**SECURITIES
AND EXCHANGE COMMISSION**
 WASHINGTON,
D.C. 20549
 
 **FORM
10-KSB**
 
 Annual
Report Pursuant to Section 13 or 15(d)
 of the
Securities Exchange Act of 1934
 
 **For
the Fiscal Year Ended 12/31/04 Commission File Number 0-10822**
 
 **BICO,
Inc.**
 (Exact
name of registrant as specified in its charter)
 
 
 **Pennsylvania**
    **25-1229323**(State
      or other jurisdiction of
    (I.R.S.
      Employerincorporation
      or organization)
    Identification
      Number)
 
 
 
 1
Wakonda, Dove Canyon, California 92679
 (Address
of principal executive offices) (Zip Code)
 
 Registrant's
telephone number, including area code (949) 367-1362
 
 **Securities
registered pursuant to Section 12(b) of the Act: None**
 
 **Securities
registered pursuant to Section 12(g) of the Act:**
 
 Common
Stock, $.0001 par value
 
 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 and (2) has been subject to such filing requirements for the
past 90 days. Yes ___No _ **X** _
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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. [ ]
 
 The
aggregate market value of the voting stock held by non-affiliates of the
registrant as of May 10, 2005: Common Stock, $.0005 par value --
$14,433,395 ****
 
 As of May
10, 2005, there were 28,866,789,945 shares of common stock, par value $.0001 per
share, issued and outstanding.
 
 Exhibit
index is located on page 18
 
   
   **Table
of Contents**
 
 Part
      I.................................................................................................................................................................................................................................................................
    1Item 1 - Description of
      Business..............................................................................................................................................................................................................................
    1Overview..........................................................................................................................................................................................................................................................
    1Merger with cXc Services,
      Inc..............................................................................................................................................................................................................................
    2Principal Products and
      Services..........................................................................................................................................................................................................................
    2Markets and
      Distribution...................................................................................................................................................................................................................................
    4Distribution....................................................................................................................................................................................................................................................
    5Competitive
      Overview.......................................................................................................................................................................................................................................
    5Intellectual
      Property.........................................................................................................................................................................................................................................
    6Need For Governmental
      Approval.......................................................................................................................................................................................................................
    6Going Concern
      Considerations...........................................................................................................................................................................................................................
    6Risk
      Factors....................................................................................................................................................................................................................................................
    6Item 2 - Description of
      Property....................................................................................................................................................................................................................................
    9Item 3 - Legal
      Proceedings....................................................................................................................................................................................................................................
    9Item 4 - Submission of Matters to a Vote of Security
      Holders.....................................................................................................................................................................................
    9Part
      II..............................................................................................................................................................................................................................................................
    9Item 5 - Market for Common Equity and Related Stockholder
      Matters..........................................................................................................................................................................
    9Item 6 - Management's Discussion and Analysis or Plan of
      Operation..........................................................................................................................................................................
    10Overview......................................................................................................................................................................................................................................................
    10a. Plan of
      Operation........................................................................................................................................................................................................................................
    10b. Financial Condition and Results of
      Operations...................................................................................................................................................................................................
    11c. Off-balance Sheet
      Arrangements......................................................................................................................................................................................................................
    12Item 7 - Financial
      Statements................................................................................................................................................................................................................................
    F1Item 8 - Changes in and Disagreements with Accountants on Accounting and
      Financial
      Disclosure.................................................................................................
    13Item 8A - Controls and
      Procedures.......................................................................................................................................................................................................................
    13Part
      III.............................................................................................................................................................................................................................................................
    13Item 9 - Directors, Executive Officers, Promoters and Control Persons;
      Compliance with Section 16(a) of the Exchange
      Act......................................................................
    13Item 10 - Executive
      Compensation..........................................................................................................................................................................................................................
    15Item 13 -
      Exhibits.................................................................................................................................................................................................................................................
    18Item 14 - Principal Accountant Fees and
      Services......................................................................................................................................................................................................
    19
 
 
  
    9
    **Part
I**
  
  ***Item
1 - Description of Business*** ******
  
 
 **SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS**
 
 Certain
statements in this Annual Report on Form 10-KSB (this "Form 10 K"), including
statements under "Item 1. Description of Business," and "Item 6. Management's
Discussion and Analysis", constitute "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1934, as amended, and the
Private Securities Litigation Reform Act of 1995 (collectively, the "Reform
Act"). Certain, but not necessarily all, of such forward-looking statements can
be identified by the use of forward-looking terminology such as "believes",
"expects", "may", "will", "should", or "anticipates", or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy that involve risks and uncertainties. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of BICO, Inc. ("BICO", "the
Company", "we", "us" or "our") to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. References in this Form 10-KSB, unless another date
is stated, are to December 31, 2004.
 
  **Overview**
  
 BICO,
Inc. was incorporated in the Commonwealth of Pennsylvania in 1972 as Coratomic,
Inc. Before closing down all operations in February, 2003, the Company’s primary
business was the development of new devices and technologies, which included
environmental and medical products. On March 18, 2003 the Company filed a
voluntary petition for Chapter 11 bankruptcy with the United States Bankruptcy
Court for the Western District of Pennsylvania. As part of the bankruptcy court
supervised reorganization, all of the Company’s existing operations were either
sold or closed and all assets were liquidated to raise cash for expenses related
to the bankruptcy and pay creditors. By the end of the reorganization the
Company had no employees, no operations and no assets, all of its prior
businesses were gone, as were the subsidiaries thorough which some of the
Company’s operations had been conducted.
 
 The
Company’s plan of reorganization, as approved in the bankruptcy proceeding,
called for BICO to merge with cXc Services, Inc., (“CXC”) a privately held
Delaware corporation formed in 2003 to introduce and commercialize a video
webphone in the United States. This video webphone is now the sole business of
the Company. The material changes which occurred in the bankruptcy and the
merger with CXC have resulted in the Company completing its reorganization and
exiting the bankruptcy proceeding as a startup business, and our success will
depend upon our ability to attract adequate funding to support the new business.
This business is comprised of two elements, the first being the sale of the
webphone internet appliances, the equipment, and the second being the sale of
advertising and other content over the webphones and sale of related fee based
services like telephone and internet services. CXC was a start-up business at
the time it merged into BICO, and had no sales or other source of revenue. CXC
possessed an exclusive distribution agreement with Amstrad, plc, the developer
of the video webphone CXC desired to commercially introduce to the US market.
This exclusivity agreement lapsed in January 2005.
 
  **M** **erger
with cXc Services, Inc.**
  
 BICO
entered a Joint Plan of Reorganization (the Plan) which was accepted by our
creditors, and confirmed by the Bankruptcy Court on September 23, 2004
(effective December 7, 2004) subject to our becoming current on our SEC
reporting, which we did. Under the Plan CXC merged into BICO and BICO was the
surviving entity. BICO obtained 100% of the assets of CXC, including the
exclusive distribution rights in North America to Amstrad’s model E3 em@iler
webphone and management expertise. In return, the shareholders of CXC received
full voting, convertible, Series M Preferred Stock in BICO. The preferred stock
was convertible at a future date into an amount of common stock equal to 49.6%
of the total authorized common stock by BICO, but does not provide CXC holders
with any priority over the common shareholders upon liquidation, nor any
dividend or disbursement priority. In a related subsequent event, the holders of
preferred stock approved a change in the conversion ratio by which the preferred
stock would be exchanged for common stock and reduced the proportionate
ownership of the Company they would hold on conversion from 49.6% of the total
authorized common stock (an amount equal to 79.8% of the shares outstanding on a
fully diluted basis at November 4, 2004, the merger date, including certain
shares reserved for payment of services subsequent to our reorganization) to
less than 1% of the total authorized common stock (an amount equal to 4.84% of
shares outstanding on a fully diluted basis at November 4, 2004, the merger
date). The former shareholders of CXC now hold all three positions on the Board
of Directors of BICO. BICO continues business operations as a publicly traded
company with continuing limited infusions of capital from selling additional
common shares and cash received from the settlement of certain claims during the
first quarter of 2005.
 
 CXC was a
private company based in Dove Canyon, California. CXC was located by the Plan
proponent, PHD Capital (PHD and CXC had no prior dealings). Neither CXC, nor any
of its principals, had any prior dealings with BICO or its subsidiaries.
  **Principal
Products and Services**
  
 Webphone
Internet Appliance
 
 The
em@iler E3 ’ (“E3”)
manufactured by Amstrad plc, is the initial webphone appliance in BICO’s
strategy to deliver a personal communication center to the consumer as well as
providing specialized business applications. Whether the communication needs of
the users are complex or simple, for home, the office or in a hotel room, the
webphone has the required features and some additional benefits to make the
webphone attractive and desirable.
 
 BICO
plans to distribute webphones from a variety of OEM manufacturers including
Amstrad, although its initial offering is expected to be the E3 manufactured by
UK based Amstrad, the developer and manufacturer of the E3 webphone. The E3
combines effective e-mail management, SMS messaging, built-in video camera for
video conferencing and snapshots, built-in voice mail, and full duplex
hands-free telephone usage, while offering quick Internet connectivity,
utilizing Microsoft’s Mobile ExplorerTM browser at a very affordable price. The
E3 also features a 1⁄2 VGA sized color viewing screen and its simplicity makes it
user-friendly and easy to operate. The E3 will be marketed and sold throughout
North America under a trademark to be selected as soon as practical .
 
 Although
the exclusive distribution agreement between the Company and Amstrad has lapsed,
we believe that once the Company has obtained funding, Amstrad will enter into a
commercial supply relationship with us for its E3 product and subsequent models.
We have had discussions with alternate suppliers of webphones in the event the
E3 is not available from Amstrad. Obtaining alternate products would extend the
approximately 5 month lead time from first order placement to delivery of
webphones by up to 6 months.
 
 The
current E3 product is expected to be supplemented with additional models
manufactured either by Amstrad or other suppliers and provide an internet
connection utilizing a high speed or broadband connection. The benefits of the
broadband model, among others, will be elimination of the need to dial up over a
telephone line to connect to the internet service provider, higher speed
downloading and uploading of email, web content, and higher quality video
transmission for video conferencing. The addition of VoIP capability or voice
over internet protocol telephony capability is an additional choice for a future
model as more voice communication migrates to the internet from traditional long
distance carriers. Discussions with potential suppliers of these future products
have been initiated, but no specific proprietary product development work has
been commenced. Subject
to the availability of financing, it is our intent to incorporate high-speed or
broadband with enhanced video and VoIP capabilities in our product offering in
the next 12 months.
 
