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

                                   FORM 10-KSB/A
                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                      For the Year Ended December 31, 2004

                          Commission File No. 333-71752

                                 Biocoral, Inc.

        (Exact name of small business issuer as specified in its charter)

            Delaware                                     33-0601504
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

 38 rue Anatole France, 92594 Levallois        011-3314-757-9843         N/A
         Perret Cedex France                  (Issuer's telephone     (Zip Code)
(Address of Issuer's principal executive       number, including
               offices)                           area code)

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                          Common Stock, $.001 par value
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |_|

The issuer's revenues for the year ended December 31, 2004 were $351,600.

The aggregate market value of the registrant's voting common equity held by
non-affiliates as of March 31, 2005 was $195,853,360.

The number of outstanding shares of the registrant's common stock as of March
31, 2005 was 11,353,818.

Transitional Small Business Disclosure Format: Yes |_| No |X|

Documents Incorporated by Reference: None.

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                                EXPLANATORY NOTE

This Amendment No. 1 to Form 10-KSB is being filed for the sole purpose of
adding Exhibit 3.4 (Certificate of Amendment of Certificate of Incorporation).


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                                TABLE OF CONTENTS

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                                                                                 Page
<S>                                                                           <C>
PART I
Item 1.  Description of Business..............................................1
Item 2.  Description of Property..............................................5
Item 3.  Legal Proceedings....................................................5
Item 4.  Submission of Matters to a Vote of Security Holders..................5

PART II
Item 5.  Market for Common Equity and Related Stockholder Matters.............5
Item 6.  Management's Discussion and Analysis or Plan of Operations...........7
Item 7.  Financial Statements.................................................F-1 - F-18
Item 8.  Changes In and Disagreements With Accountants on Accounting
         and Financial Disclosure.............................................11
Item 8A. Controls and Procedures

PART III
Item 9.  Directors, Executive Officers, Promoters and Control Persons.........12
Item 10. Executive Compensation...............................................13
Item 11. Security Ownership of Certain Beneficial Owners and Management.......14
Item 12. Certain Relationships and Related Transactions.......................15
Item 13  Exhibits and Reports on Form 8-K.....................................15
Item 14. Principal Accountant Fees and Services...............................16
</TABLE>

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                                     PART I

Item 1. Description of Business

Background

Biocoral, Inc., a Delaware corporation, is an international biomaterials
"tissue-engineering" company specializing in the research, development and
commercialization of patented high biotechnologies and biomaterials in the
health care area. Through our subsidiaries, Biocoral, Inc. researches, develops,
manufactures and commercializes bone graft substitutes and other high technology
patented biomaterials in a number of countries outside the United States. We
entered the biomaterials field in 1995 by agreeing to acquire Inoteb, SA, a
French corporation from 10 individuals "the founders", all French nationals. The
shares and bonds of Inoteb acquired in 1995 represented, at such time, 51.5% of
the capital stock of Inoteb. We increased our ownership percentage through
several additional investments in Inoteb common stock to 67% in 1997 and to 100%
in 1998.

Our representative offices are located at 38 rue Anatole France, Levallois
Perret Cedex, France consisting of approximately 2000 square feet of office
space.

Biocoral(R),

Biocoral(R), our primary product, is a natural coral "carbonate Calcium" derived
bone graft substitute and is used by surgeons and practitioners because of its
biocompatibility, resorbability, osseo conduction and safety. Certain chemical,
physical and structural characteristics of coral are very similar to that of
human bone tissue. Biocoral(R), is derived from three particular species of
coral naturally present in abundance. Biocoral(R), is primarily (more than 97%)
comprised of calcium carbonate. Porous and resorbable, Biocoral(R), is prepared
in microgranules as well as in engineered shapes according to specific
indication. Due to its similarity to bone tissue, Biocoral(R), is compatible,
resorbed by the body as new bone growth invades the Biocoral(R) and is replaced
by neoformed invasion. It is highly porous with numerous interconnected channels
which allow a total migration to the center of the implant free of contamination
risk. Because Biocoral(R), is resorbed, it can be combined with antimicrobials,
anticancer agents or other pharmaceuticals for slow release into bone tissue,
resulting in an advantage over autologous bone grafts. The principal current
alternative to Biocoral(R), is the utilization of autologous (from the patient's
own body) bone grafts. The use of autologous bone grafts requires the patient to
undergo one or more additional surgeries to harvest the bone graft material.
This is not always feasible due to the condition of the patient or other
contraindications, and must be shaped in a separate procedure to fit the graft
area.

According to our French subsidiary, Biocoral(R), has been used in more than
300,000 patients, principally in Western Europe and Korea. Biocoral(R), was
originally patented in France in 1979, in the United States in 1982, and in
Japan in 1989. Our French subsidiary acquired the patent rights to Biocoral(R),
from ANVAR/CNRS, (l'ANVAR)" National Agency for Valorization of Research" and
(CNRS) "French National Center for Scientific Research", both French
governmental agencies. Through our subsidiaries, we have developed twelve
additional patent titles for various applications and uses of our products,
including among others osteoporosis remediation, autologous glue and combination
with growth factor, among others. Through these twelve additional patent title
applications in various countries in Europe, Switzerland, Canada, Japan,
Australia, and the United States, we own more than 187 patent applications
around the world and approximately 160 of which have thus far been granted by
various countries by their official government patent office, including most
European Community countries, Switzerland, Canada, Japan, Australia, and in the
United States by the US Department of Commerce Patent and Trademark Office.

Using proprietary manufacturing processes, our chief product, Biocoral(R), is a
resorbable biomaterial derived from Natural Carbonate Calcium in the metastable
crystalline aragonite form in a natural condition ocean-generated coral used as
bone graft sustitutes has certain characteristics (including chemical
composition, porosity, mineral content and bioactive properties) that permit its
safe, contamination-free use. Its similarity to human bone facilitates its
replacement by newly-formed bone. Substantially all of our revenue has been
derived from sales of the first generation of our products. The second
generation of products and their application after long years of research and
development and success of several clinical applications now are ready for
marketing. Our product application in the treatment of demineralized bone, for
example, such as in cases of osteoporosis fractures and their prevention, is


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based on technology that is protected by strong patents which have thus far been
granted by various countries by their official government patent office,
including most European Community countries, Canada, Australia, Japan and in the
United States by the US Department of Commerce Patent and Trademark office.

We have not yet begun to seek FDA approval for sale of our products in the
United States but are preparing the documentation required for our product
homologation application in the United States. We have identified the
requirements for this application and approached a US medical supply distributor
in order to access the US market. An accredited scientific team in the US has
conducted human clinical studies with a five-year follow up to confirm bone
reconstruction in oral application. This study confirmed the stability of the
successful result and management believes that this study will facilitate FDA
approval for our product used in this indication when we file for FDA approval.
We anticipate submitting this application during 2005. Canadian approval of
certain products has been renewed in 2004 by Canadian Health Care Authority
"Sante Canada," and our products are already commercialized in the European
Community and Asia. We recently entered into a distribution agreement with a
Canadian medical supply company in order to access the Canadian market.

Clinical Applications

Biocoral(R), has been used in various clinical applications. Current uses
include the following: (a) orthopedic surgery uses include spinal surgery,
tibial (shinbone) osteotomies, hip fractures, trephine (skull) hole replacement,
fracture repair and filling of bone cavities particularly in bone fractures due
to osteoporosis; (b) maxillocraniofacial surgery and plastic surgery uses
include reconstructive and cosmetic surgery; (c) oral surgery uses include
filling of bone defects due to loss of teeth or periodontal disease.

We are preparing new clinical human trials for autologous fibrin glue in
different indications which we expect to begin during 2006. We believe that the
results of these clinical trials may allow us to extend the market for our
innovative products for use in other indications. However, there can be no
assurance that we will be able to extend the market for our products.

Osteoporosis

We are developing several variants of our Biocoral(R), technology aimed at
osteoporosis.

Osteoporosis is a bone disease due to natural bone demineralization in which
bone density decreases combined with increased bone brittleness and porosity
that causes the bones to become thin and weak. It occurs mostly in women after
menopause. That's because the female hormone oestrogen helps women maintain bone
strength. As oestrogen levels decline, bone is lost. Osteoporosis can also occur
in men. Other risk factors include: delayed puberty, poor calcium intake,
smoking, excess alcohol consumption or from medications such as glucocorticoids.

As bones weaken, they are more likely to break (fracture). Hip, wrist and spine
bones are at the greatest risk of breaking. The breaks in spine bones are known
as vertebral compression fractures, or VCFs. Left untreated, they may lead to
kyphosis, commonly referred to as "dowager's hump."

Some statistics

According to the International Osteoporosis Foundation (www.osteofound.org), 40%
of all middle-aged women (8 out of 20) and 15% of middle-aged men (3 out of 20)
in Europe will suffer one or more osteoporotic fractures during their remaining
lifetime. In fact, someone in Europe has a fracture every 30 seconds as a result
of osteoporosis. Furthermore, they estimate that the number of osteoporosis
patients will double over the next 50 years with the projected increase in the
aging population and as a result of lifestyle factors. However, despite the fact
that the incidence of osteoporotic fractures is growing, the problem is
under-recognized with only one in two osteoporotic spinal fractures being
diagnosed.

The clinical trials conducted by our subsidiaries over the past eleven years
have demonstrated the feasibility of this treatment to reduce the consequences
of fractures caused by osteoporosis and to avoid the occurrence of fracture as
well. We are developing several variants of our Biocoral(R), technology aimed at
treatment of bone disease due to natural bone demineralization (such as
osteoporosis) ,and Treatment and Prevention of Osteoporotic Fracture.
Biocoral(R), offers a superior method of preventing and repair of bone fractures
due to osteoporosis. It has the ability to help the skeletal system, reinforcing
it where it is weak and fragile. Biocoral(R), can serve both to heal bones that


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are already fractured and to prevent bone fractures from occurring. Phase II
clinical trials in Europe demonstrated the efficacy of Biocoral(R), for local
osteoporosis treatment in rebuilding bone, particularly in combination with
osteodensimatic screening.

In 2000, we began Phase III multi-center clinical trials of our product
"Biocoral(R)", for the treatment of hip fractures due to osteoporosis, in 14
clinics in Europe. In 2002, the period for inclusion of patients in the Phase
III multi-center clinical trials ended. In the third quarter of 2002, the
preliminary report of the follow up study was completed. The preliminary report
confirmed the advantage of using our product in stabilization of fractures due
to Osteoporosis. We were following up on the patients included in the trials and
this follow-up continued through December 2003.

