operation, a weakening of
the Euro has a favorable impact on the Company when the Finnish operations
experience a loss and an unfavorable impact on the Company when the Finnish
operations experience a profit. Alternatively, a strengthening of the Euro has
an unfavorable impact on the Company when the Finnish operations experience a
loss and a favorable impact on the Company when the Finnish operations
experience a profit. Additionally, the effect on the Company of changes in the
relative strength of the Euro depends upon the extent of the Company's Euro
denominated net expenses and/or net assets for the period under evaluation. As
the Company was structured during the first nine months of 2002, a 1%
strengthening of the Euro results in a $50,000 to $150,000 loss to the Company.
During 2001, and the first nine months of 2002, the Company did not purchase
financial instruments to manage this foreign currency risk. The Company may seek
to manage its foreign currency risk in the future through the purchase of
foreign currency options and forward contracts. However, there is a cost to such
hedging. No assurances can be given that such hedging techniques if implemented
will protect the Company from exposure resulting from relative changes in the
economic strength of the Euro.

                                       13
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Corporation (including its consolidated subsidiaries) required
to be included in the Corporation's periodic SEC filings. There were no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

Part II. Other Information

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

  (a)     The Registrant did not file any Current Reports on Form 8-K during the
          quarter ended September 30, 2002.

  (b)     Exhibits -

          99.1 - Certification of Chief Executive Officer pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002

          99.2 - Certification of Chief Financial Officer pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002















                                       14
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                              BIONX IMPLANTS, INC.


                                      By:   /s/ Gerard Carlozzi
                                           -------------------------------
                                           Gerard Carlozzi, President
                                           and Chief Executive Officer



                                      By:   /s/ Drew Karazin
                                           -------------------------------
                                           Drew  Karazin
                                           Chief Financial Officer

Dated: November 14, 2002

















                                       15
<PAGE>

                                 CERTIFICATIONS

I, Gerard Carlozzi, certify that:

1)   I have reviewed this quarterly report on Form 10-Q of Bionx Implants, Inc.;

2)   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3)   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4)   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

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

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

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

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

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

6)   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

     Date: November 14, 2002

                                      /s/ Gerard Carlozzi
                                      -------------------------------------
                                      Gerard Carlozzi
                                      President and Chief Executive Officer

                                       16
<PAGE>

I, Drew Karazin, certify that:

1)   I have reviewed this quarterly report on Form 10-Q of Bionx Implants, Inc.;

2)   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3)   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4)   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

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

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

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

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

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

6)   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

     Date: November 14, 2002

                                      /s/ Drew Karazin
                                      ------------------------------------------
                                      Drew  Karazin
                                      Vice President and Chief Financial Officer

                                       17