 The
original version of the E3 was developed for the British market which has
different electrical and telephone specifications than the United States.
Amstrad has engineered a US compliant version of the E3 which has received
formal approval from the United States Federal Communications Commission and
Underwriters Laboratories for commercial sale in the United States.
 
 Network
Support Services
 
 BICO will
manage and maintain the required server environment to support advertising
downloading, e-mail, SMS text and MMS messaging, and fax storage and routing.
This function will be physically outsourced to a vendor whose core competency
will be ensuring the proper scalability and system integrity.
 
 BICO’s
primary role in supporting interaction with vendors, providers, and customers
will be to provide the initial dial-up ISP service (through a third party
supplier) that can manage the traffic (speed and capacity) and ensure interface
compatibility with content and the web appliance. BICO will offer technical
support to content and solution development for vendors and providers as well as
manage and monitor the real-time flow of daily information and updates necessary
to service the customer.
 
 BICO’s
strategy is to provide the expertise and perform the duties necessary to ensure
that the webphone not only remains current with vendor partners’ business
objectives but also works to promote such objectives and the growth of the
business. We will support technical expertise on staff to monitor and direct the
efforts of our vendor partners.
 
 Advertising
Publishing Services
 
 Advertisements
are downloaded from the server into the webphone’s local memory each time it
dials in (automatically) to retrieve new email messages and software upgrades.
Therefore, the advertisements rotate on the screen while the device is offline
providing a large advantage over Internet banner advertising, which requires
that a user be at their computer, connected to the World Wide Web, and surf to a
particular Web site in order to view a particular advertiser’s ad.
 
 Webphone
advertising is inexpensive to produce and individual advertisements can be added
quickly to the server and updated regularly to make sure they are always fresh
with the current promotion. Since BICO manages the advertisement server, ads can
be scheduled to rotate on the screen during certain times of the day, as well as
target different demographics; advertisements can even be targeted at an
individual household, depending on the users’ interests.
 
 CPM, the
cost per thousand impressions, is the most widely used metric when comparing
advertising rates over different mediums: it measures the cost for 1,000 people
to see an advertisement. BICO will initially charge for a full “unit” or “block”
of time approximately $1/month per phone that is activated and scrolling
advertisements, a highly competitive CPM rate of $2.78.
 
  **Markets
and Distribution**
  
 Market
 The
primary initial markets for webphones are multi-housing and hospitality
industries. The webphone delivers content and other fee-based services,
including ISP, telephone services, video conferences, and e-commerce fulfillment
directly to its appliances. Much like a magazine publication sells advertising
space based on its circulation and readership, the BICO WebPhone business relies
on generating advertising revenue from regional, national and local merchants
who service apartment communities, and have the willingness to place ads on the
screen of the WebPhone.
 
 BICO
believes the webphone is a highly innovative, easy-to-use, device that provides
users with fast and convenient Internet access. It also provides advertisers and
e-commerce businesses with a new way to reach consumers. BICO intends to become
primarily an advertising media publisher for specialized Internet appliances as
well as a value added reseller of Internet appliances, telephone services, video
interface, and Internet commerce fulfillment. The webphone is already a success
in the UK, is compact and suitable for placement in any prominent area in the
home with the full functionality of a high-end telephone and quick Internet
connection time, since it does not need to “boot up” like a PC.
 
 Dependent
on the availability of financing, the initial deployment of the webphones
(scheduled for later this year) will utilize a “forced distribution” strategy by
focusing on large strategic sponsors like apartment communities, cable
companies; and telephone companies.
 
 Initially,
webphones will be provided free of charge to each household by a sponsor, which
in turn will receive a percentage of the revenues generated from ads scrolling
on every activated phone’s screen and from other activities such as telephone
services and e-commerce. Dial-up ISP service will be included along with up to
eight e-mail accounts and “smart cards” for each account. All the consumer has
to do is plug it in and use it. Upon the initial registration session, BICO will
have captured enough household information to offer advertisers target-marketing
opportunities for delivering their message and report on related
activity.
 
 The
objective is to pragmatically establish an installed base as quickly as possible
with sponsors and the infomercial that will draw local and regional advertisers.
As the base expands, national advertisers will be drawn to the unique “virtual
bill board” the webphone offers.
 
 The
Company believes the webphone offers advertisers unparalleled access to the
kitchen counters and family rooms of their target consumers, plus the unique
capability and convenience for these consumers to respond directly to an ad on
the same device on which it appears - whether it be purchasing goods or
requesting services. At the push of a button, consumers can talk to a live
person, send e-mail, or visit a website to obtain information or complete a
transaction, unlike any other form of advertising available to advertisers. In
addition, BICO optimizes the timing in which advertisers reach their targeted
audiences via the webphone.
 
 BICO
projects a substantial market for the dial-up model of the E3. However to ensure
our offering continues to meet the needs of our strategic sponsors and consumers
BICO plans to introduce a broadband version of the webphone within the next
twelve months. This model may also incorporate within its technology
“stand-alone” support for VoIP telephone services.
 
  **Distribution** ****
  
 BICO will
utilize a “forced-distribution” channel strategy by deploying to specific target
populations in conjunction with strategic sponsors. The
deployment of the first quantity of phones will mirror in many ways the initial
publication of a new magazine. BICO will
develop a circulation base by giving inducements for the various sponsors to
purchase large quantities of webphones,
which will then be distributed by the Sponsor to its captive constituency. The
sponsor will “force” distribution by giving a webphone to each of its members or
in many cases, actually placing a webphone in the consumer’s apartment home.
This strategy will allow BICO to deploy phones to homogenous target groups and
thereby build specific advertising target bases as quickly as possible. For the
support of the strategic sponsors, BICO will share with the sponsors a portion
of the net revenue generated from the selling of rotating display-advertising
space. Key sponsor categories include the Multi-Housing Industry (MHI), hotels,
telecommunications firms, other service providers, and affinity groups. BICO is
initially focusing on the MHI, hotels and communications providers as its lead
strategic sponsors.
 
 The
apartment industry alone represents a significant opportunity comprised of over
20 million homes housing over 40 million residents. Since the webphone is able
to bring low cost Internet access to these millions of households not yet
connected, as well as the incremental convenience it provides those already
online, the phones have received very strong interest from apartment property
managers and owners who are enthusiastic about the phone’s capability to attract
new renters and the substantial potential for generating ancillary income from
advertising and e-commerce activities conducted on the phones.
 
 We have
not yet made any sales of the webphone, advertising or ancillary services. We
have entered into conditional agreements to run pilot programs in which we will
distribute webphones to various apartment communities for 90 or 120 day trial
periods during which the residents and owners/managers evaluate the desirability
and value of the webphones and services offered over them. Upon successful
completion of these pilot programs we expect to receive both orders for
commercially meaningful quantities of webphones and positive coverage in
multi-family industry and advertising media due to the progressive nature of the
webphones and the service offering they enable.
  **Competitive
Overview**
  
 We are
not aware of any device which possesses the combination of features included in
the E3 and would therefore be a direct product competitor. The primary
competitors of the Company’s webphone product are traditional telephones which
are used for the vast majority of hard wired telephone installations in
apartments, hotels and businesses. Other competitive products are the array of
devices which perform the other major functions of the webphone such as a
personal computers, personal digital assistants (“PDA”) or full featured mobile
phones which allow different combinations of web access, text messaging, email
exchange, transaction fulfillment, web browsing, etc. Many of the devices with
which the webphone competes for a portion of its capabilities are more costly
than the webphone, take up a greater amount of desk space and have different
combinations of functions, some of which the webphone does not possess, such a
computing. Some of these devices offer desirable attributes which the webphone
does not posses, such as portability or calendar functions. Those devices
offering video conferencing tend to be for a single purpose and more expensive
than our product
 
 The
webphone and our approach to utilizing its combination of features to capitalize
on the sale of advertising and other value added services such as transaction
fulfillment, ISP services, and telephone services is unique. The webphones
capacity to allow 3 immediate means of response to an advertisement is also
unique and an important part of its value.
 
  **Intellectual
Property**
  
 The
Company’s intellectual property consists of its business plan and certain
proprietary technical knowledge regarding the network and security operations of
the Amstrad E3 webphone appliance and its programming. This knowledge is
important to the Company and its ability to execute its business plan. The
Company holds no trademarks, patents or other protected intellectual property in
the electronics and telecommunications industry.
 
 All of
the intellectual property formerly held by BICO has been disposed of in the
bankruptcy reorganization.
  **Need
For Governmental Approval**
  
 All
electronic telephony products distributed in the United States must first obtain
U.S. Federal Communication Commission (FCC) approval. The Company, working with
Amstrad, obtained this approval for distributing the E3 webphone in the United
States on December 9, 2004, and obtained Underwriters Laboratories approval for
US and Canadian distribution in August, 2004.
 
  **Going
Concern Considerations**
  
 At
December 31, 2004, and for the fiscal year then ended, we had a net loss and
negative working capital, which raise substantial doubt about our ability to
continue as a going concern, and which caused our independent auditors to
qualify their report on our financial statements. Our ability to continue
operations will depend on positive cash flow from future operations and on our
ability to raise additional funds through equity or debt financing. If we are
unable to raise or obtain needed funding, we may be forced to discontinue
operations.
 