We initially were expecting the definitive report to be completed during the
first quarter 2003, but due to the disparate locations of the fourteen hospitals
participating in the trial, it was difficult for the monitors to visit the
hospitals. The study is monitored by an independent organization in France
called Biomatech located in city of Lyon which has been chosen directly by the
French government agency " National Agency for Valorization of Research"
(l'ANVAR). The definitive report is now ready and we expect it to be released in
the third quarter of 2005. We are planning to hold a meeting with all hospital
participants for release of final results and conclusions. We expect and believe
that this study will demonstrate that our product in this application will
stabilize the fracture and will permit better recovery for patients, allowing
them faster mobility and return to a healthy state with a very low risk of
refracture.

We are also working on the prevention of osteoporotic fractures and believe that
for the first time, patients who already have osteoporosis or had already
suffered from osteoprotic fracture will be able to be treated before either
refracture or the occurrence of fractures in other locations. Our product in
this application is intended to permit the regeneration of newly formed bone in
the area which is susceptible to osteoporosis and has a low bone mass. The
initial human clinical study has demonstrated and confirmed the result of
regeneration of newly formed bone in the bone mass area.

We own, through our wholly-owned subsidiary, various patents in the application
treatement of bone disease due to natural bone demineralization (such as
ostroprosis) and "Treatment and Prevention of Osteoporotic Fractures ." Our
technology underlying this application is protected by strong patent
applications in many countries around the world where patent applications were
filed. Our patent applications in this application have thus far been filed and
granted by the official government patent offices of various countries,
including 17 European Community countries, Japan, Australia, and in the United
States by the US Department of Commerce Patent and Trademark Office. Our patent
application is still in examination and pending in Canada.

Autologous Fibrin Glue

We have developed a medical device and a method for preparation of autologous
fibrin glue which management believes is the world's first fully autologous
fibrin glue. In 1993, our scientists began working on the development of this
medical device and method for preparation of autologous fibrin glue. This
autologous fibrin glue is prepared using the patient's own blood, in a closed
system, thereby eliminating the risk of viral transmission, immunological
problems and the risk of blood-borne disease transmission such as, for example,
HIV and hepatitis. In contrast, all fibrin glues currently on the market
(whether autologous or homologous) require foreign protein such as thrombin or
antifibrinolitic.

Surgical glue represents a fast growing segment of the biotech industry.
Clinical trials have been done especially for skin replacement and skin grafts
eliminating the need for protein based skin grafts. Following the successful
result of the phase III human clinical trail for specific indications, the
product file has been approved by the appropriate French authorities Agence
Francaise de Securite Sanitaires des Produits de Sante (AFSSAPS) the French
equivalent of the Food and Drug Administration. On September 14, 2000, AFSSAPS
granted to a blood bank the authorization to prepare, use and distribute the new
autologous fibrin glue that was developed by us. Before we can commence
commercialization of the autologous fibrin glue, AFSSAPS requires that the
French blood bank known as Etablissement Francaise du Sang ("EFS"), the
exclusive operator of blood transfusions in France, prepare a report following
up on the progress of the first fifty (50) patients treated with the autologous
fibrin glue.

We have been coordinating the program to prepare the report with EFS and the
blood bank of the French Army in


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Clamart, known as CTSA. The inclusion of patients began in April of 2002.
Shortly thereafter, we were required to suspend the trial after testing of nine
preparations in which a technical problem with the testing materials was
observed. Three of these nine preparations were successful and have been used by
surgeons on patients with successful results. Other preparations could not be
used by surgeons. However, the discovery of this problem with the materials will
help us to ensure that the final product is safe for patients.

The investigation and correction of the technical problem has provided us with
additional information on how to properly prepare and use the final product. On
the basis of this information, we believe that the complication which was
discovered during the trial was due to the quality of material used by the
manufacturer in the production of the medical device and not with the autologous
fibrin glue itself. The medical device we developed is manufactured by a third
party pharmaceutical group.

We have concluded our investigation of this problem and have determined that we
must replace the manufacturer and the preparation materials used in order to
restart the clinical trails required by AFSSAPS. We have not resumed clinical
trials as we have not yet reached an agreement with a new manufacturer. We are
in negotiations with several accredited medical device manufacturers which
specialize in the type of blood bags needed for our medical device. We cannot
give any specific date for resumption of clinical trails. We cannot assure that
we will be able to complete our clinical trails successfully. We anticipate
resuming the inclusion of patients and preparation before the end of 2005.
However, we may be unable to resume the patient inclusion in 2005. Failure to
successfully complete these trails could prevent us from obtaining authorization
to market this product and could negatively affect our financial condition.

Our technology underlying this application is protected by strong patent titles
owned by our wholly-owned subsidiary in many countries around the world where
patents applications were filed. Thus far, most of these have been granted and
issued by the official government patent offices in the countries where they
were filed, including most European Community countries, Switzerland, Canada,
Japan, Australia, and in the United States by the US Department of Commerce
Patent and Trademark Office.

Composite Biocoral and Growth Factor

For more than 15 years, studies have been undertaken to demonstrate that it is
possible to accelerate the bone repair process by combining growth factors with
a support matrix such as Biocoral(R). Some scientific research has shown that
Biocoral(R), as a biomaterial, represents a useful support for growth factors.
European clinical trials conducted over the past six years have had positive
results confirming the acceleration of the bone repair process. Our technology
underlying this application is protected by strong patents owned by our
wholly-owned subsidiary in many countries around the world where patents
applications were filed. Our patent applications in this application have thus
far been granted in every country where filed by their official government
patent offices, including 17 European Community countries, Canada, Japan,
Australia, and in the United States by the US Department of Commerce Patent and
Trademark Office.

Raw Materials and Manufacturing

The primary raw material used by us to manufacture Biocoral(R), is natural
coral. The coral used in our products is presently sourced from New Caledonia,
but is also found in abundance in wide areas of the Indian and Pacific Oceans.
We believe that our existing inventory of coral, together with coral sources
immediately available to us, are sufficient to meet our present and future
needs. To date, coral prices have been stable but no assurance can be had that
they will not rise. We are, however, unaware of any factors which are likely to
have a material adverse effect on our ability to obtain coral at a competitive
price.

For the past four years, the Company has collaborated with accredited scientists
as well as with a special laboratory located at one of most prestigious European
universities to develop a method of purification of its raw material "coral," in
order to remove the trace amounts (0.07% +/- 0.02%) of amino acids which were
present, without any change in chemical and crystalline structure of the coral.
As a result of these efforts, the small percentage of amino acid can now be
removed from our raw material. We are now working on some final technical issues
and expect to be able to put the method in place in our manufacturing process
before the end of 2005. The purification of raw materials permits us to improve
their performance. We also filed a patent for this purification method including
the


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final product issued from it. The patent will protect our main product for an
additional 20 years. The patent was filed in France in 2003, with PCT extension
in December 2004.

The Company's manufacturing facility, located in Saint-Gonnery in France,
complied with ISO 9002 norms and has been ISO 9002 rated since August 1995. On
October 25, 1996, the manufacturing facility was granted, in addition to the ISO
9002 certification, European Norms 46002 certification for the quality assurance
system set up in the manufacturing process of Biocoral(R), and, on December 30,
1996, the manufacturing facility was granted the EC certification allowing sales
of Biocoral(R), throughout the European Community which was renewed in 2001. The
EC certificate is valid until December 2006. The company has already made the
arrangements for the renewal of its EC certificate for last quarter 2006. During
October 2004, the manufacturing facility was audited by TUV Rheinland France and
its certifications have been renewed for an additional five years until 2009.
The manufacturing facility is classified as ISO 13485:00 certification. The
Company also obtained the extension of its certification to ISO 13485 (1996)
which allow the Company to continue offering its products in CANADA.
Additionally, we are audited once a year by TUV Rheinland France to maintain our
certifications.

We believe this facility is adequate to service our present and medium-term
future needs.

Competition

Our Biocoral(R), product competes with (i) natural bone obtained from autograft
procedures and allograft sources; and (ii) two other synthetic bone products,
one marketed in the United States by Interpore International, Inc. a
publicly-held company with significantly greater resources and distribution
capabilities than ours, and another that was approved by the FDA in May 1993.

In May 1993, a second bone graft substitute was approved by the FDA. This
product consists of hydroxyapatite-calcium phosphate and bovine collagen, which
must be mixed with the patient's own bone marrow. We believe that this
three-part system is more difficult to use due to the mixing process and has
inferior mechanical qualities. It also requires refrigeration, has a shorter
shelf life and raises the risks of adverse reaction in patients allergic to
bovine collagen, and poses risk of infection. In addition, many countries have
prohibited the commercialization of product utilizing bovine collagen as a base.

In October of 1998, Interpore introduced resorbable Pro Osteon. Pro Osteon is
harvested from marine coral exoskeletons that are hydrothermally converted to
hydroxyapatite, the natural mineral composition of bone. Pro Osteon's
interconnected porous structure closely resembles the porosity of human
cancellous or cortical bone. When placed in contact with viable bone, the
implant provides a strong, natural foundation for new bone ingrowth and offers
structural support during the healing process. Upon healing, the composite of
bone and Pro Osteon is comparable in strength to the surrounding bone.

Interpore recently announced that it has entered into a definitive agreement and
plan of merger with Biomet, Inc. pursuant to which Biomet will acquire all of
the outstanding shares of Interpore stock for cash. The closing of this
transaction is subject to Interpore stockholder approval, regulatory approvals
and other customary closing conditions.

Autograft and allograft bone have been used for graft material for a much longer
period of time than Biocoral(R), and similar materials, and in order to increase
our future sales of Biocoral(R), we will have to demonstrate to the medical
community the surgical and patient advantages, safety, efficacy, cost
effectiveness and clinical results of Biocoral(R). Most of our competitors have
substantially greater resources, larger market share and greater research and
development capabilities than ours and may, therefore, be expected to compete
aggressively and successfully in the markets for our products.

We believe that Biocoral(R), provides an attractive alternative to autograft and
allograft bone graft materials. In an autograft procedure, bone material is
first harvested from another part of the patient's skeleton and then, in a
second procedure, grafted to the site of the bone deficit. The harvesting
procedure increases operating time and expense, and can lead to complications
such as infection, excessive blood loss, chronic pain and deformity. When an
autograft is not feasible or desirable, allograft bone, typically obtained from
a cadaver, can be used. In order to


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maintain mechanical and biological properties, some allograft bone is not
sufficiently secure to avoid all risks of disease transmission. Therefore,
unlike Biocoral(R), which is a sterile and biocompatible material, allograft
bone carries the risks of implant rejection and the transmission of infectious
agents such as hepatitis and HIV. The use of Biocoral(R), entails none of these
risks and provides clinical results comparable to those of autograft material in
suitable condition for use.

Biocoral(R), was originally patented in France in 1979, in the United States in
1982, and in Japan in 1989. Our French subsidiary acquired the patent rights to
Biocoral(R), from ANVAR/CNRS, the French National Center for Scientific
Research, a French governmental agency. Through our subsidiaries, we have
developed an additional ten titles of patents for various applications and uses
of our products, such as osteoporosis remediation, autologous glue, combination
with growth factor, among others. Through these ten titles patent applications
in various countries in Europe, Canada, the United States, Japan, Australia, and
Switzerland, we own more than 185 patent applications around the world and
approximately 140 of which have thus far been granted by various countries by
their official government patent office, including most European Community
countries, Canada, Australia, Japan and in the United States by the US
Department of Commerce Patent and Trademark office.

Homologous fibrin sealant is biologically prepared from large plasma pools, with
the addition of other biologicals such as thrombin and anti fibrinolytics
products necessary for their activation. Even after a safety process has been
implemented, there can be residual unexpected viral transmission or
immunological problems. Safer autologous fibrin glue can be prepared by
different processes, but are not standardized and need other biologicals such as
thrombin and antifibrinolytics.

The new autologous fibrin glue prepared by our innovative medical device is
standardized and truly safe due to the use of calcium as an activator, without
the addition of any other biologicals such as thrombin or antifibrinolytics. In
addition, the composition remains constant in terms of components and
properties.

Our technology underlying this application is protected by strong patent titles
in many countries around the world where patent applications were filed. Thus
far, most of these have been granted and issued by the official government
patent offices in the countries where they were filed, including most European
Community countries, Switzerland, Canada, Japan, Australia, and in the United
States by the US Patent and Trademark Office.

One of our patent titles covers technology called "method for preparation of
biological adhesive enriched with platelet factors and application". Our patent
applications in this application have thus far been filed and granted by the
official government patent offices of various countries, including France and 15
European Community countries, Japan, and in the United States by the US
Department of Commerce Patent and Trademark Office. However, our patent
application covering this technology in Japan, after being granted in October
1999, received written opposition from Thermogensis Corp of California in June
2000. We were required to defend the patent against this opposition. The
Japanese Patent Office rejected the opposition in May 2003, and the patent was
reinstated.

We have been able to compete in Europe against producers that also sell products
in the United States. Despite their significantly greater resources, management
believes that it will, once our products have been approved by the FDA, be able
to be competitive with such companies because of the quality of our products.
See "Business -- Government Regulation." Biocoral(R), has been used in European
dental applications for more than 17 years. This use, together with the
scientific results of our in vivo use and clinical trials have demonstrated the
efficacy of using Biocoral(R), for bone regeneration in dental applications. We
compete with many businesses in the production and distribution of biomaterials
for filling bone cavities before rehabilitation of partially and totally
edentulous patients. These businesses compete primarily on the basis of product
performance and price, as well as customer loyalty and service. Biocoral(R),
also competes with bone grafts and bone graft substitutes. Companies selling
competitive products sometimes also sell dental implants, so bundling these
products is often a strategy. All of these businesses compete primarily on the
basis of product performance and price, as well as on customer loyalty and
service.

Management believes that our products are superior to our competitors' products.
We have identified the requirements for this application and approached a US
medical supply distributor in order to access the US market. An accredited
scientific team in the US has conducted human clinical studies with a 5 year
follow up to confirm bone reconstruction in oral application. This study
confirmed the stability of the successful result and management believes that
this study will facilitate FDA approval for our product used in this indication
when we file for FDA


<PAGE>

approval. We have begun to make arrangements for the commencement of clinical
trials for certain of our products with a long term/ medium term view toward FDA
approval thereof. In the interim, we will focus on increasing our European and
other sales of our products and entering into joint ventures with key strategic
partners for distribution of our products, research and development and the
like. No assurance can be given that any such arrangements will be reached or
that they will be profitable.

We believe that in certain cases, some of our competitors may be infringing on
our patents. We are exploring various options for enforcing these patents where
necessary. Bio Holdings, our wholly-owned subsidiary and the owner of all of our
patents, has sent warnings to these possible infringers in France, England and
Germany. The Company is considering pursuing legal action against these possible
infringers in United States.

Governmental Regulation

Biocoral(R), has been approved for marketing in Europe, Korea, South Africa,
Canada and Australia. Biocoral(R), has been approved for reimbursement in France
by French National Health Authority (Securite Sociale) and is listed on the
"Liste des Produits et Prestations Remboursables" (LPPR) reimbursement by French
National Health Authority. Our products are subject to significant government
regulation in the United States and other countries. To test clinically, and to
produce and mass market products for human diagnostic and therapeutic use in the
United States, we must comply with mandatory procedures and safety standards
established by the Food and Drug Administration ("FDA") and comparable state and
foreign regulatory agencies. Typically, such standards require that products be
approved by the government agency as safe and effective for their intended use
before being marketed for human applications.

There are two principal methods by which we may obtain FDA approval to market
regulated products in the United States. One method is to seek FDA approval
under the 510(k) procedure. Section 510(k) of the Food, Drug and Cosmetic Act
requires those device manufactures who must register to notify the FDA, at least
90 days in advance, of their intent to market a medical device. This is known as
Premarket Notification - also called PMN or 510(k). It allows the FDA to
determine whether the device is equivalent to a device already placed into one
of the three classification categories. Thus, "new" devices (not in commercial
distribution prior to May 28, 1976) that have not been classified can be
properly identified. Specially, medical device manufacturers are required to
submit a premarket notification if they intend to introduce a device into
commercial distribution for the first time or reintroduce a device that will be
significantly changed or modified to the extent that its safety or effectiveness
could be affected. Such change or modification could relate to the design,
material, chemical composition, energy source, manufacturing process, or
intended use.

In late 2004 we had discussions with the FDA, which indicated that Biocoral(R),
may be classified as a Class 3 Medical Device in the United States and may be
considered equivalent to Pro Osteon(TM) (Pro Osteon) which is a bone graft
substitute, already registered by the FDA. See "Competition." We believe that
the 510(k) procedure should apply to Biocoral(R). If the 510(k) procedure were
applied to Biocoral(R), an FDA audit would not be necessary before the
homologation could be granted. To the best of our knowledge, the FDA can require
an audit at any time.

An accredited scientific team in the US has conducted human clinical studies
with a five-year follow-up to confirm bone reconstruction in oral application.
This study confirmed the stability of the successful result and management
believes that this study will facilitate FDA approval of our product used in
this indication when we file for such approval.

The alternative method is to obtain premarket approval ("PMA") from the FDA.
Under the PMA procedure, the applicant must obtain an Investigational Device
Exemption (IDE) before beginning the substantial clinical testing required to
determine the safety, efficacy and potential hazards of the products. The review
period under the PMA procedure may last for several years. The FDA also imposes
requirements on manufacturers and sellers of products under its jurisdiction,
such as labeling, manufacturing practices, record keeping and reporting.
Obtaining such approvals in the US could take some time and involve substantial
expenditures. No clinical testing on humans may be undertaken in the United
States without first obtaining an IDE from the FDA.


<PAGE>

Employees

Except for our wholly-owned French subsidiary, we currently have no employees
other than our officers and directors who devote as much time as they believe
necessary to conduct our business and maintain our operations. Inoteb currently
has nine employees all of whom are full time. In addition, we engage the
services of various scientific and research consulting teams under consulting
contracts, working on research and development projects in different
laboratories and hospitals in France and other countries.

Subsidiaries

The company conducts its operation in Europe via several subsidiaries, including
its French and UK subsidiaries and others.

BioHoldings International Limited

BioHoldings International Limited is one of the company's wholly-owned
subsidiaries which was formed to hold and manage the principal patents of the
company. We own all of BioHoldings's outstanding shares, and cover all of
BioHolding's expenses. BioHoldings. BioHoldings:

      -     deposits and files all patents and follows up with the patent
            counsels and patent offices in each country where the patents are
            filed;

      -     extends filing territory and works to protect our patents; and

      -     looks after and maintains patents.

Item 2. Description of Property.

Our French subsidiary currently leases its principal executive offices from an
unrelated third party for an aggregate annual rent of approximately $56,000
(approximately 46,000 euros).

We previously leased our manufacturing facility in Saint Gonnery in the west of
France until the year 2001. We now own the property which includes a reception
area, laboratory-chemistry and bacteriology area, workshop maintenance area,
stock F area, stock SM area, laboratory-prothes area, stock 1 area, room
dresses, radio operator area, raw material area, an local conditioning and
control, drying and washing area, management and accountancy area.

Item 3. Legal Proceedings.

There is no material litigation pending against us at this time.

Item 4. Submission of Matters to a Vote of Security Holders.

None.


<PAGE>

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

At December 31, 2004 there were 11,353,818 shares of our common stock issued and
outstanding. Unless these securities are registered under the Securities Act of
1933, as amended, or exempt under another provision of the Securities Act, these
securities are ineligible for sale in the public market. Sales in the public
market of substantial amounts of our common stock that are presently restricted
could adversely affect prevailing market prices.

Our common stock trades on the OTC Bulletin Board. The following table sets
forth information regarding the high and low closing price per share for our
common stock on the OTC Bulletin Board as reported by Commodity Systems Inc. on
Yahoo.com. Such prices do not necessarily reflect actual transactions and do not
include retail mark-ups, mark-downs or commissions.

      Quarter Ended                      High                 Low
      -------------                      ----                 ---
      December 31, 2004                  $15.50               $10.05
      September 30, 2004                 $20.00               $ 7.00
      June 30, 2004                      $35.00               $20.00
      March 31, 2004                     $95.00               $40.00

      December 31, 2003                  $32.00               $32.00
      September 30, 2003                 $112.00              $20.00
      June 30, 2003                      $250.00              $10.90
      March 31, 2003                     $13.00               $ 5.00

Holders

As of December 31, 2004 there were approximately more than 400 holders of record
of the shares of our common stock including several European financial and
portfolio institutions.