  **Risk
Factors**
  
 **Risk
Factors Related to Our Finances**
 
 ·
    **If
      BICO Fails To Raise Additional Financing, We May Not Be Able To Fund Our
      Ongoing Operations And Implement Our Business
      Plan**.
      The Company requires additional capital to support strategic acquisitions
      and its current expansion plans. The Company needs to raise approximately
      $8,000,000. Should the Company not be able to raise capital as required,
      the Company may need to delay, curtail or scale back some or all of its
      expansion plans. Any additional financing may involve dilution to the
      Company's then-existing shareholders. 
 **·**
    **If
      BICO Does Not Have Sufficient Capital, It May Not Be Able To Secure
      Webphone Inventory To Meet Growth Projections:******The
      webphone manufacturer (Amstrad) presently requires a Letter of Credit for
      the full amount of each order be in place prior to their purchasing the
      component parts necessary to build each order. BICO projects that letter
      of credit requirements will be as high as $23 million by the end of Year
      One and over $30 million in Year Two. Insufficient capital for L/Cs would
      potentially limit BICO’s projected rate of
growth. 
 ·
    **BICO
      has Historically Lost Money; If Losses Continue In The Future, It May
      Cause Us To Curtail Operations**.
      BICO emerged from bankruptcy in the fourth quarter of 2004. Future losses
      are likely to occur, as we are dependent on raising money to pay for our
      operations. No assurances can be given that we will be successful in
      reaching or maintaining profitable operations. Accordingly, we may
      experience liquidity and cash flow problems. If our losses continue, our
      ability to operate may be severely impacted. 
 ·
    **BICO
      Has No Operating History In Our Industry Which Makes It Difficult To
      Forecast Our Future Results**.
      As a result of our limited operating history, our historical financial and
      operating information is of limited value in predicting our future
      operating results. We may not accurately forecast customer behavior and
      recognize or respond to emerging trends, changing preferences or
      competitive factors facing us, and, therefore, we may fail to make
      accurate financial forecasts. Our current and future expense levels are
      based largely on our investment plans and estimates of future revenue. As
      a result, we may be unable to adjust our spending in a timely manner to
      compensate for any unexpected revenue shortfall, which could force us to
      curtail or cease our business operations. 
 **Risk
Factors Related to Our Operations**
 
 ·
    **If
      BICO Cannot Maintain Its Single Equipment Supplier, It Will Delay
      Implementation Of Our Business Plan.******We
      currently rely on our relationship with Amstrad plc as the sole provider
      of our equipment to ensure thatBICOreceives webphones (manufactured in Asia) in a timely manner and that they
      are fully compatible with the United States telephone and Internet
      service. Should that relationship not continue, the identification of a
      new supplier will delay the implementation of our business
      plan. 
 ·
    **BICO’s
      Business Plan Is Dependent On Advertising Revenue Which Is
      Unpredictable.******A
      large portion of anticipated revenue from this venture is earned from
      selling advertising space on the webphone screen. There is very little
      data regarding effectiveness of advertising on this type of media, which
      may make advertisers reluctant to spend a portion of their ad budget withBICOif
      they elect to advertise, there is no guarantee on the response rate that
      they will receive. 
 **·**
    **Advertising
      Content May Be Technically Difficult To Target And
      Manage.******Maintaining
      secure and timely advertising, configuration and authentication servers
      will be a large and important undertaking. Advertisers may want to change
      their offerings on a daily basis, or target different ads to different
      regions of the country or different demographics. Having a system flexible
      enough to support their ad schedules will increase revenues and provide a
      level of comfort for our advertisers. Additionally, keeping user
      information secure is critical to ensure consumer trust and avoid negative
      publicity, due to many consumers’ fears about providing personal
      information over the Internet. 
 ·
    **BICO’s
      Key Deployment Strategy Depends on Strategic Sponsors Outside of****BICO****Control.******In
      relying on strategic sponsors to distribute webphones to their
      constituents, BICO has little control over the pace and volume of its
      distribution. The Multi-Housing Industry (MHI), for example, has been
      traditionally risk-adverse, and therefore may delay deployments across
      their entire property portfolio until a long test period has been
      completed. Changes in the telecommunications regulatory market could
      change the profit equation for cable companies and telecom providers in
      the middle of our initial deployments. 
 ·
    **If
      BICO’s Business Develops More Slowly Than Anticipated, We May Have To
      Curtail Certain Operations.******Sluggish
      sales of the webphone may pose a problem for the business in two ways. If
      fewer webphones are deployed, less advertising revenue will be achieved.
      Furthermore, with less of a “circulation base” out in the population, it
      may be more difficult to secure advertisers to put their offerings on the
      webphone screen. 
 ·
    **If
      BICO Is Not Able To Secure Competitive Pricing Arrangements, We May lose
      Market Share**.
      BICO is a small company with little or no leverage with its various
      suppliers of goods and outsourced services. The Company’s projected profit
      margins may not be achievable if the Company cannot secure favorable
      pricing arrangements. Should such an event occur and management chose not
      to offer competitive prices, we could lose our market share. If we chose
      to compete, the reduction in profit margins could have a material adverse
      effect on our business and operations. 
 ·
    **If
      BICO Is Unable To Respond To The Rapid Changes In Technology And Services
      Which Characterize Our Industry, Our Business And Financial Condition
      Could Be Negatively Affected**.
      Our business is directly impacted by changes in the telephone and Internet
      communications industry. The telephone and Internet communication products
      and services industry is subject to rapid technological change, frequent
      new product and service introductions and evolving industry standards.
      Changes in technology could affect the market for our products, accelerate
      the obsolescence of our inventory and necessitate changes to our product
      line. We believe that our future success will depend largely on our
      ability to anticipate or adapt to such changes, to offer on a timely
      basis, services and products that meet these evolving standards and demand
      of our customers, and our ability to manage and maximize our product
      inventory and minimize our inventory of older and obsolete products. We
      cannot offer any assurance that we will be able to respond successfully to
      these or other technological changes, or to new products and services
      offered by our current and future competitors, and cannot predict whether
      we will encounter delays or problems in these areas, which could have a
      material adverse affect on our business, financial condition and results
      of operations. 
 ·
    **BICO
      Has No Product Exclusivity**.
      The Company does not have any exclusive agreements to market various
      Internet appliances. The Company has no control over its suppliers to
      ensure that they will provide product in a timely manner, nor continue to
      supply product to BICO at all. In addition, these suppliers could choose
      to enter into an exclusivity agreement with another distributor at any
      time in the future. Should such an event occur, the Company’s ability to
      provide products to its customers could be severely
    impacted. 
 **Risk
Factors Related to Our Stock**
 
 ·
    **BICO’s
      Common Stock May Be Affected By Limited Trading Volume And May Fluctuate
      Significantly, Which May Affect Our Shareholders' Ability To Sell Shares
      Of Our Common Stock.**Prior to this filing, there has been a limited public market for our
      common stock and there can be no assurance that a more active trading
      market for our common stock will develop. An absence of an active trading
      market could adversely affect our shareholders' ability to sell our common
      stock in short time periods, or possibly at all. Our common stock has
      experienced, and is likely to experience in the future, significant price
      and volume fluctuations, which could adversely affect the market price of
      our common stock without regard to our operating performance. In addition,
      we believe that factors such as quarterly fluctuations in our financial
      results and changes in the overall economy or the condition of the
      financial markets could cause the price of our common stock to fluctuate
      substantially. These fluctuations may also cause short sellers to enter
      the market from time to time in the belief that we will have poor results
      in the future. We cannot predict the actions of market participants and,
      therefore, can offer no assurances that the market for our stock will be
      stable or appreciate over time. These factors may negatively impact
      shareholders' ability to sell shares of our common stock. 
 ·
    **BICO’s
      Common Stock Is Deemed To Be "Penny Stock," Which May Make It More
      Difficult For Investors To Sell Their Shares Due To Suitability
      Requirements**.
      Our common stock is deemed to be "penny stock" as that term is defined in
      Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as
      amended. These requirements may reduce the potential market for our common
      stock by reducing the number of potential investors. This may make it more
      difficult for investors in our common stock to sell shares to third
      parties or to otherwise dispose of them. This could cause our stock price
      to decline. 
  ***Item
2 - Description of Property*** ******
  
 The
Company does not currently own or lease any real property. An office has been
provided to the Company at no cost by one of its executive officers. Once we
obtain funding sufficient to support the initial purchase of product and
building of the administrative and technical infrastructure necessary to support
operations, we will lease necessary office space in the Orange County,
California area. We do not anticipate any need for purchasing real property or
leasing office or other space greater than would be necessary to house our
executive and administrative offices. We do not anticipate manufacturing any
product or performing warranty or repair service operations
in-house.
 
  ***Item
3 - Legal Proceedings*** ******
  
 We are
not presently involved in any legal proceedings nor are any legal proceedings
known to be threatened. The recent bankruptcy disposed of all liabilities which
predated the bankruptcy filing, and no legal actions since that time are
currently pending or threatened.
 
  ***Item
4 - Submission of Matters to a Vote of Security
Holders*** ******
  
 No
matters were presented to a vote of securities holders.
  **Part
II**
   ***Item
5 - Market for Common Equity and Related Stockholder
Matters***
  
 The
Company's common stock is quoted on the OTC Bulletin Board under the symbol
BIKO.
 
 The
following table sets forth the range of high and low bid information for the
Company's common stock for each quarterly period in 2004 and 2003. These
quotations are believed to be representative inter-dealer prices, without retail
mark-up, markdown or commission, and may not represent actual
transactions.
 
 BidHigh
    
    Low4th
      Quarter 2004
    $.0021
    
    $.00053rd
      Quarter 2004
    $.0018
    
    $.00082nd
      Quarter 2004
    $.0017
    
    $.00071st
      Quarter 2004
    $.0015
    
    $.00094th
      Quarter 2003
    $.0014
    
    $.00013rd
      Quarter 2003
    $.0029
    
    $.00032nd
      Quarter 2003
    $.0030
    
    $.00011st
      Quarter 2003
    $.0110
    
    $.0004
 
 Sources:
QuoteMedia.com
 
 
 As of May
10, 2005, the Company had approximately 6,870 Shareholders of
Record.
 
 We have
never paid a cash dividend and do not anticipate doing so in the foreseeable
future.
 
 We have
no equity compensation plans which authorize the issuance of shares, nor are
their any individual compensation arrangements which authorize issuance of
shares.
 
 Recent
sales of unregistered securities: none other than common shares issued to
claimants and interest holders in the bankruptcy proceedings which were exempt
from registration pursuant to 11 U.S.C. §1145(a) under Section 5 of the
Securities Act of 1933.
 
 In
connection with the merger transaction of CXC into BICO, shares of Series M
Preferred Stock were issued to the former holders of CXC common stock in a
transaction exempt from registration under Section 4(2) of the Securities Act of
1933.
 
 During
the period from November 4, 2004 to December 31, 2004 BICO issued 1,244,462,560
shares of common stock under a facility put in place prior to the Bankruptcy by
the company and J. P. Carey Asset Management LLC for sale into the market place.
1,194,462,560 were sold for a total of $500,000 at an average price of $0.0043.
The remaining 50,000,000 shares were issued and held in an account related
specifically to the facility mentioned above.. Price will be set and proceeds
from the sale of these shares will be determined and transferred to the company
at the time of sale.
 
  ***Item
6 - Management's Discussion and Analysis or Plan of
Operation***
  
 This
report contains 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. These forward looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including those set forth under
"Factors that may affect future results" in this Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
report. The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the Company's financial statements and notes
thereto included elsewhere in this report.
 