Dividends

We have paid no cash dividends on our equity securities to date and do not
anticipate the payment of cash dividends on our equity securities in the near
future. We paid a dividend of one share of our common stock for each three
shares owned on December 18, 1995 and paid, in December 1996, another stock
dividend of one share for each three shares owned as of November 6, 1996.

Recent Sales of Unregistered Securities

During 2004, the Company sold 7% convertible promissory notes payable (the "7%
Notes") in the aggregate principal amount of $650,000 to "accredited investors"
only in a private placement intended to be exempt from registration pursuant to
the provisions of Regulation D of the Securities Act of 1933. $350,000 of this
amount was received in 2004 and $300,000 was received in January 2005.

We believe that the sales of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act of 1933, as amended, or Regulation D promulgated thereunder. The
recipients of securities in each such transaction represented their intentions
to acquire the securities for investment only and not with a view to or for sale
in connection with any distribution thereof and appropriate legends were affixed
to the instruments representing such securities issued in such transactions. All
recipients either received adequate information about us or had adequate access,
through their relationships with us, to such information.


<PAGE>

On December 21, 2004, the Company approved requests from certain note holders
for the conversion of $ 562,584 of principal and interest of 6 and 7% Notes into
shares of the Company's common stock. As a result of the conversion, the Company
charged $562,584 to interest expenses in the year ended December 31, 2004 based
on the beneficial conversion feature of these note.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion and analysis should be read in conjunction with our
consolidated financial statements and notes included in the financial statement
contained elsewhere in this annual report.

            Summary of Significant Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of
operations is based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these consolidated financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues, and expenses, and related disclosures
of contingent assets and liabilities. On an on-going basis, we evaluate our
estimates, including those related to accounts receivable, property and
equipment, stock based compensation and contingencies. We base our estimates on
historical experience and on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The assumptions and bases
for estimates used in preparing our consolidated financial statements are set
forth as significant accounting policies in Note 3 of the notes to the
consolidated financial statements included in this annual report and are
summarized below:

Intangible Assets. Intangible assets consist of expenses incurred on approved
patents and on the successful defense of approved patents. Amortization is
computed using the straight-line method over the estimated period of benefit.
The valuation of these intangible assets is based upon estimates as to the
current value of each patent and the period of benefit and such estimates are
subject to fluctuations. The value of a particular patent could fluctuate based
upon factors, such as competing technology or the creation of new applications,
which are not accounted for in making, but could affect, the estimates used.

Allowance for Doubtful Accounts. We estimate uncollectibility of trade accounts
receivable by analyzing historical bad debts, customer concentrations, customer
creditworthiness and current economic trends when evaluating the adequacy of the
allowance for doubtful accounts. We consider these factors to be the best
available indicators of the likelihood of collection of trade accounts
receivable. However, they are subject to uncertainty, and collectibility cannot
be precisely determined.

Investment in Limited Partnership. We own an investment in a limited
partnership, which is accounted for under the equity method of accounting. Under
this method, the initial investment is recorded at cost. Subsequently, the
investment is increased or decreased for our pro-rata share of the partnership's
income and losses. No ready trading market exists for this partnership interest
by which we can determine with any certainty its value. Moreover, because it is
initially valued at cost, which in turn is based upon negotiations between us
and the limited partnership, this initial valuation may or may not reflect the
value which an independent third party would assign to the partnership interest.
This investment is illiquid, and, should we determine to liquidate it, we may be
unable to do so at a price that equals or approximates the valuation reflected
on our balance sheet.

Results of Operations for the Year Ended December 31, 2004 Compared to the Year
Ended December 31, 2003

Net sales, which are solely attributable to Inoteb, SA ("Inoteb"), our
wholly-owned French subsidiary, totaled approximately $352,000 for the year
ended December 31, 2004, a decrease of approximately $10,000 (or approximately
2.8%) from approximately $362,000 for the year ended December 31, 2003. This
decrease is partially attributable to a decrease in sales of products in the
maxillocraniofacial surgery area in France and the orthopedic and neurosurgery
markets during 2004. This decrease also resulted from stock (storage) levels
accumulated at our


<PAGE>

distributors in particular in Greece where we had no orders in 2004 compared to
2003 and to a greater overall reduction in sales activity for the year ended
December 31, 2004 versus the year ended December 31, 2003.

Cost of sales was approximately $172,000 for the year ended December 31, 2004,
an increase of approximately $115,000 (or approximately 200%) from approximately
$57,000 for the year ended December 31, 2003. The main factor contributing to
this decrease was a variation of gross inventories and the impact of booking at
the year ended December 31, 2003 of gross inventories of resterilizable goods.
It is also partially due to the revision in the method of calculation of cost of
sales under GAAP in 2003.

As discussed above in reference to net sales and cost of sales, all of our sales
are made outside the United States and as such, we primarily account for
earnings and costs in euros. In order to comply with GAAP, our financial
statements as well as the following discussion are in terms of U.S. dollars.
Accordingly, the expenses discussed below may partially differ as a result of
fluctuating exchange rates in addition to the other factors discussed.

Operating expenses were approximately $894,000 during the year ended December
31, 2004, an increase of approximately $140,000 (approximately 18.6%) from
approximately $754,000 for the year ended December 31, 2003. This increase was
primarily due to increased costs in our wholly-owned subsidiary, Bio Holdings
International LTD, related to additional patent costs in 2004.

Consulting and professional fees during the year ended December 31, 2004 were
approximately 261,000, an increase of $18,000 (or approximately 7.4%) compared
to approximately $243,000 during the year ended December 31, 2003. Most of these
fees are incurred in Europe, and as such, we primarily account for them in
Euros. A portion of the increase resulted from exchange rate fluctuations and
part of increase was attributable to consulting fees associated with the
development of the next generation of products and professional fees associated
with the Sarbanes-Oxley Act of 2002.

Other income (net of expenses) totaled approximately $66,000 of income for the
year ended December 31, 2004 as compared to approximately $130,000 of expense
for the year ended December 31, 2003. This decrease is primarily due the accrual
of approximately $54,000 for estimated litigation.

As a result of the above, our net loss for the year ended December 31, 2004
totaled approximately $649,000 or $.06 per share compared to a net loss of
approximately $319,000 or $.03 per share for the year ended December 31, 2003.
These losses per share were based on weighted average common shares outstanding
of 11,299,267 & 11,297,572 for the years ended December 31, 2004 and 2003
respectively.

              Financial Condition, Liquidity and Capital Resources

As shown in the accompanying consolidated financial statements, we had net
losses of approximately $649,000 and $319,000 in 2004 and 2003, respectively.
The net loss in 2004 and 2003 included a nonrecurring income item relating to
forgiveness of debt of approximately $297,800 and $259,800 respectively
Management believes that it is likely that we will continue to incur net losses
through at least 2004. We had a working capital deficiency and stockholders'
deficiency of approximately $38,000 and $2,126,800 at December 31, 2004,
respectively.

During 2004, we sold additional 7% convertible promissory notes in the aggregate
principal amount of $650,000. $350,000 of this amount was received during 2004
and $300,000 in January 2005. We also own marketable securities which are
classified as available-for-sale and consisted of equity securities with an
aggregate fair value of approximately $247,800 at December 31, 2004.

Management plans to seek additional equity and/or debt financing and/or, if
necessary, request that our lenders convert our existing obligations to common
stock. Accordingly, management believes that we have sufficient liquid resources
to operate through at least December 31, 2005 and will have the ability to make
or defer the payment of our obligations as they come due. For the year ended
December 31, 2004, we had negative cash flow from operating activities of
approximately $620,000. We had cash provided by financing activities of
approximately $929,000. Our net loss of approximately $649,000 increased our
accumulated deficit to approximately $19,427,000 at December 31, 2004.


<PAGE>

During the year ended December 31, 2003, we sold a portion of our investments
available for sale and received approximately $23,100 in proceeds and realized a
loss on the transaction of approximately $28,300.

Our marketable securities are classified as available-for-sale and consisted of
equity securities with an aggregate fair value of approximately $247,000 and a
cost totaling approximately $646,000 at December 31, 2004. The net unrealized
holding loss was approximately $399,000 for the year ended December 31, 2004
which increased accumulated other comprehensive loss, a component of total
stockholders' deficiency to approximately $611,600 as of December 31, 2004.

                           Forward-Looking Statements

In this annual report, we include some forward-looking statements that involve
substantial risks and uncertainties and other factors that may cause our
operational and financial activity and results to differ from those expressed or
implied by these forward-looking statements. In many cases, you can identify
these statements by forward-looking words such as "may," "expect," "anticipate,"
"believe," "estimate," "plan," "intend" and "continue," or similar words. You
should read statements that contain these words carefully because they discuss
our future expectations, contain projections of our future results of operations
or of our financial condition, or state other "forward-looking" information.
Statements relating to restarting of clinical trials for certain of its products
or receiving certain revenues or proceeds constitute forward-looking statements
under the federal securities laws. Such statements are subject to certain risks
and uncertainties that could cause the actual timing of such revenues, clinical
trials or other events to differ materially from those projected.

You should not place undue reliance on these forward-looking statements. The
section captioned "Management's Discussion and Analysis of Financial Condition
and Plan of Operations," as well as any cautionary language in this annual
report, provide examples of risks, uncertainties and events that may cause our
actual results to differ materially from our expectations.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements.

We do not undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Because of the risks and uncertainties, the forward-looking
events and circumstances discussed in this annual report might not occur.

Item 7. Financial Statements

See pages F-1 through ___ attached hereto.


<PAGE>

               REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT

To the Board of Directors/Audit Committee
Biocoral, Inc.

We have audited the accompanying balance sheet of Biocoral, Inc. as of December
31, 2004 and the related statement of operations, stockholders' equity, and cash
flows for year then ended. 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 audit. The statements for 2003 and prior were
audited by another auditor.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Biocoral, Inc. as of December
31, 2004 and the results of its operations and cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.


/s/ Shelley International CPA

Shelley International CPA

May 15, 2005
Mesa, Arizona


<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Biocoral, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Biocoral, Inc.
and Subsidiaries (the "Company") as of December 31, 2003, and the related
consolidated statements of operations, changes in stockholders' deficiency and
comprehensive loss and cash flows for the year then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

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

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


/s/ WEINBERG & COMPANY, P.A.

WEINBERG & COMPANY, P.A.

Boca Raton, Florida
April 14, 2004


<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                     ASSETS
                                                                    December 31,    December 31,
                                                                        2004            2003
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
Current Assets
   Cash                                                             $    129,508    $     88,489
   Investments in marketable securities                                  247,811         208,189
   Accounts receivable, net of allowance for doubtful accounts
     of $2,700 for 2004 and $1,900 for 2003                               53,276         137,200
   Inventories                                                           156,500         183,600
   Prepaid expenses and other current assets                              37,507           1,200
                                                                    ------------    ------------

     Total Current Assets                                                624,602         618,678

Property and equipment, net                                               21,500          24,100
Restricted cash held in escrow                                            11,049          11,049
Investment in limited partnership                                         20,209          35,209
Patents, net                                                             105,156         111,140
Other assets                                                              15,320          12,500
                                                                    ------------    ------------

       Total Assets                                                 $    797,836    $    812,676
                                                                    ============    ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current  Liabilities
   Accounts payable                                                 $    547,747    $    576,764
   Current portion of due to officer                                     106,258         390,000
   Accrued interest payable                                                8,951         317,707
   Current portion of long-term debt                                          --          45,300
                                                                    ------------    ------------

     Total Current Liabilities                                           662,956       1,329,771

Due to Officer, net of current portion                                   412,500              --
Long-term debt, net of current portion                                 1,800,000       1,554,253
Deferred employee benefits                                                49,200          45,700
                                                                    ------------    ------------

     Total Liabilities                                                 2,924,656       2,929,724
                                                                    ------------    ------------

Commitments and contingencies

Stockholders' Deficiency
   Preferred stock; par value $.001 per share; 1,000,000 shares
     authorized; none issued                                                  --              --
   Common Stock; $.001 par value;  100,000,000 shares authorized;
     11,353,818 shares and 11,297,573 issued and outstanding,
     respectively                                                         11,354          11,298
   Additional paid-in capital                                         17,900,090      17,337,292
   Accumulated other comprehensive loss                                 (611,633)       (687,629)
   Accumulated deficiency                                            (19,426,631)    (18,778,009)
                                                                    ------------    ------------

     Total Stockholders' Deficiency                                   (2,126,820)     (2,117,048)
                                                                    ------------    ------------

       Total Liabilities and Stockholders' Deficiency               $    797,836    $    812,676
                                                                    ============    ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-1
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                      Years ended December 31,
                                                        2004           2003
                                                     -----------    -----------
Net sales                                            $   351,600    $   361,900
Cost of sales                                            172,100         57,200
                                                     -----------    -----------

   Gross Profit                                          179,500        304,700
                                                     -----------    -----------

Operating Expenses
   Research and development                              245,590        178,149
   Consulting and professional fees                      261,255        242,754
   Depreciation and amortization                          12,284         18,784
   General and administrative                            375,042        314,310
                                                     -----------    -----------

     Total Operating Expenses                            894,171        753,997
                                                     -----------    -----------

   Loss From Operations                                 (714,671)      (449,297)
                                                     -----------    -----------

Other Income (Expense)
   Interest, net                                        (162,175)       (88,536)
   Equity in loss of partnership                         (15,000)       (63,336)
   Realized loss on sale of marketable securities             --        (28,349)
   Dividend income                                            --         18,311
   Foregivenss of debt                                   297,800        259,836
   Litigation contingency loss                           (54,576)            --
   Other                                                      --         32,195
                                                     -----------    -----------

     Total Other Income (Expense)                         66,049        130,121
                                                     -----------    -----------

Net (Loss) Income                                       (648,622)      (319,176)

Other Comprehensive Income (Loss)
   Foreign translation gain (loss)                        36,374       (193,715)
   Unrealized gain (loss) on marketable securities        39,622        139,268
                                                     -----------    -----------

Comprehensive (Loss) Income                          $  (572,626)   $  (373,623)
                                                     ===========    ===========

Net (loss) income per share

     Basic                                           $     (0.06)   $     (0.03)
                                                     ===========    ===========
     Diluted

Weighted average number of shares outstanding

     Basic                                            11,299,267     11,297,573
                                                     ===========    ===========
     Diluted

The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-2
<PAGE>

                          BIOCORAL, INC. AND SUBSIDIARY
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                             AND COMPREHENSIVE LOSS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                                 Common Stock            Additional        Other
                                                          ---------------------------     Paid-in      Comprehensive    Accumulated
                                                             Shares         Amount        Capital          Loss         Deficiency
                                                          ------------   ------------   ------------   -------------   ------------
<S>                                                         <C>          <C>            <C>            <C>             <C>
Balance, January 1, 2003                                    11,297,573   $     11,298   $ 17,337,292   $   (633,182)   $(18,458,833)

Other comprehensive gain - increase in market value of
  marketable securities                                             --             --             --        139,268              --

Other comprehensive loss - foreign currency translation             --             --             --       (193,715)             --

Net loss                                                            --             --             --             --        (319,176)
                                                          ------------   ------------   ------------   ------------    ------------

Balance, December 31, 2003                                  11,297,573         11,298     17,337,292       (687,629)    (18,778,009)

Net loss                                                                                                                   (648,622)

Other comprehensive gain - increase in market value of
  marketable securities                                             --             --             --         39,622              --

Other comprehensive gain - foreign currency translation             --             --             --         36,374              --
                                                          ------------   ------------   ------------   ------------    ------------

Total comprehensive income                                          --             --             --         75,996        (648,622)

Conversion of convertible debentures                            56,246             56        562,798             --              --
                                                          ------------   ------------   ------------   ------------    ------------

Balance, December 31, 2004                                  11,353,818   $     11,354   $ 17,900,090   $   (611,633)    (19,426,631)
                                                          ============   ============   ============   ============    ============

<CAPTION>

                                                              Total
                                                           Stockholders'   Comprehensive
                                                            Deficiency         Loss
                                                           -------------   -------------
<S>                                                        <C>
Balance, January 1, 2003                                   $ (1,743,425)

Other comprehensive gain - increase in market value of
  marketable securities                                         139,268    $    139,268

Other comprehensive loss - foreign currency translation        (193,715)       (193,715)

Net loss                                                       (319,176)       (319,176)
                                                           ------------    ------------

Balance, December 31, 2003                                   (2,117,048)   $   (373,623)

Net loss                                                       (648,622)   $   (648,622)

Other comprehensive gain - increase in market value of
  marketable securities                                          39,622          39,622

Other comprehensive gain - foreign currency translation          36,374          36,374
                                                           ------------    ------------

Total comprehensive income                                   (2,689,674)       (572,626)

Conversion of convertible debentures                            562,854              --
                                                           ------------    ------------

Balance, December 31, 2004                                 $ (2,126,820)   $   (572,626)
                                                           ============    ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-3
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                             --------------------------
                                                                2004           2003
                                                             -----------    -----------
<S>                                                          <C>            <C>
Cash flows from operating activities
   Net loss                                                  $  (648,622)   $  (319,176)
   Adjustments to reconcile net loss to net cash used in
     operating activities
       Depreciation and amortization                              12,284         18,784
       Equity in loss of partnership                              15,000         63,336
       Forgiveness of debt                                      (297,800)      (259,836)
       Provision for doubtful accounts                               800            900
       Realized loss on sale of marketable securities                 --         28,349
   Change in operating assets and liabilities
     Accounts receivable                                          83,124        (63,900)
     Inventories                                                  27,100        (97,500)
     Prepaid expenses and other current assets                   (36,307)        (1,200)
     Other assets                                                 (2,820)        (2,700)
     Accounts payable and accrued interest payable                95,081        146,772
     Current portion of due to officer                          (283,742)       207,500
     Due to officer                                              412,500
     Deferred employee benefits                                    3,500         10,100
                                                             -----------    -----------

Net cash (used in) provided by operating activities             (619,902)      (268,571)
                                                             -----------    -----------

Cash flows from investing activities
   Purchase of property and equipment                                 --         (7,000)
   Proceeds from sale of marketable securities                        --         23,102
                                                             -----------    -----------

Net cash provided by investing activities                             --         16,102
                                                             -----------    -----------

Cash flows from financing activities
   Restricted cash held in Escrow                                     --      1,000,000
   Principal payments on long-term debt                          (41,000)    (1,000,000)
   Proceeds from long-tem debt                                   670,000        499,383
                                                             -----------    -----------

Net cash provided by (used in) financing activities              629,000        499,383

Effects of changes in exchange rates on cash                      31,921       (201,195)
                                                             -----------    -----------

Net increase in cash                                              41,019         45,719
                                                             -----------    -----------

Cash, beginning of year                                           88,489         42,770
                                                             -----------    -----------

Cash, end of year                                            $   129,508    $    88,489
                                                             ===========    ===========

Supplemental Statements of Cash Flows Information
                                                                 2004           2003
                                                                 ----           ----
       Conversion of Interest and advances to common stock   $   462,854    $        --
                                                             ===========    ===========
       Conversion of 7% notes to common stock                $   100,000    $        --
                                                             ===========    ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                      F-4
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 1 - DESCRIPTION OF BUSINESS

      Biocoral, Inc. ("Biocoral") was incorporated under the laws of the State
      of Delaware on May 4, 1992. Biocoral is a holding company that conducts
      its operations primarily through a wholly-owned French subsidiary, Inoteb
      SA ("Inoteb"). Biocoral, Inc., Bio Holdings International Ltd, Inoteb and
      Biocoral, Inc.'s other subsidiaries are referred to collectively herein as
      the "Company."

      The Company's operations are in one business segment which consists
      primarily of researching, developing, manufacturing and marketing patented
      high technology biomaterials, bone substitute materials made from coral
      and other orthopedic, oral and maxillo-facial products, including products
      marketed under the trade name of Biocoral. All of the Company's operations
      are conducted from France. The Company has obtained regulatory approvals
      to market its products throughout Europe, Canada and certain other
      countries. The Company owns various patents for its products which have
      been registered and issued in the United States, Canada, Japan, Australia
      and various countries throughout Europe. However, the Company has not
      applied for the regulatory approvals needed to market its products in the
      United States.

NOTE 2 - LIQUIDITY

      The Company had net losses of approximately $648,600 and $319,000 in 2004
      and 2003, respectively. The net loss in 2004 and 2003 includes a
      nonrecurring income item relating to forgiveness of debt of approximately
      $297,800 and $259,800 (See Note 8(A)). Management believes that it is
      likely that the Company will continue to incur net losses through at least
      2005. In 2004, the Company had a working capital deficiency of
      approximately $38,354 and a working capital deficiency of approximately
      $711,000 for 2003. The Company also had stockholders' deficiency of
      approximately $2,126,820 and approximately $2,117,000 at December 31, 2004
      and 2003 respectively. During January 2005, the Company received
      approximately $300,000 relating to the issuance of the 7% convertible
      promissory notes payable (See Notes 8(C) and 15). In addition, the Company
      had as of December 31, 2004 approximately $247,900 of investments in
      available-for-sale securities. Management believes that these funds will
      provide sufficient working capital to operate through 2005.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation

      The accompanying consolidated financial statements are presented in United
      States dollars under accounting principles generally accepted in the
      United States of America.