 
  **Overview**
  
 As part
of the Company’s bankruptcy reorganization plan, it merged with cXc Services,
Inc. (a privately held Delaware corporation), abandoned the Company’s original
bio-technology business plan, and adopted the business plan of cXc Services.
Under this new business plan, BICO is now focused on being both a distributor of
Internet appliances and an advertising and content publisher, primarily focused
on the multi-housing and hospitality industries. It delivers content and other
fee-based services, including ISP, telephone services, video conferences, and
e-commerce fulfillment directly to its appliances. Much like a magazine
publication sells advertising space based on its circulation and readership, the
BICO WebPhone business relies on generating advertising revenue from regional,
national and local merchants who service apartment communities, and have the
willingness to place ads on the screen of the WebPhone.
 
 
  **a.**
    **Plan
      of Operation**  
 BICO,
Inc. has raised $500,000 through private placement issuance of common stock
during the 4 th Quarter
2004 to support operations. An additional $130,000 has been received during the
1 st Quarter
of 2005. The Company’s continued operation is dependent on raising sufficient
funds through the sources available to it, primarily issuance of stock either
through private placement or a facility in place prior to the merger with J. P.
Carey Asset Management and Perrin, Holden and Davenport Capital Corp. (PHD),to
support its base-level ongoing monthly expenses, which are approximately
$120,000, per month, and raise the estimated capital required to advance its
business plan through making an initial purchase of webphones, build the
infrastructure of servers and programming necessary to support the deployment of
thousands of webphones and provide internet access, create and download
advertising content and support the full range of functions of the webphones
over the internet. We will need to raise short term funds promptly in order to
remain in business and the estimated $8,000,000 necessary to implement our
business plan within the next 3 - 6 months. This requirement consists of
$4,000,000 to support the acquisition of product, $2,000,000 to complete the
infrastructure needed to support the installed webphone base, and approximately
$2,000,000 to ensure the timely availability of next generation product
discussed previously.
 
 Shortly
after obtaining sufficient go-forward funding, we will procure our initial
supply of webphones to support the various pilot deployments we already have
commitments for in the multi-housing industry, and begin building out our
network and service infrastructures to support these and future deployments.
Once funding is secure, we anticipate entering into joint research projects with
selected business partners to develop the next generation of webphones which
will provide high speed internet access and VoIP capabilities. We expect to have
these products developed and available for market within 12 months of initiating
development work. In addition, should appropriate strategic or tactical business
combination opportunities be presented to the Company, we would consider
undertaking such a transaction if it were a positive value-added proposition for
the shareholders.
 
 The
primary purchases the Company intends to make over the next year are the
purchase of webphones to conduct pilot programs to validate our business model
and contract for the servers and programming necessary to support deployment of
webphones.
 
 The
number of employees will ramp up as financing makes funds available to implement
our business plan and we expect that within 12 months of obtaining substantial
funding we would have between 53 and 100 employees. At December 31, 2004 the
company had 5 employees.
 
  **b.**
    **Financial
      Condition and Results of Operations******  
 At
December 31, 2004, and for the fiscal year then ended, we had a net loss and
negative working capital, which raise substantial doubt about our ability to
continue as a going concern, and which caused our independent auditors to
qualify their report on our financial statements. Our ability to continue
operations will depend on positive cash flow from future operations and on our
ability to raise additional funds through equity or debt financing. If we are
unable to raise or obtain needed funding, we may be forced to discontinue
operations.
 
 The
Company emerged from almost 21 months in Chapter 11 bankruptcy on December 7,
2004 (“Effective Date”) reorganized as a new business. No business activity,
product or services previously offered exist in BICO’s new efforts. The
operations and markets are completely different. The board of directors and the
management team are completely different. Under these circumstances comparisons
to past periods provide limited benefit to communicating the company’s financial
condition or results of operation. (See Item 1 - Description of Business)
 Upon
emergence from bankruptcy on the Effective Date, BICO adopted “fresh start”
accounting and reporting, which resulted in material adjustments to the
historical carrying amounts of our assets and liabilities (see Note B-Basis of
Presentation and Significant Accounting Policies). As a result, the historical
financial data of the company prior to and during bankruptcy (“Predecessor”) may
not be entirely comparable to the historical financial data of the company after
emerging from bankruptcy (“Successor”) and may be of limited value in evaluating
our financial and operating prospects in the future.
 
 The
Company’s continued operation is dependent on raising sufficient funds through
the sources available to it, primarily issuance of stock either through private
placement or a facility in place prior to the merger with J. P. Carey Asset
Management and Perrin, Holden and Davenport (PHD), to support its base-level
ongoing monthly expenses until funding sufficient to fully implement our new
business plan is secured.
 
 Funds
have been used to support the costs associate with the merger with cXc Services
and instituting the company’s business plan.
 
 The
primary use of funds during 2004 has been focused primarily on emerging from
bankruptcy, consummating the merger with cXc Services, Inc., and launching the
Company’s new business plan.
 
 During
the successor period the Company incurred $195,229 in General and Administrative
expenses primarily for new business development and organization related costs.
During the Predecessor period the Company had $496,355 in General and
Administrative expenses primarily in bankruptcy related cost and merger related
costs.
 
 During
the Successor period the Company did not generate sales revenue, the Predecessor
period had only $7,500 in sales revenue, all of which was generated prior to the
merger with cXc Services, Inc.
 
 Accounts
Payable at December 31, 2004 was $133,978. Approximately $31,000 represented
consolidation and reorganization related Legal expenses, slightly more than
$28,000 was accrued compensation deferred by management, almost $25,000
represented a State of Pennsylvania tax liability claim that survived the
bankruptcy, and just under $25,000 due to the Company’s Transfer Agent related
to the issuance of shares to unsecured creditors and former preferred share
holders resulting from the court approved re-organization plan.
 
 The
largest item in the Statement of Operations is reorganization expenses at
$7,150,000. This represents the calculated value of shares awarded to Perrin,
Holden & Davenport (PHD) - 5,000,000,000 at $0.0011 per share; JP Carey, LLC
- 1,000,000,000 at $0.0011 per share; and Anthony Paterra - 500,000,000 at
$0.0011 per share for services provided as stipulated in the court approved
reorganization plan using the implied price on the date the court approved the
reorganization plan.
 
  **c.**
    **Off-balance
      Sheet Arrangements******  
 BICO,
Inc. has no off-balance sheet arrangements.
 
   9
   
  ***Item
7 - Financial Statements***
  
 The
information below presents financial data of the Company as of and for the 2
years ended December 31, 2004. The historical financial data for December 31,
2004 and for the year ended December 31, 2003, the period from January 1, 2004
to December 7, 2004, and the period from December 8, 2004 to December 31, 2004
should be read in conjunction with accompanying notes.
 
 The
consolidated financial statements of Predecessor for the period from January 1,
2003 to December 7, 2004 were prepared while the Company was still involved in
Chapter 11 proceedings and, accordingly, were prepared in accordance with
Statement of Position 90-7, “Financial Reporting by Entities in Reorganization
under the Bankruptcy Code” (“SOP 90-7”). As a result, the historical financial
data for such periods does not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that would have resulted if Predecessor were
deemed not to have been continuing as a going concern.
  F-
  REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the
Board of Directors and Stockholders
 BICO,
Inc.
 
 We have
audited the accompanying balance sheet of BICO, Inc., (the "Company") as of
December 31, 2004 (Successor Company balance sheet), and the related statements
of operations, stockholders’ equity (deficit) and cash flows for the period from
December 8, 2004 to December 31, 2004 (Successor Company operations), for the
period from January 1, 2004 to December 7, 2004, and the year ended December 31,
2003 (Predecessor Company operations). These financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.  An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.
 
 On
December 7, 2004, the Bankruptcy Court entered an order confirming the plan of
reorganization which became effective on December 8, 2004. Accordingly, the
accompanying financial statements have been prepared in conformity with AICPA
Statement of Position 90-7, Financial Reporting for Entities in Reorganization
Under the Bankruptcy Code, for the Successor Company as a new entity with
assets, liabilities, and a capital structure having carrying values not
comparable with prior periods as described in Note B.
 
 In our
opinion, the Successor Company financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
2004, and the results of its operations and its cash flows for the period from
December 8, 2004 to December 31, 2004, in conformity with accounting principles
generally accepted in the United States of America. Further, in our opinion, the
Predecessor Company financial statements referred to above present fairly, in
all material respects, the results of the Predecessor Company’s operations and
its cash flows for the period from January 1, 2004 to December 7, 2004, and for
the year ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As described in Note B, the Company's
continued operation is dependent on raising sufficient funds through sources
available to it to support its base-level monthly expenses and to advance its
business plan. This condition raises substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
 
 Goff
Backa Alfera & Company, LLC
 *Pittsburgh,
Pennsylvania*
 May 20,
2005
  F-
  
 **BICO,
      Inc.**
      **Balance
      Sheet**
      **at
      December 31, 2004**
      
      ******ASSETS****CURRENT
      ASSETS**Cash
      and equivalents
    $
      73,016Other
      current assets
    5,962**TOTAL
      CURRENT ASSETS**
    78,978**FIXED
      ASSETS**Furniture
      and equipment
    2,830Accumulated
      depreciation
    (282)**TOTAL
      FIXED ASSETS**
    2,548**TOTAL
      ASSETS**
    $
      81,526**LIABILITIES
      AND STOCKHOLDER'S EQUITY****CURRENT
      LIABILITIES**Accounts
      payable
    $
      133,978**TOTAL
      CURRENT LIABILITIES**
    133,978**STOCKHOLDERS'
      EQUITY (DEFICIENCY)******Common
      stock, par value $.0001 per share, authorized 250,000,000,000
      sharesat
      Dec. 31, 2004 outstanding, 27,934,732,782
    2,793,473Convertible
      preferred stock, par value $.0001 per share, authorized 150,000,000shares
      issuable in series, outstanding 125,470,031
    12,547Additional
      paid-in capital
    (2,663,469)Accumulated
      deficit
    (195,003)****
      **TOTAL
      STOCKHOLDERS' EQUITY (DEFICIENCY)**
    (52,452)**TOTAL
      LIABILITIES AND****STOCKHOLDERS'
      EQUITY (DEFICIENCY)**
    $
      81,526
 
 **The
accompanying notes are an integral part of these
statements.**
  F-
   **BICO,
      Inc.**
      **Statements
      of Operations****Successor**
    
    **Predecessor****December
      8 to**
    
    **January
      1 to**
    
    **Year
      Ended****December
      31,**
    
    **December
      7,**
    
    **December
      31****2004**
    
    **2004**
    
    **2003**RevenuesNet
      sales
    $ -
    
    $
      7,500
    
    $
      625,231Costs
      and expensesCost
      of products sold
    -
    
    -
    
    258,319General
      and administrative
    195,229
    
    496,355
    
    750,524195,229
    
    496,355
    
    1,008,843Loss
      from operations
    (195,229)
    