      Principles of Consolidation

      The accompanying consolidated financial statements include all of the
      accounts of Biocoral, Inc. and its wholly-owned subsidiaries, Bioholdings
      International, Ltd., Cabestan, Inc., Immo Distribution, Ltd., 3H
      ,Healthcare and High Biotechnology Innovation, Inc. (2004 year only), and
      Inoteb, S.A., for the years ended December 31, 2004 and 2003. Cabestan,
      Inc. 3H and Immo Distribution are not operating subsidiaries. All material
      intercompany balances and transactions have been eliminated in
      consolidation.


                                      F-5
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

      Cash and Cash Equivalents

      The Company considers cash on hand, cash in banks, certificates of
      deposit, time deposits and other short term securities with maturities of
      three months or less when purchased as cash and cash equivalents. There
      were no cash equivalents held by the Company at December 31, 2004 and
      2003.

      Concentration of Credit Risk

      Concentrations of credit risk with respect to trade accounts receivable
      are limited due to the large number of customers and their dispersion
      across geographic areas around the world. However, all trade accounts
      receivable are concentrated in the health care sector. The Company does
      not currently see a concentrated credit risk associated with these
      receivables, even though repayment is dependent upon the financial
      stability of this industry and the respective country's national
      economies.

      Allowance for Doubtful Accounts

      The Company estimates uncollectibility of trade accounts receivable by
      analyzing historical bad debts, customer concentrations, customer credit
      worthiness and current economic trends when evaluating the adequacy of the
      allowance for doubtful accounts.

      Investments in Marketable Securities

      The Company invests in European common stocks. Available-for-sale
      securities are carried at fair market value, with unrealized gains and
      losses, net of tax, reported as a separate component of stockholders'
      deficiency. In determining realized gains and losses, the cost of the
      securities sold is based upon the specific identification method. The
      Company reviews each marketable security to determine whether a decline in
      fair market value in other than temporary. If the decline is deemed other
      than temporary, the cost basis of the individual security is written down
      to the fair value as a new cost basis and the amount written down is
      included in operations as a realized loss.

      Inventories

      Inventories are stated at the lower of cost or market, determined on the
      first-in, first-out ("FIFO") method.

      Property and Equipment

      Property and equipment are recorded at cost less accumulated depreciation
      and amortization. Depreciation and amortization are computed using the
      straight-line method over the estimated useful lives of the assets.
      Estimated useful lives are 25 years for building and building
      improvements, two to twelve years for equipment and furnishings and one
      year for computer software. Normal maintenance and repairs of property and
      equipment are expensed as incurred, while renewals, betterments and major
      repairs that materially extend the useful live of the property and
      equipment are capitalized.


                                      F-6
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

      Investment in Limited Partnership

      The Company owns a 9.3% interest in Bensenville Associates Ltd., a limited
      partnership, which is accounted for under the equity method of accounting.
      Under this method, the initial investment is recorded at cost.
      Subsequently, the investment is increased or decreased for the Company's
      pro-rata share of the partnership's income and losses. The Company's share
      of the loss in the partnership for the years ended December 31, 2004 and
      2003 was approximately $15,000 and $63,336, respectively, and the book
      value of the investment at December 31, 2004 and 2003 was $20,209 and
      $35,209, respectively.

      Intangible Assets

      Intangible assets consist of acquired patents, expenses incurred on
      approved patents and on the successful defense of approved patents.
      Amortization is computed using the straight line method over the estimated
      period of the benefit.

      Impairment of Long-Lived Assets

      In accordance with Statement of Financial Accounting Standards ("SFAS")
      No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets",
      the Company reviews long-lived assets for impairment whenever
      circumstances and situations change such that there is an indication that
      the carrying amounts may not be recovered. In such circumstances, the
      Company will estimate the future cash flows expected to result from the
      use of the asset and its eventual disposition. Future cash flows are the
      future cash inflows expected to be generated by an asset less the future
      outflows expected to be necessary to obtain those inflows. If the sum of
      the expected future cash flows (undiscounted and without interest charges)
      is less than the carrying amount of the asset, the Company will recognize
      an impairment loss to adjust to the fair value of the asset. Management
      believes that there are no impaired long-lived assets at December 31, 2004
      and 2003.

      Income Taxes

      The Company accounts for deferred taxes in accordance with SFAS No. 109
      "Accounting for Income Taxes." Under this method, deferred tax assets and
      liabilities are determined based on differences between financial
      reporting and tax basis of assets and liabilities. Deferred tax assets and
      liabilities are measured using enacted tax rates and laws that will be in
      effect when the differences are expected to reverse. Valuation allowances
      are established when necessary to reduce deferred tax assets to the amount
      expected to be realized.

      Revenue Recognition

      Sales are recognized when the earnings process is complete and
      collectibility is reasonably assured, which is usually when the goods are
      shipped to customers. Amounts billed related to shipping and handling are
      included in revenue.

      Shipping and Handling Costs

      Shipping and handling costs are included in cost of sales in accordance
      with guidance established by the Emerging Issues Task Force, issue No.
      00-10, "Accounting for Shipping and Handling Costs." During 2004 and 2003,
      there were no material shipping and handling costs.


                                      F-7
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

      Research and Development

      The Company expenses all research and development costs as incurred.

      Stock Based Compensation

      Effective January 1, 2003 the Company adopted SFAS No. 148, "Accounting
      for Stock-Based Compensation-Transition and Disclosure" ("SFAS 148"). SFAS
      148 amends SFAS No. 123 "Accounting for Stock-Based Compensation" ("SFAS
      123"), and provides alternative methods of transition for a voluntary
      change to the fair value based method of accounting for stock-based
      employee compensation. In addition, SFAS 148 amends the disclosure
      requirements of SFAS 123 to require more prominent and more frequent
      disclosures in financial statements of the effects of stock-based
      compensation. The interim disclosure requirements of SFAS 148 are
      effective for interim periods beginning after December 15, 2002. The
      Company's stock-based compensation related to employees and non-employee
      directors is recognized using the intrinsic value method in accordance
      with Accounting Principles Board Opinion No. 25, "Accounting for Stock
      Issued to Employees," and thus there is no compensation expense for
      options granted with exercise prices equal to the fair value of the
      Company's common stock on the date of the grant. With respect to stock
      based compensation granted to nonemployees, the Company records an expense
      equal to the fair value of the option on the measurement date, which is
      either the earlier of the date at which a commitment for performance is
      reached or the date at which the service is complete.

      Computation of Net Loss per Share

      The Company presents basic loss per share and, if applicable, diluted
      earnings per share pursuant to the provisions of SFAS No. 128, "Earnings
      per Share" ("SFAS 128").

      Under SFAS 128 basic net loss per share is computed by dividing the net
      loss for the year by the weighted average number of shares outstanding
      during the year. Diluted net earnings per share is computed by dividing
      the net earnings for the year by the weighted average number of common
      share and common share equivalents outstanding during the year. Common
      stock equivalents would arise from the exercise of stock options. For the
      year ended December 31, 2004, the Company granted 200,000 shares and
      cancelled contracts granted June 30, 1999 totaling 34,270 shares. For the
      year ended December 31, 2003, none were issued. Diluted net loss has not
      been disclosed for the years ended December 31, 2004 and 2003 as the
      effect is anti-dilutive.

      Foreign Currency Translation and Transactions

      Assets and liabilities of the foreign subsidiaries are translated at
      current exchange rates and related revenues and expenses are translated at
      average exchange rates in effect during the year. Resulting translation
      adjustments, if material, are recorded as accumulated other comprehensive
      loss which is a separate component of stockholders' deficit.

      Comprehensive Loss

      The foreign currency translation gains (losses) resulting from the
      translation of the financial statements of the Company's subsidiaries
      expressed in Euros to United States dollars are reported as accumulated
      other comprehensive income (loss) in the consolidated statement of changes
      in stockholders' deficiency and comprehensive loss.


                                      F-8
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

      Comprehensive Loss

      The unrealized gains and losses, net of tax, resulting from the valuation
      of available-for sale securities at their fair market value at year end
      are reported as other comprehensive income (loss) in consolidated
      statement of changes in stockholders' deficiency and comprehensive loss.

      The change in accumulated unrealized loss on investments in marketable
      securities during the year ended December 31, 2004 and 2003 was as
      follows:

<TABLE>
<CAPTION>
                                                                          2004         2003
                                                                          ----         ----
<S>                                                                    <C>          <C>
      Beginning accumulated unrealized loss on marketable securities   $(437,868)   $(577,391)
      Unrealized gain (loss) arising during the year                      39,622      105,574
      Reclassification adjustment gain                                        --       33,949
                                                                       ---------    ---------
      Ending accumulated unrealized loss on marketable securities      $(398,246)   $(437,868)
                                                                       =========    =========
</TABLE>

      Financial Instruments

      The carrying amounts of financial instruments, including cash, accounts
      receivable, accounts payable and accrued interest payable approximate fair
      value at December 31, 2004 and 2003, due to the relatively short maturity
      of the instruments. The investment in limited partnership is recorded
      using the equity method and it is not practical to estimate the fair value
      of this investment without incurring excessive cost, as this investment is
      not publicly traded. Long-term debt approximates fair value based upon
      based upon debt terms available for entities under similar terms.

      Use of Estimates

      The preparation of consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America
      requires management to make estimates and assumptions that affect the
      reported amounts of assets and liabilities and the disclosure of
      contingent assets and liabilities at the date of the financial statements
      and revenues and expenses during the reporting period. Actual results
      could differ from those estimates.

      Recent Accounting Pronouncements

      In November 2004, the FASB issued SFAS No. 151 "Amendment of ARB No. 43,
      Chapter 4, Inventory Pricing". This statement clarifies the accounting for
      abnormal amounts of idle facility expense, freight, handling costs, and
      wasted material (spoilage). The statement requires that those items be
      recognized as current-period charges regardless of whether they meet the
      criterion of "so abnormal". In addition, this statement requires that
      allocation of fixed production overheads to the costs of conversion be
      based on the normal capacity of the production facilities. The provisions
      of this statement shall be effective for inventory costs incurred during
      fiscal years beginning after June 15, 2005. Earlier application is
      permitted for inventory costs incurred during fiscal years beginning after
      the date this Statement is issued. The provisions of this Statement shall
      be applied prospectively. Management believes this statement will not have
      a material impact on the Company's consolidated financial statements.