    (488,855)
    
    (383,612)Other
      (income) and expenseForgiveness
      of debt
    -
    
    (928,188)
    
    (1,292,335)Gain
      on sale of ViaCirq
    -
    
    -
    
    (1,061,254)Interest
      income
    (226)
    
    -
    
    -Gain
      on sale of Diasense
    -
    
    (264,773)
    
    -Interest
      expense
    -
    
    -
    
    42,694Reorganization
      expense
    -
    
    7,150,000
    
    -(226)
    
    5,957,039
    
    (2,310,895)Net
      income (loss)
    $(195,003)
    
    $
      (6,445,894)
    
    $1,927,283Loss
      per common share - Basic:Net
      Loss
    $
      (0.00)
    
    $
      (0.00)
    
    $
      (0.00)Less:
      Preferred stock dividends
    (0.00)
    
    (0.00)
    
    (0.00)Net
      loss attributable tocommon
      stockholders:
    $
      (0.00)
    
    $
      (0.00)
    
    $
      (0.00)Loss
      per common share - Diluted:Net
      Loss
    (0.00)
    
    (0.00)
    
    (0.00)Less:
      Preferred stock dividends
    (0.00)
    
    (0.00)
    
    (0.00)Net
      loss attributable tocommon
      stockholders:
    $
      (0.00)
    
    $
      (0.00)
    
    $
      (0.00)
 
 **The
accompanying notes are an integral part of these
statements.**
   F-
   **BICO,
      Inc.**
      **Statement
      of Stockholders' Equity (Deficiency)****Preferred
      Stock**
    **Common
      Stock**
    **Additional**
    **Accumulated****Shares**
    **Amount**
    **Shares**
    **Amount**
    **Paid-in
      Capital**
    **Deficit**
    **Total****Predecessor:**Balance
      at December 31, 2002
    10,836
    $
      108,357
    7,138,933,167
    $
      713,893,312
    $
      (444,039,721)
    $
      (279,779,924)
    $
      (9,817,976)Conversion
      of Preferred Stock
    (10,836)
    (108,357)
    248,574,648
    24,857,466
    (24,749,109)Net
      income
    -
    -
    -
    -
    -
    1,927,283
    1,927,283Balance
      at December 31, 2003
    -
    $-
    7,387,507,775
    $
      738,750,778
    $
      (468,788,830)
    $(277,852,641)
    $
      (7,890,693)Change
      in par value
    -
    -
    -
    (736,014,027)
    736,014,027
    -
    -Net
      loss
    -
    -
    -
    -
    -
    (6,445,894)
    (6,445,894)Stock
      issued for services
    -
    -
    6,500,000,000
    650,000
    6,500,000
    
    7,150,000Fresh
      start adjustments
    -
    -
    (20,000,000)
    (2,000,000)
    (282,438,221)
    284,298,535
    (139,686)Predecessor
      balance at December 7, 2004
    -
    -
    13,867,507,775
    1,386,751
    (8,713,024)
    -
    (7,326,273)**Successor:**Preferred
      stock to cXc shareholders
    125,470,031
    12,547
    -
    -
    87,453
    -
    100,000Stock
      issued to creditors
    -
    -
    12,822,762,447
    1,282,276
    5,586,548
    -
    6,868,824Issuance
      of common stock
    -
    -
    1,244,462,560
    124,446
    375,554
    -
    500,000Net
      loss
    -
    -
    -
    -
    -
    (195,003)
    (195,003)Balance
      at December 31, 2004
    125,470,031
    $
      12,547
    27,934,732,782
    $
      2,793,473
    $
      (2,663,469)
    $
      (195,003)
    $
      (52,452)
 **The
accompanying notes are an integral part of these
statements.**
 **.**
   F-
   **BICO,
      Inc.**
      **Statement
      of Cash Flows****Successor**
    **Predecessor****December
      8 to**
    **January
      1 to**
    **Year
      Ended****December
      31,**
    **December
      7,**
    **December
      31****2004**
    **2004**
    **2003**Cash
      flows used by operating activities:Net
      income (loss)
    $
      (195,003)
    $
      (6,445,894)
    $
      1,927,283Adjustments
      to reconcile net loss to netcash
      used by operating activities :Depreciation
    282
    -
    -Unrelated
      investors' interest in subsidiaries
    -
    -
    (1,440)Stock
      issued in exchange for services
    -
    7,150,000
    -Decrease
      in accounts receivable
    -
    -
    50,096(Increase)
      in prepaid expenses
    (532)
    (5,400)
    -Increase
      (decrease) in accounts payable
    (5,585)
    99,837
    -Increase
      (decrease) in other liabilities
    -
    (1,285,276)
    42,694Debt
      forgiveness
    -
    -
    (1,292,335)Increase
      (decrease) in liabilities in excess of
      assets
      held for sale
    -
    (184,773)
    125,116Gain
      on sale of assets held for sale
    -
    -
    (1,061,254)Net
      cash flow used by operating activities
    (200,838)
    (671,506)
    (209,840)Cash
      flows from investing activities:Proceeds
      from liabilities in excess of assets sold
    -
    -
    530,000Purchase
      of property, plant and equipment
    (2,250)
    (570)
    -Payments
      received on notes receivable
    -
    -
    46,338Purchase
      of exclusivity license
    -
    (100,000)
    -Net
      cash provided (used) by investing activities
    (2,250)
    (100,570)
    576,338Cash
      flows from financing activities:Proceeds
      from stock offering
    250,000
    250,000
    -Proceeds
      from sale of cXc stock
    -
    100,000
    -Net
      cash provided by financing activities
    250,000
    350,000
    -Net
      increase (decrease) in cash
    46,912
    (422,076)
    366,498Cash
      and cash equivalents, beginning of period
    26,104
    448,180
    81,682Cash
      and cash equivalents, end of year
    $
      73,016
    $
      26,104
    $
      448,180
 
 
 **The
accompanying notes are an integral part of these
statements.**
  F-
  
 **BICO,
      Inc.**
      **Statements
      of Cash Flows**
      **(Continued)****Year
      ended December 31,****Supplemental
      Information:**
    **2004**
    **2003**Interest
      paid
    -
    -**Supplemental
      schedule of non-cash****investing
      and financing activities:**Conversion
      of preferred stock for common stock
    -
    $
      24,857,466Reduction
      of Additional paid in capitalcreated
      by application of Fresh Start Accounting
    $
      284,298,535
    -Write
      off of accumulated deficit as a resultof
      Fresh Start Accounting
    $
      282,438,221
    -Change
      in par value of common stock
    $
      736,014,027
    -Change
      in Additional paid in capital as a result ofchange
      in par value of common stock
    $
      736,014,027
    -Settlement
      of liabilities through common stock issuance
    $
      6,868,824
    -Preferred
      stock issued to cXc shareholders
    $
      100,000
    -
 
 **The
accompanying notes are an integral part of these
statements.** **BICO,
Inc.**
  F-
   
 **Notes
to Financial Statements**
 
 
 **NOTE
A - BACKROUND AND ORGANIZATION**
 
 BICO,
Inc. (“BICO”) was incorporated in the Commonwealth of Pennsylvania in 1972 as
Coratomic, Inc. Before closing down all operations in February2003, the
Company's primary business was the development of new devices and technologies,
which included environmental and medical products. On March 18, 2003 the Company
filed a voluntary petition for Chapter 11 bankruptcy with the United States
Bankruptcy Court for the Western District of Pennsylvania. As part of the
bankruptcy court supervised reorganization, all of the Company's existing
operations were either sold or closed and all assets were liquidated to raise
cash for expenses related to the bankruptcy and pay creditors. By the end of the
reorganization the Company had no employees, no operations and no assets, all of
its prior businesses were gone, as were the subsidiaries thorough which some of
the Company's operations had been conducted.
 
 The
Company's plan of reorganization, as approved in the bankruptcy proceeding,
called for BICO to merge with cXc Services, Inc., a privately held Delaware
corporation formed in 2003 to introduce and commercialize a video webphone in
the United States. This video webphone is now the sole business of the Company.
The material changes which occurred in the bankruptcy and the merger with cXc
have resulted in the Company completing its reorganization and exiting the
bankruptcy proceeding as a startup business, and our success will depend upon
our ability to attract adequate funding to support the new business. This
business is comprised of two elements, the first being the sale of the webphone
internet appliances, the equipment, and the second the sale of advertising and
other content over the webphones and sale of related fee based services like
telephone and internet services. cXc Services, Inc. ("CXC")was a start-up
business at the time it merged into BICO, and had no sales or other source of
revenue. CXC possessed an exclusive distribution agreement with Amstrad, plc,
the developer of the video webphone CXC desired to commercially introduce to the
US market. This exclusivity agreement lapsed in January 2005.
 
 BICO
entered a Joint Plan of Reorganization (the Plan) which was accepted by our
creditors, and confirmed by the Bankruptcy Court on September 23, 2004 subject
to our becoming current on our SEC reporting, which we did. Under the Plan, CXC
merged into BICO and BICO was the surviving entity. BICO obtained 100% of the
assets of CXC, including the exclusive distribution rights in North America to
Amstrad's model E3 em@iler webphone and management expertise. In return, the
shareholders of CXC received full voting, convertible Series M Preferred Stock
in BICO. The preferred stock was convertible at a future date into an amount of
common stock equal to 49.6% of the total authorized common stock by BICO, but
does not provide CXC holders with any priority over the common shareholders upon
liquidation, nor any dividend or is disbursement priority. In a related
subsequent event, the board of directors and the holders of preferred stock
approved a change in the conversion ratio by which the preferred stock would be
exchanged for common stock and reduced the proportionate ownership of the
Company they would hold on conversion from 49.6% of the total authorized common
stock (an amount equal to 79.8% of the shares outstanding on a fully diluted
basis at November 4, 2004, the merger date, including certain shares reserved
for payment of services subsequent to our reorganization) to less than 1% of the
total authorized common stock (an amount equal to 4.94% of shares outstanding on
a fully diluted basis at November 4, 2004, the merger date). The former
shareholders of CXC now hold all three positions on the Board of Directors of
BICO. BICO continues business operations as a publicly traded company with
continuing limited infusions of capital from selling additional common shares
and cash received from the settlement of certain claims during the first quarter
of 2005.
 
 CXC was a
private company based in Dove Canyon, California. CXC was located by the Plan
proponent, PHD Capital (PHD and CXC had no prior dealings). Neither CXC, nor any
of its principals, had any prior dealings with BICO or its
subsidiaries.
 
 **NOTE
B - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING
POLICIES**
 
 **Going
Concern Basis**
 
 The
accompanying Financial Statements have been prepared on a going concern basis,
which assumes continuity of operations and realization of assets and
satisfaction of liabilities in the ordinary course of business, and in
accordance with SOP-7.
 
 BICO,
Inc. has raised $500,000 through private placement issuance of common stock
during 2004 through private placements to investors. We have only sufficient
cash on hand to pay expenses arising within the next quarter. The Company’s
continued operation is dependent on raising sufficient funds through the sources
available to it, primarily issuance of stock either through private placement or
a facility in place prior to the merger with J.P. Carey Asset Management and
Perrin, Holden and Davenport (PHD) to support its base-level ongoing monthly
expenses, which are approximately $120,000 per month, and raise the estimated
capital required to advance its business plan through making an initial purchase
of webphones, build the infrastructure of servers and programming necessary to
support the deployment of thousands of webphones and provide internet access,
create and download advertising content and support the full range of functions
of the webphones over the internet. We will need to raise short term funds
promptly in order to remain in business and the estimated $8,000,000 necessary
to implement our business plan within the next 3-6 months. This requirement
consists of $4,000,000 to support the acquisition of product, $2,000,000 to
complete the infrastructure needed to support the installed webphone base, and
approximately $2,000,000 to ensure the timely availability of next generation
product.
 
 **Fresh
Start Accounting**
 
 The
Company implemented "fresh start" accounting and reporting in accordance with
the American Institute of Certified Public Accountants ("AICPA") Statement of
Position No. 90-7, "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code" ("SOP 90-7") upon its emergence from bankruptcy on December 7,
2004, the date of the final order by the Bankruptcy Court. Fresh start
accounting required the Company to allocate the reorganization value to its
assets and liabilities based upon their estimated fair values. The determination
of fair value of assets and liabilities is subject to significant estimation and
assumptions. The accumulated deficit as of December 7, 2004 was eliminated.
Although not required by SOP90-7 prior period operating results were presented
to help explain the effects of “fresh start” accounting.
 
 **Cash
and Cash Equivalents**
 
 For
purposes of the statement of cash flows, the Company considers all highly liquid
investments with a maturity of three months or less at acquisition to be cash
equivalents.
 
 **Income
(Loss) Per Common Share**
 
 Net
income (loss) per common share is based upon the weighted average number of
common shares outstanding. The income (loss) per share does not include common
stock equivalents since the effect would be anti-dilutive. The weighted average
shares used to calculate the loss per share amounted to
10,244,793,988   for the
period ended December 7, 2004, 17,677,043,711  for the
period ended December 31, 2004 and 7,357,012,122 for the year ended December 31,
2003. The net income (losses) attributable to common shareholders for the
periods ended December 7, 2004 and December 31, 2004 were ($6,445,894) and
($195,003) respectively and the net income for the year ended December 31, 2003
was $1,927,283.
 
 **Income
Taxes**
 
 The
Company previously adopted Statement of Financial Accounting Standards No. 109
(FAS 109), Accounting for Income Taxes, which requires the asset and liability
method of accounting for income taxes. Enacted statutory tax rates are applied
to temporary differences arising from the differences in financial statement
carrying amounts and the tax bases of existing assets and liabilities.
 
 **Estimates
and Assumptions**
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The Company has stated
liabilities subject to compromise based upon estimated settlement amounts.
 
 **Concentration
of Credit Risk**
 
 Financial
instruments, which potentially subject the Company to significant concentrations
of credit risk, consist principally of cash investments at commercial banks.
Cash and cash equivalents are temporarily invested in interest bearing accounts
in financial institutions, and such investments may be in excess of the FDIC
insurance limit.
 
 **Comprehensive
Income**
 
 The
Company's consolidated net income (loss) is the same as comprehensive income
required to be disclosed under Statement of Financial Accounting Standards No.
130.
 
 **Forgiveness
of Debt**
 
 On
December 7, 2004 the Bankruptcy Court issued its final order and the Company
emerged from Chapter 11 bankruptcy. As a result of the bankruptcy all
liabilities subject to compromise were settled. Reduction in liabilities as a
result of the bankruptcy proceedings were recognized as Forgiveness of Debt in
the Statements of Operations.
 
 
 **NOTE
C - SALE OF ASSETS**
 
 In
October 2003 the Company sold its equity and debt interest in subsidiaries
ViaCirq, Inc, and Viatherm, Inc. to an unrelated party for $300,000. A gain of
$1,061,254 was recognized in the fourth quarter of 2003 as a result of this
sale.
 
 In July
2004 the Company sold its equity and debt interest in subsidiary
 Diasense,
Inc. to an unrelated party for $80,000 and recognized a net gain of $264,773 at
that time.
 
 
 **NOTE
D - BUSINESS SEGMENTS**
 
 Because
the Company discontinued all other operations, there was only one operating
segment, "Biomedical Devices," in 2003. This segment was discontinued in 2004
and the Company commenced development of operations in the areas of the sale of
webphone internet appliances.
 
 **NOTE
E - STOCKHOLDERS' EQUITY**
 
 **Preferred
Stock**
 
 The Board
of Directors of the Company may issue up to 150,000,000 shares of preferred
stock in series, which would have rights as determined by the
Board.
 
 In
connection with the Company’s reorganization under Chapter 11 BICO obtained 100%
of the assets of CXC. In return, the former shareholders of CXC received full
voting, convertible, Series M Preferred Stock in BICO. The preferred stock was
convertible at a future date into an amount of common stock equal to 49.6% of
the total authorized common stock by BICO, but does not provide CXC holders with
any priority over the common shareholders upon liquidation, nor any dividend or
disbursement priority. In a related subsequent event, the board of directors and
the holders of preferred stock approved a change in the conversion ratio by
which the preferred stock would be exchanged for common stock and reduced the
proportionate ownership of the Company they would hold on conversion from 49.6%
of the total authorized common stock (an amount equal to 79.8% of the shares
outstanding on a fully diluted basis at November 4, 2004, the merger date,
including certain shares reserved for payment of services subsequent to our
reorganization) to less than 1% of the total authorized common stock (an amount
equal to 4.94% of shares outstanding on a fully diluted basis at November 4,
2004, the merger date).
 
 **Common
Stock**
 
 In
accordance with BICO’s reorganization under Chapter 11 the Company’s authorized
number of common stock shares was increased to 250 billion and the par value was
amended to $.0001. Also, in accordance with the reorganization, 6.5 billion
shares were to be issued to consultants for services related to reorganization
and approximately 12.8 billion shares were issued to settle claims of former
creditors and preferred shareholders. Although all shares to be issued have been
recorded and reflected in the accompanying financial statements, there were 1
billion shares to reorganization plan recipient J.P. Carey Asset Management LLC
remaining to be issued at December 31, 2004.
 
 During
the period from November 4, 2004 to December 31, 2004 BICO issued 1,244,482,560
shares of common stock through a series of private placement to raise $500,000.
An additional 50,000,000 shares were issued and held in an account related to a
specific facility previously put in place by the company and J.P. Carey Asset
Management LLC for sale into the market place. Proceeds from the sale of these
shares are transferred to the company at the time of sale.
 
 **NOTE
F - INCOME TAXES**
 
 As of
December 31, 2004, the Company had available approximately $165,000,000 of net
operating loss carry-forwards for federal income tax purposes. These
carry-forwards are available, subject to ownership change and other limitations,
to offset future taxable income, and expire in tax years 2005 through 2024. The
Company also has research and development credit carry-forwards available to
offset federal income taxes of approximately $1,569,000, subject to ownership
change and other limitations, expiring in tax years 2005 through
2021.
 
 The
Company has not reflected any future income tax benefits for these temporary
differences or for net operating loss and credit carry-forwards because of the
uncertainty as to realization. Accordingly, the adoption of FAS 109 had no
effect on the financial statements of the Company.
 
 **NOTE
G - COMMITMENTS AND CONTINGENCIES**
 
 **Litigation**
 
 The
Company is not presently involved in any legal proceedings nor are any legal
proceedings known to be threatened. The recent bankruptcy disposed of all
liabilities which predated the bankruptcy filing, and no new legal actions have
arisen since.
 
 
 
 
 **Employment
Agreements**
 
 BICO
accepted pre-existing and approved employment contracts with cXc Services for
Messrs. Greenwood, DiCamillo, Hannesson and Rundles. Each contract contained a
provision that if the company was unable to make payments under each respective
contract due to insufficient funds or the expectation of insufficient funds, the
company was not obligated to make the payments but the company would be obliged
to accrue any such missed payments and pay them when it could prudently do so.
The Company notified the effected executives on January 27, 2005. It may not be
able to make payments under their respective employment contracts.
 
 
 **NOTE
H - RELATED PARTY TRANSACTIONS**
 
 During
2004, the Company made payments and incurred expenses for services of certain
members of its Board of Directors, Legal expenses were incurred in the amount of
$51,571 to Mr. Hannesson’s legal firm and network and server related expenses of
$2,145 were incurred for services provided by Mr. DiCamillo. Also, Mr. Raznick
and Mr. Greenwood were reimbursed for $62,000 and $9,648, respectively, for
expenses incurred relative to legal, market research, office and other
items.
 
 
 
 **NOTE
I - SUBSEQUENT EVENTS**
 
 On March
30, 2005, BICO entered into a Settlement Agreement and Mutual General Releases
with Kenneth F. Raznick, Chairman of the Board of Directors of BICO, Susan
Raznick, Mr. Raznick’s spouse, RFK Investments, LLC, a Michigan limited
liability company wholly owned by Mr. Raznick, Richard M. Greenwood, Chief
Executive Officer, President and member of the Board of Directors of BICO, Mark
DiCamillo, Executive Vice President and Chief Operating Officer of BICO, Richard
Rundles, Executive Vice President, Real Estate Distribution Development, John D.
Hannesson, formerly Executive Vice President of Law and Administration of BICO,
Perrin, Holden & Davenport Capital Corp., Jody Eisenman, principal of Perrin
Holden & Davenport Capital, and Nelson Braff, principal of Perrin Holden
& Davenport Capital.
 
 The
Settlement Agreement was entered into in connection with resolution of certain
issues arising from the merger of CXC into BICO and the provision of funding for
BICO subsequent to the merger. The Settlement Agreement provides for: (i) an
agreement by the parties for a reduction in the conversion ratio of the Series M
Preferred Stock of BICO from one share of Series M Preferred Stock convertible
into one thousand (1000) shares of common stock of BICO to one share of Series M
Preferred Stock convertible in to thirteen and fifteen one-hundredths (13.15)
shares of common stock of BICO and to seek consent for such reduction from the
Series M Preferred Stock holders and the members of the Board of BICO; (ii) a
cash payment to BICO from Mr. Raznick in the amount of $117,500; (iii) the
resignation of Mr. Raznick as a member and Chairman of the Board of Directors of
BICO; and (iv) various releases of claims among the parties.
 