      Reclassifications

      Certain reclassifications have been made to the 2003 financial statements
      to conform to the 2004 presentation.


                                      F-9
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 4 - INVESTMENTS IN MARKETABLE SECURITIES

      During 2004 and 2003, the Company classified its investments in marketable
      securities as available for sale, and those that intend to hold for more
      than one year as non-current. Unrealized holding gains and losses are
      reported as a separate component of stockholders' deficiency as part of
      accumulated other comprehensive income (loss) until realized. The
      following is a reconciliation of original cost to fair market value for
      securities held as of December 31:

<TABLE>
<CAPTION>
                                                                           2004           2003
                                                                        ----------     ----------
<S>                                                                     <C>            <C>
      Investments in marketable securities, at cost                     $  646,057     $  646,057
      Unrealized loss                                                     (398,246)      (437,868)
                                                                        ----------     ----------
      Investment in marketable securities at fair market value             247,811        208,189
      Less current portion                                                (247,811)      (208,189)
                                                                        ----------     ----------

      Non-current portion                                               $       --     $       --
                                                                        ==========     ==========
</TABLE>

NOTE 5 - INVENTORIES

      Inventories consist of the following at December 31:

<TABLE>
<CAPTION>
                                                                           2004           2003
                                                                        ----------     ----------
<S>                                                                     <C>            <C>
              Raw materials                                             $   23,300     $   21,700
              Work in process                                               48,300         51,700
              Finished goods                                                85,000        110,200
                                                                        ----------     ----------

                                                                        $  156,600     $  183,600
                                                                        ==========     ==========
</TABLE>

NOTE 6 - PROPERTY AND EQUIPMENT

     Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
                                                                           2004           2003
                                                                        ----------     ----------
<S>                                                                     <C>            <C>
              Land                                                      $   12,160     $   11,600
              Buildings and improvements                                   185,000        185,000
              Equipment and furnishings                                    202,400        183,600
                                                                        ----------     ----------

                                                                           399,000        380,200
              Less accumulated depreciation and amortization               377,500        356,100
                                                                        ----------     ----------

                                                                        $   21,500     $   24,100
                                                                        ==========     ==========
</TABLE>

NOTE 7 - INTANGIBLE ASSETS

     Intangible assets consist of the following at December 31:

<TABLE>
<CAPTION>
                                                                           2004           2003
                                                                        ----------     ----------

<S>                                                                     <C>            <C>
              Patents                                                   $  119,682     $  119,682
              Less: Accumulated amortization                                14,526          8,542
                                                                        ----------     ----------

                                                                        $  105,156     $  111,140
                                                                        ==========     ==========
</TABLE>


                                      F-10
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 8 - LONG-TERM DEBT

      Long-term debt consists of the following at December 31:

<TABLE>
<CAPTION>
                                                                           2004           2003
                                                                        ----------     ----------
<S>                                                                     <C>            <C>
              6% convertible promissory notes payable (A)               $  700,000     $  700,000
              ANVAR advances (B)                                                          338,800
              7% convertible promissory notes payable (C)                1,100,000        560,753
                                                                        ----------     ----------
                                                                         1,800,000      1,598,553
              Less current portion                                              --         45,300
                                                                        ----------     ----------

                                                                        $1,800,000     $1,554,253
                                                                        ==========     ==========
</TABLE>

(A)   On March 25, 2002 the holders of the 6% convertible promissory notes
      payable (the "6% Notes") agreed to extend the due date from December 31,
      2002 to December 31, 2004 and on March 1, 2004 agreed to extend the due
      date to December 31, 2006. The 6% Notes are convertible at any time, at a
      rate of $.045, at the holder's option, subject to Company approval. The 6%
      Notes were not affected by the reverse stock split on December 23, 2002.
      Interest on the 6% Notes is payable annually, at the Company's option,
      either in cash or common stock of the Company. The Company sold the 6%
      Notes in the aggregate principal amount of $3,000,000 to "accredited
      investors" during 2000 through a private placement intended to be exempt
      from registration pursuant to the provisions of Regulation D of the
      Securities Act of 1933. A portion of the proceeds, $1,000,000, had been
      held in an escrow account pending the Company's issuance of all of the
      required regulatory documents and the listing of the Company's common
      stock for trading on The NASDAQ Stock Market. On June 26, 2003, the money
      held in the escrow account was returned to the note holders. Since the
      $1,000,000 proceeds were never used by the Company, but always maintained
      in the escrow account, the Company wrote off the prior years' accrued
      interest of $179,836 and the accrued issuance costs of $80,000 associated
      with these 6% Notes resulting in a benefit of $259,836, which was recorded
      as forgiveness of debt in the consolidated statements of operations.

      On December 20, 2004, the Company approved requests from certain holders
      of 6% Notes for the conversion of approximately $336,000 into shares of
      the Company's common stock. As a result of the conversion, the Company
      charged approximately $336,000 to accrued interest for the year then ended
      December 31, 2004 based on the beneficial conversion feature of these 6%
      notes.

(B)   These non interest bearing advances represent monies provided to Inoteb by
      ANVAR, an agency of the French government that finances or subsidizes
      certain "credible" research and development projects. If the research does
      not result in a commercially feasible product and certain other conditions
      are met, Inoteb will not have to pay some or all of the advances.

      During the third quarter of 2004, notes of $297,800 were forgiven by ANVAR
      under the terms of their research and development agreement upon the
      determination that certain research will not result in a commercially
      feasible product.

(C)   The Company sold 7% convertible promissory notes payable due December 31,
      2006 (the "7% Notes") in the aggregate principal amount of $850,000 to
      "accredited investors" during December 2003 through February 2004 through
      a private placement intended to be exempt from registration pursuant to
      the provisions of Regulation D of the Securities Act of 1933. At December
      31, 2003 the Company had received approximately $560,000, of which
      approximately $135,000 was received as stockholder advances during 2002
      and approximately $425,000 during 2003, and approximately an additional
      $290,000 during February 2004. .

      A conversion took place on December 2004 for $100,000 note at the rate of
      $10 per share.


                                      F-11
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 8 - LONG-TERM DEBT - continued

      During February and July 2004, the Company sold an additional $350,000
      under the new subscription for $350,000 of 7% convertible promissory notes
      payable (the "7% Notes"). In further, during December 2004, the Company
      sold to an accredited investor an additional 7% convertible promissory
      note in the aggregate principal amount of $300,000 bringing the total 7%
      convertible promissory notes payable sold in 2004 to $650,000 and total
      outstanding 7% convertible promissory notes to $1,500,000. The Company
      will pay a 7% commission on $650,000, which was sold during 2004.

      The 7% Notes are convertible at any time, using a conversion rate
      utilizing the average closing price of the Company's common stock for the
      20 trading days immediately preceding the conversion, at the holder's
      option, subject to Company approval.

      Interest on the 7% Notes is payable annually, at the Company's option,
      either in cash or common stock of the Company. The Company may, at any
      time, prepay in whole or in part the principal and accrued interest of the
      7% Notes, either in cash or common stock of the Company.

      The aggregate maturities of long-term debt at December 31, 2004 are as
      follows:

                December 31,
                ------------
                    2005                                                      --
                    2006                                               1,800,000
                                                                     -----------

                                                                     $ 1,800,000
                                                                     ===========

NOTE 9 - INCOME TAXES

      At December 31, 2004, the Company had net operating loss carryforwards of
      approximately $10,792,000 available to reduce future Federal taxable
      income, which, if not used, will expire at various dates through December
      31, 2023. These net operating loss carryforwards create a deferred tax
      asset of approximately $3,665,000. There are no other material differences
      between amounts used for financial reporting purposes and tax reporting
      purposes. Since it is more likely than not that the Company will not
      realize a benefit from these net operating loss carryforwards a 100%
      valuation allowance has been recorded to reduce the deferred tax asset to
      its net realizable value.

      The Company's wholly owned subsidiary, Inoteb, has a net operating loss of
      approximately $5,000,000 at December 31, 2004 under French tax
      regulations. Prior to January 1, 2004 these net operating losses could be
      carried forward five years to offset future taxable income. After January
      1, 2004 these net operating loss carryforwards can be carried forward
      indefinitely to offset future taxable income. This net operating loss
      creates a deferred tax asset of approximately $1,700,000. There are no
      other material differences between amounts used for financial reporting
      purposes and tax reporting purposes. Since it is more likely than not that
      the subsidiary will not realize a benefit from these net operating loss
      carryforwards a 100% valuation allowance has been recorded to reduce the
      deferred tax asset to its net realizable value.

      Income taxes differ from the statutory rate due to the following at
      December 31:

<TABLE>
<CAPTION>
                                                                   2004           2003
                                                                ----------     ----------
<S>                                                             <C>            <C>
              Income tax benefit at 35%                         $ (221,000)    $ (108,500)
              Utilization of net operating loss carryforward       221,000        108,500
                                                                ----------     ----------

                                                                $       --     $       --
                                                                ==========     ==========
</TABLE>


                                      F-12
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 10 - STOCK OPTION PLAN

      In December 21, 2004, the Company decided to cancel all option contracts
      and reissue new contracts. A summary of the Company's stock option
      activity is as follows for the years ended December 31, 2004 and 2003:

          ------------------------------------------------------------------
                                                      Common Stock
          ------------------------------------------------------------------
                                                            Weighted average
                                               Shares        Exercise Price
          ------------------------------------------------------------------
          Outstanding, December 31, 2002       34,270          $  89.88
          ------------------------------------------------------------------
          Granted                                  --
          ------------------------------------------------------------------
          Exercised                                --
          ------------------------------------------------------------------
          Outstanding, December 31, 2003       34,270             89.88
          ------------------------------------------------------------------
          Cancelled                           (34,270)
          ------------------------------------------------------------------
          Granted                             200,000             10.00
          ------------------------------------------------------------------
          Exercised
          ------------------------------------------------------------------
          Outstanding, December 31, 2004      200,000          $  10.00
          ------------------------------------------------------------------

      The fair value of the option grant is estimated on the date of grant using
      the Black-Scholes option-pricing model. A summary of the Company's stock
      options outstanding is as follows:

<TABLE>
<CAPTION>
          --------------------------------------------------------------------------------------
                                      Options Outstanding                Options Exercisable
          --------------------------------------------------------------------------------------
                                            Weighted-
                                             Average       Weighted-                   Weighted-
                                            Remaining      Average                     Average
                               Number      Contractual     Exercise       Number       Exercise
          Exercise Prices    Outstanding      Life          Price       Exercisable     Price
          --------------------------------------------------------------------------------------
<S>                            <C>             <C>         <C>            <C>          <C>
              $10.00           200,000         4.98        $ 10.00        200,000      $ 10.00
          --------------------------------------------------------------------------------------
</TABLE>

NOTE 11 - SEGMENT AND GEOGRAPHIC INFORMATION

      Information about the Company's assets in different geographic locations
      at December 31, 2004 and 2003 is shown below pursuant to the provisions of
      SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
      Information."