 
 
   F-
   
  ***Item
8 - Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure*** ******
  None.
 
  ***Item
8A - Controls and Procedures*** ******
  
 Within 90
days prior to the date of this report, we carried out an evaluation, under the
supervision and with the participation of the Company’s management, including
our Chief Executive Officer and our Principal Accounting Officer, of the
effectiveness of our disclosure controls and procedures pursuant to Rule 13a-14
under the Securities Exchange Act of 1934, as amended. Based upon that
evaluation, the Chief Executive Officer and the Principal Accounting Officer
concluded that our disclosure controls and procedures are effective, in all
material respects, with respect to the recording, processing, summarizing, and
reporting, within the time periods specified in the Securities and Exchange
Commission’s rules and forms, of information required to be disclosed by us in
the reports that we file or submit under the Exchange Act.
 
 There
were no significant changes in our internal controls or in other factors that
could significantly affect internal controls subsequent to the date of the
evaluation referred to above.
 
  **Part
III**
   ***Item
9 - Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act***
  
 **Directors
and Executive Officers**
 
 Name
    Age
    Title
    TenureRichard
      Greenwood
    57
    Chairman
      & Secretary
      President
      Acting
      Chief Financial Officer, Principal Accounting Officer
    3/30/05
      to date
      11/3/04
      to date
      11/30/04
      to dateIrvin
      E. Kebler
    45
    Director
    11/3/04
      to dateMark
      DiCamillo
    49
    Director
      Executive
      V.P., Chief Operating Officer
    3/3/05
      to date
      11/3/04
      to dateRichard
      Rundles
    55
    Executive
      V.P.
    11/3/04
      to dateKen
      Raznick
    58
    Chairman
    11/3/04
      - 3/30/05John
      Hannesson
    53
    Executive
      V.P., Secretary
    11/3/04
      - 3/11/05William
      J. Shea
    51
    Executive
      V.P.
    11/3/04
      - 4/11/05
 
 **Richard
Greenwood** :
President & CEO and Member of the Board of Directors. Mr. Greenwood has over
25 years experience in consumer and financial services including senior
executive positions at some of the nation's largest financial institutions.
Greenwood held various treasury positions at Citibank, including Treasurer for
the USA consumer business and the bank's European and African consumer banking
group, representing businesses in sixteen countries. Greenwood was also the CFO
of California Federal Bank and Valley National. At both Institutions, he led the
capital and funding efforts as well as implementing effective risk management
systems during their respective recovery from troubled real estate loan
portfolios. Greenwood was appointed CEO by Bank Plus/Fidelity Federal Bank. As
CEO, Greenwood raised over $300 million and was responsible for implementing a
program that restructured or eliminated $1,500,000,000 in problem loans as well
as restructuring the organization of the company and its work force. . Greenwood
was President & CEO of Predictive Data, Inc., a privately held company that
services the Multi-housing industry with financial products, from 1999 - 2000.
Prior to co-founding cXc, Greenwood was President & CEO of Hagenuk CPS/USA,
a privately held manufacturer and distributor of webphones and smart card
systems and technologies over the period of 2000 - 2002. From 2002 to the
formation of cXc Services, Greenwood has worked with Raznick to promote the
commercialization of the webphone concept. Greenwood has been on the boards of
Treasury Services Inc. and Americash. Greenwood has also been an active board
member and Chairman of the Association of Financial Services Holding Companies
(Washington D.C.), Western League of Community Banks (Sacramento), and served
two years as President of SONET -ALLTEL Information Services Users
Group.
 
 **Irvin
E. Kebler** : Member
of the Board of Directors has served as the Chief Operating Officer for The Eyde
Company since joining the company in 2000. Eyde is a private real estate
development company headquartered in East Lansing, Michigan. Mr. Kebler is also
President of Utica Park, Inc., an entity which serves as the general partner for
Utica Park Place, LP, which owns and manages an approximate 450,000 square foot
retail shopping center in Utica, Michigan. Mr. Kebler was previously in
commercial banking for approximately 15 years with Wells Fargo Bank in Southern
California and Michigan National Bank in Farmington Hills, Michigan. Mr. Kebler
is a graduate of Michigan State University's School of Business (Finance).
 
 **Mark
DiCamillo** :
Executive Vice President, and Chief Operating Officer (Mr. DiCamillo was
appointed as a member of the Board of Directors of BICO to replace Mr Raznick on
March 30, 2005). Mr. DiCamillo is a leading expert in webphone systems and
technologies and has successfully managed Internet screen phone deployments with
iBank at the Mall of America, Illinois Power in Champaign, Illinois, and
Portland General Electric in Portland, Oregon. Prior to joining cXc Services,
from 1995 - 2003 Mr. DiCamillo was COO of HomeAccess MicroWeb, Inc., a software
developer and systems provider for Internet Appliances. Since 2003 DiCamillo has
been VP & Chief Operating Officer of Once Upon a Family, LLC, a producer and
distributor of consumer products. Mr. DiCamillo is a licensed engineer and has
held engineering, marketing and management positions with Ford Motor Company,
Mattel Toys, Amhdahl Computers and Philips Electronics.
 
 **Richard
Rundles:** Executive Vice President, Business Development. Mr. Rundles has over 25 years of
experience in corporate real estate and has held various senior-level management
positions. Most recently, Rundles served as Executive Vice President and Chief
Operating Officer at Predictive Data, Inc. where he successfully developed and
introduced Deposit Saver, a new security deposit program for the Multi-Housing
Industry. At Trammell Crow Company, Rundles served as Senior Vice President -
West Region for their “Corporate Services” business practice. Prior to that,
Rundles was the founder and CEO of Corporate Facilities Services, a full-service
real estate services and development company acquired by Trammell Crow Company.
Rundles also served as First Vice President and Division Head of Real Estate
& Property Management at California Federal Bank. Rundles is on the Board of
Directors for the National Association of Corporate Real Estate Executives - Los
Angeles Chapter and the Advisory Council of the National Multi-Housing
Council.
 
 **Ken
Raznick** :
Chairman of the Board of Directors. Mr. Raznick has spent almost 30 years in the
commercial real estate field, playing a key role in developing over 25 million
square feet of shopping centers and other industrial space. In 1974, Raznick
began his own company, The Kenneth Raznick Company, developing many neighborhood
shopping centers. Raznick founded The New Center Company in 1983, and numerous
major retailers have looked to Raznick for expertise in all phases of site
selection and development throughout the country such as Walmart, Home Depot, K
mart, AMC Theaters, Office Max, Toys `R' Us, T. J. Maxx, and
Circuit
 City.
(Mr. Raznick stepped down as Chairman and Director March 30, 2005)
 
 **John
Hannesson:** Executive Vice President, Administration & Law, Secretary. Mr. Hannesson
spent over 15 years as vice president, general counsel and secretary for two
NYSE listed multinational corporations, BWIP Holding, Inc. (formerly Borg Warner
Industrial Products, Inc.) and Overhead Door Corporation.  Since 1998 Mr.
Hannesson has been in the private practice of corporate law.
 
 
 **Compliance
with Section 16(a) Of the Exchange Act**
 Section
16(a) of the Securities Exchange Act of 1934, as amended, and the rules there
under require the Company's officers and directors, and persons who own more
than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies. Based solely on its review of
the copies of the Section 16(a) forms received by it, or written representations
from certain reporting persons, the Company believes that, during the
last
 fiscal
year, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with, except that
the Form 3 initial filing was filed late by Messrs Greenwood, DiCamillo, Raznick
and Hannesson.
 
 
 **Audit
Committee Information**
 
 BICO’s
Board of Directors does not have a separate Audit Committee. The entire Board
acts as the Audit Committee. Messrs Greenwood, Kebler (independent director) and
DiCamillo have extensive financial experience and each qualify as a financial
expert as that term is defined in Item 401(e) of Regulation S-B of the
Securities and Exchange Commission. BICO will seek additional qualified outside
directors such that a majority of the board will be outside directors once we
have raised funds to execute our business plan. Once in place, the Audit
committee and Compensation committee with be chaired by an independent
director.
 
 
 **Code
of Ethics**
 
 The
Company has adopted a Policy Statement on Business Ethics and Conflicts of
Interest, which was approved by the Board of Directors, applicable to all
employees, which is attached as an exhibit to this report.
 
  ***Item
10 - Executive Compensation***
  
 The
following table sets forth all compensation paid or accrued by the Company
during the last three years to its executive officers.
 
 Name
    
    
    
    Other
    
    Securities
    
    All
      otherAnd
    
    
    
    Annual
    Restricted
    Underlying
    LTIP
    Compen-Principal
    
    Salary
    Bonus
    Compen-
      sation($)
    Stock
    Options/
    Payouts
    sationPosition
    Year
    ($)
    ($)
    Awards($)
    SARs
      (#)
    ($)
    ($)Richard
      M. Greenwood
      President,
      CEO & CFO
    2004
    40,000
    0
    0
    0
    0
    0
    02003
    0
    0
    0
    0
    0
    0
    0(3)
    2002
    0
    0
    0
    0
    0
    0
    0Mark
      DiCamillo
      Executive
      Vice President & COO
    2004
    36,458
    0
    0
    0
    0
    0
    02003
    0
    0
    0
    0
    0
    0
    0(3)
    2002
    0
    0
    0
    0
    
    0
    0Richard
      L. Rundles
      Executive
      Vice President, Sales
    2004
    31,250
    0
    0
    0
    0
    0
    02003
    0
    0
    0
    0
    0
    0
    02002
    0
    0
    0
    0
    
    0
    0(3)Kenneth
      F. Raznick Chairman
    2004
    48,000
    0
    0
    0
    0
    0
    02003
    0
    0
    0
    0
    0
    0
    0(2)
    2002
    0
    0
    0
    0
    0
    0
    0Anthony
      Paterra, Former CEO
      (1)
      (3)
    2004
      2003
      2002
    112,500
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    0
      0
      0
    550,000
      0
      0William
      J. Shea Executive Vice President, Advertising
    2004
    29,167
    0
    0
    0
    0
    0
    02003
    0
    0
    0
    0
    0
    0
    02002
    0
    0
    0
    0
    0
    0
    0(3)
      (5)John
      D. Hannesson Executive Vice President, Admin & Law,
      Secretary
    2004
    29,167
    0
    0
    0
    0
    0
    0(3)
      (4)
    2003
    0
    0
    0
    0
    0
    0
    02002
    0
    0
    0
    0
    0
    0
    0
 
 Notes:
 1.
    Mr.
      Paterra served as a Director of BICO, Inc. Prior to the company filing for
      bankruptcy. At that time the court appointed Mr. Paterra Trustee and CEO
      of BICO, a position he held until the merger with cXc Services was
      completed November 4, 2004. Mr. Paterra resigned as CEO and Director of
      BICO on November 4, 2004. Mr. Paterra agreed to provide certain consulting
      assistance after BICO’s bankruptcy plan was approved and the merger was
      completed, as consideration he received 500,000,000 restricted shares of
      common stock when the Bankruptcy court approved the Second Amended Plan
      October 18, 2004. Restrictions on 25% are removed April 13, 2005, another
      25% is removed July 13, 2005, and the remaining restrictions are removed
      October 13, 2005. 2.
    Mr.
      Raznick received $62,000 in reimbursements for certain merger related
      expenses. On March 30, 2005 Mr. Raznick terminated his employment and
      resigned his positions as a director and chairman pursuant to an agreement
      with the Company. 3.
    Mr.
      Paterra received $821.20 in expense reimbursements in FY 2004, Mr.
      Greenwood received $10,512.73
      in expense reimbursements in FY 2004, Mr. DiCamillo received $5,532.57
      in expense reimbursements in FY 2004. Mr. Rundles received $7.909.00
      expense reimbursements in FY 2004, Mr. Shea received $2,940.70
      expense reimbursements in FY 2004, Mr. Hannesson received $1,002.66 in
      expense reimbursements in FY 2004. 4.
    Mr.
      Hannesson provided certain organization and merger related legal services
      prior to becoming an executive of BICO, Inc. for which BICO compensated
      him $24,823.88 for those services. 5.
    On
      April 11, 2005 BICO, Inc. entered into an agreement which terminated Mr.
      Shea’s employment contract. The company paid Mr. Shea a one time payment
      of $17,500 at that time and agreed to a further payment contingent upon
      obtaining funding. 
 
 No
Option/SAR grants or exercises or Long-Term Incentive Plan awards or exercises
to or by any director, officer or employee occurred in the fiscal year ended
December 31, 2004
 
 BICO
accepted pre-existing and employment contracts with cXc Services for Messrs.
Greenwood, DiCamillo, Hannesson and Rundles. Each contract contained a provision
that if the Company was unable to make payments under the contracts due to
insufficient funds or the expectation of insufficient funds the Company was not
obligated to make the payments but the Company would be obliged to accrue any
such missed payments and pay them when it could prudently do so. The Company
notified all executives on January 27, 2005 that it may not be able to make
payments under the employment contracts.
 
 There is
no program in place to compensate Directors for their services.
 
 
 ***Item
11. Security Ownership Of Certain Beneficial Owners And Management And Related
Stockholder Matters***
 
 The
following table sets forth information regarding beneficial ownership as of May
10, 2005 of the Company's common stock by any person who is known to the Company
to be the beneficial owner of more than 5% of the Company's voting securities
and by each director and officer of the Company.
 
 Beneficial
    PercentageName
    Ownership
    of
      Class**Common
      Stock**
      
      Jody
      Eisenman
      Nelson
      Braff
      All
      directors/officers as a group
    2,388,262,408
      2,367,000,000
      0
    8.87%
      8.79%
      0%**Series
      M Preferred Stock**
      
      Kenneth
      Raznick, Chairman, Director
      Richard
      Greenwood, President & CEO, Director
      Irvin
      Kebler, Director
      Mark
      DiCamillo, EVP & COO
      Richard
      Rundles, EVP, Sales
      John
      Hannesson, EVP, Law, Administration, Secretary
      All
      directors/officers as a group
    49,540,587
      10,037,602
      3,764,101
      7,528,202
      5,018,801
      2,509,401
      78,398,694
    39.48%
      8.00%
      3.00%
      6.00%
      4.00%
      2.00%
      62.48%
 
 
 On March
30, 2005 as part of a settlement between the Company, PHD and others (including
Mr. Raznick, Mr. Greenwood, Mr. Kebler, Mr. DiCamillo, Mr. Rundles and Mr.
Hannesson), the original exchange rate for the Series Preferred Shares issued to
cXc Services, Inc. shareholders, one share of Series M for 1,000 shares of BICO,
Inc. common, was adjusted downward such that every share of Series M Preferred
converted into 13.15 shares of common. Under the original conversion ratio on a
fully diluted basis Series M would convert into 81.79% of BICO, inc. ownership
(as part of the cXc Services group Mr. Raznick, Mr. Greenwood, Mr. DiCamillo,
Mr. Rundles and Mr. Hannesson were beneficial owners of 62.80% of issued common
stock at 12/31/04 when converted). After the settlement Series M Preferred (cXc
Services ownership) on a fully diluted basis reduced to 5.58% (as part of the
cXc Services group Mr. Raznick, Mr. Greenwood, Mr. Kebler, Mr. DiCamillo, Mr.
Rundles and Mr. Hannesson would be beneficial owners of 3.48% of issued common
stock at 12/31/04 when converted)
 
 ***Item
12. Certain Relationships and Related Transactions***
 
 See Notes
to Financial Statements Note H
  ***Item
13 - Exhibits*** ******
  
 3(a)
    Articles
      of Incorporation as filed with the Secretary of State of the Commonwealth
      of Pennsylvania on March 20, 1972 (filed with Form S-1 Registration
      Statement filed December 1, 1992)3(b)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on May 8, 1972 (filed with Form S-1
      Registration Statement filed December 1, 1992)3(c)
    Restatement
      of Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on June 19, 1975 (filed with Form S-1
      Registration Statement filed December 1, 1992)3(d)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on February 4, 1980 (filed with Form S-1
      Registration Statement filed December 1, 1992)3(e)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on March 17, 1981 (filed with Form S-1
      Registration Statement filed December 1, 1992)3(f)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on January 27, 1982 (filed with Form S-1
      Registration Statement filed December 1, 1992)3(g)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on November 22, 1982 (filed with Form S-1
      Registration Statement filed December 1, 1992)3(h)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on October 30, 1985 (filed with Form S-1
      Registration Statement filed December 1, 1992)3(i)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on October 30, 1986 (filed with Form S-1
      Registration Statement filed December 1, 1992)3(j)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on December 28, 1992 (filed with Amendment
      No. 1 to Form S-1 Registration Statement filed February 8,
      1993)3(k)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on February 7, 2000 (filed with Form 10-K for
      the fiscal year ended December 31, 1999)3(l)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on June 14, 2000 (filed with Form S-1
      Registration Statement filed July 9, 2001)3(m)
    Amendment
      to Articles of Incorporation as filed with the Secretary of State of the
      Commonwealth of Pennsylvania on November 30, 2001 (filed with Form 10-K
      for the fiscal year ended December 31, 2001)3.(n)
    Amended
      and Restated Articles of Incorporation of BICO, Inc. as filed with the
      Secretary of State of the Commonwealth of Pennsylvania (filed with Form
      8-K filed November 12, 2004)3.(o)
    Certificate
      of Designation of Series M Preferred Stock as filed with the Secretary of
      State of the Commonwealth of Pennsylvania (filed with Form 8-K filed
      November 12, 2004)3(p)
    Amended
      and Restated Certificate of Designation of Series M Preferred Stock as
      filed with the Secretary of State of the Commonwealth of Pennsylvania
      (filed with Form 8-K filed April 1, 2005)3(q)
    By-Laws
      of BICO (as filed with Form S-1 Registration Statement filed December 1,
      1992)3(r)
    Joint
      Second Amended Plan of Reorganization dated August 3, 2004 (filed with
      Form 8-K filed November 12, 2004)3(s)
    Order
      Approving Joint Second Amended Plan of Reorganization dated October 14,
      2004 (filed with Form 8-K filed November 12, 2004)10
    Material
      Contracts10(a)
    Employment
      Agreement with Richard M. Greenwood dated October 1, 2004 (filed
      herewith)10(b)
    Employment
      Agreement with Mark DiCamillo dated October 1, 2004 (filed
      herewith)10(c)
    Employment
      Agreement with Richard Rundles (filed herewith)10(d)
    Policy
      Statement on Business Ethics and Conflicts of Interest (filed
      herewith)31.1
    Certification
      of Chief Executive Officer Under Section 302 (filed
    herewith)31.2
    Certification
      of Acting Chief Financial Officer and Acting Principal Accounting Officer
      Under Section 302 (filed herewith)32.1
    Certification
      of Chief Executive Officer Under Section 906 (filed
    herewith)32.2
    Certification
      of Acting Chief Financial Officer and Acting Principal Accounting Officer
      Under Section 906 (filed herewith)
 
 
  ***Item
14 - Principal Accountant Fees and Services*** ****
  
 The
following table sets forth fees billed to the Company by our auditors during the
fiscal years ended December 31, 2004 and 2003:
 
 
 DECEMBER
      31, 2004
    DECEMBER
      31, 20031.
      Audit Fees
    $
      25,728.00
    $
      8,000.002.
      Audit Related Fees
    0.00
    0.003.
      Tax Fees
    0.00
    0.004.
      All Other Fees
    0.00
    0.00Total
      Fees
    $
      25,728.00
    $
      8,000.00
 
 Audit
fees consist of fees billed for professional services rendered for the audit of
the Company's consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by Goff Backa Alfera & Company, LLC in connection
with statutory and regulatory filings or engagements.
 
 Audit-related
fees consists of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
consolidated financial statements, which are not reported under "Audit Fees."
There were no Audit-Related services provided in fiscal 2004 or 2003.
 
 Tax fees
consists of fees billed for professional services for tax compliance, tax advice
and tax planning.
 
 All other
fees consist of fees for products and services other than the services reported
above. There were no management consulting services provided in fiscal 2004 or
2003.
 
 **SIGNATURES**
 
 In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 
 BICO,
INC..
 
 
 
 Signature
    Title
    Date/s/
      Richard M. Greenwood
      Richard
      M. Greenwood
    Chief
      Executive Officer; President; Acting Chairman of the Board; Director; and
      acting Chief Financial Officer and Principal Accounting
      Officer
    May
      23, 2005/s/
      Irvin E. Kebler
      Irvin
      E. Kebler
    Director
    May
      23, 2005/s/
      Mark DiCamillo
      Mark
      DiCamillo
    Director;
      Executive V.P.; Chief Operating Officer
    May
      23, 2005