      The following shows information about the Company's foreign operations at
      December 31, 2004 and 2003:

                                                          2004           2003
                                                      -----------    -----------
      Net Sales:
      France                                          $   171,000    $   190,000
      Other European countries                            108,200         90,800
      Others                                               72,300         81,100
                                                      -----------    -----------

                                                      $   351,500    $   361,900
                                                      ===========    ===========

      Total Assets:
      United States                                   $   818,947    $   443,076
      France                                              282,100        369,600
                                                      -----------    -----------

                                                      $ 1,101,047    $   812,676
                                                      ===========    ===========


                                      F-13
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

NOTE 12 - RELATED PARTY

      The Company has a consulting agreement with its Chairman and President in
      which he earns $150,000 annually. The agreement expires August 2005. At
      December 31, 2004 and 2003 the Company owed this individual an aggregate
      of $518,758 and $390,000, respectively, of which $412,500 and $300,000,
      respectively relate to the consulting agreement, the balance of $104,438,
      and $90,000, respectively relate to un-reimbursed travel expenses and
      $1,820 relate to start-up costs. In the year ended December 31, 2004, to
      help the Company's cash position, the president has deferred receipt of
      any 2004 cash compensation pursuant to his consulting agreement.

NOTE 13 - COMMITMENTS

      The Company rents certain office space under an operating lease expiring
      on April 30, 2004, with an automatic renewal of three years. The lease has
      been renewed for the three years ending April 30, 2007. This agreement is
      transferable and can be cancelled with six months notice. Rent expense for
      the years ended December 31, 2004 and 2003 were approximately $52,000.

      At December 31, 2004, total minimum rentals under noncancellable operating
      leases with an initial or remaining term lease term of one year or more
      are as follows:

             Year Ending
             December 31:
             ------------
                 2005                                                  $  52,000
                 2006                                                     52,000
                 2007                                                     17,333
                                                                       ---------

                                                                       $ 121,333
                                                                       =========

NOTE 14 - LEGAL PROCEEDINGS

      There is no material litigation pending against us at this time.

NOTE 15 - SUBSEQUENT EVENT

      In January, 2005, the Company received $300,000 in connection with the
      subscription for $300,000 of 7% convertible promissory notes (the "7%
      Notes") sold in December 2004 (See Note 8c).


                                      F-14
<PAGE>

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

There were no disagreements with accountants on accounting and financial
disclosure. For discussion regarding recent changes of our independent
accountants, please see our Annual Report on Form 10-KSB for the year ended
December 31, 2003 and our previously filed and subsequent Current Reports on
Form 8-K.

Item 8A. Controls and Procedures

(a) Disclosure controls and procedures. Based upon an evaluation, supervised by
Nasser Nassiri, our Chief Executive Officer and Principal Accounting Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures concluded that our disclosure controls and procedures were effective
as of December 31, 2004.

(b) Internal controls. During the year ended December 31, 2004, there were no
significant changes in our internal accounting controls or in other factors that
materially affected our internal controls over financial reporting.


<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons

Directors and Executive Officers

The following persons are our executive officers and directors:

Name                      Age          Positions with our Company
----                      ---          --------------------------
Nasser Nassiri            41           President, Chief Executive Officer and
                                       Chairman of the Board
Yuhko Grossman            39           Secretary, Treasurer and Director
Jean Darondel             62           Director

Mr. Nasser Nassiri has been the President, Chief Executive Officer and Chairman
of the Board of our company since 1997. Mr. Nassiri is a Europe-based financier.
Since 1990, he has been a private investor and financial advisor to several
European financial and portfolio institutions, as well as group investment
companies and pharmaceutical businesses in the Middle East. From 1983 to 1987,
Mr. Nassiri was a director of Prak Management, a privately-held Middle
East-based oil and gas holding company.

Ms. Yuhko Grossman is our Secretary, Treasurer and a director. Ms. Grossman is
currently a director of Ono Trading Company of Canada Ltd., a large wholesale
company dealing in industrial safety equipment, and a director of Ono Import
Export Company Ltd., an international trading company. Previously, Ms. Grossman
spent over ten years working with the largest retail pharmaceutical chain in
Canada, where her responsibilities included the restructuring and implementation
of new management and information systems following corporate buy-outs. Ms.
Grossman holds degrees from Simon Fraser University in Modern European History,
Political Science and Physics.

Dr. Jean Dardonel is a member of our board of directors. Dr. Jean Darondel was
co-founder of Inoteb and was its President General until March 18, 2003. He is
an active member of different scientific pilotage committees programs. Dr.
Darondel is known for his research in the field of veterinary medicine and
business development in the medical/pharmaceutical fields.

Board of Directors

All of our directors serve until the next annual meeting of stockholders or
until their successors are duly elected and qualified. All of our officers serve
at the discretion of the board of directors. There are no family relationships
among the directors and executive officers.

Scientific Advisory Board

We also have a scientific advisory board to aid us in the strategic development
of our products. The following are the members of the scientific advisory board:

Dr. Yves Cirotteau is an orthopedic and traumatologic surgeon. Dr. Yves
Cirotteau is Medical Scientific Director of our French subsidiary. He is a
member of the SOFCOT (French Orthopaedic and Traumatologic Society), Hip and
Knee Society and AAAS (American Association for Advancement of Science). Dr.
Cirotteau is the principal inventor of Biocoral(R), applications in curative and
preventive treatments of osteoporotic fractures and is involved in its
development.

Professor L'Hocine Yahia is a full professor at the mechanical department of
engineering of the polytechnic school of Montreal (l'Ecole Polytechnique de
Montreal) where he is in charge of research group of biomechanics and
biomaterials (Groupe de recherche en biomecanique et biomateriaux "GRBB"). He is
also the professor associated


<PAGE>

with the hospital complex with Montreal (Centre Hospitalier de Montreal "CHUM").
Professor Yahia has a distinguished track record in tissue engineering and
advanced biomaterials "Intelligent Materials, Polymers and Ceramics".

Prof. Jean-Pierre Ouhayoun is a doctor of dental surgery and Professor and
ex-Chairman of the Department of Periodontology at the University of Paris
School of Dentistry. He is also Chief of the dental clinic at Garanciere Hotel
Dieu, and is in charge of the research unit at the Orthopedic Research
Laboratory in Paris specializing in bone regeneration.

Dr. Alberto Jussman is a specialist in post-menopausal medicine and the
prevention of osteoporosis and is a consultant to the Laboratoires pour la
Pharmacie et les Devices Medical and teaches at the CHU Bichat-Claude Bernard in
Paris.

Dr. Jean Darondel, a director of our company, is also a member of the scientific
advisory board.

Mr. Roland Schmitthauesler is currently part of the National Center of Blood
Transfusion in France. He is the former Chief of the Laboratory of the Plasma
Unit at the CRTS in Strasborg. Mr. Roland Schmitthauesler has been associated
with the development of Biocoral's autologous glue since 1991.

Dr. Genevieve Guillemin is a scientist and director of CNRS (French National
Center of Scientific Research). Dr. Guillemin co-filed the original 1979 patent
for Biocoral(R) and still participates in the development of Biocoral(R).

Limitation on Liability of Directors

As permitted by Delaware law, our certificate of incorporation includes a
provision which provides that a director shall not be personally liable to us or
our stockholders for monetary damages for a breach of fiduciary duty as a
director, except (i) for any breach of the director's duty of loyalty to us or
our stockholders, (ii) under Section 174 of the General Corporation Law of the
State of Delaware, which prohibits the unlawful payment of dividends or the
unlawful repurchase or redemption of stock, or (iii) for any transaction from
which the director derives an improper personal benefit. This provision is
intended to afford directors protection against, and to limit their potential
liability for, monetary damages resulting from suits alleging a breach of duty
of care by a director. As a consequence of this provision, our stockholders will
be unable to recover monetary damages against directors for action taken by them
which may constitute negligence or gross negligence in performance of their
duties unless such conduct falls within one of the foregoing exceptions. The
provision, however, does not alter the applicable standards governing a
director's fiduciary duty and does not eliminate or limit our right, or the
right of any stockholder, to obtain an injunction or any other type of
non-monetary relief in the event of a breach of fiduciary duty. We believe this
provision will assist in securing and retaining qualified persons to serve as
directors.

Compliance With Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors and executive officers, and persons who own more than ten percent of a
registered class of our Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
our Common Stock. Officers, directors and ten-percent stockholders are required
by SEC regulations to furnish us with copies of all Section 16(a) forms they
file. During the fiscal year ended December 31, 2004, no such reports were
submitted to us for review and, based upon this, to our knowledge, all Section
16(a) filing requirements applicable to our officers and directors have been
complied with except that our directors have not yet filed Forms 5 relating to
the issuance of options in December 2004.

Item 10. Executive Compensation

Presently, none of our executive officers receive any salary. However, on
September 1, 1997, we entered into a Consulting Agreement with Nasser Nassiri,
our Chairman, pursuant to which Mr. Nassiri serves as our Chairman. The
Agreement, which was for a three year term, provided for base compensation of
$150,000 per annum, reimbursement of certain expenses and for a payment of two
years' compensation thereunder in the event of a change in control of the
Company. The agreement was renewed, on the same terms, in 2000 for two years
until August 30, 2002 and has been renewed during 2002 for an additional three
years until August 2005. Through


<PAGE>

December 31, 2004, to help the company's cash position. Our Chairman has
deferred receipt of any cash compensation pursuant to his Consulting Agreement.

Stock Option Plan

On May 4, 1992, we adopted a stock option plan which originally authorized the
granting of options to purchase up to 2,000,000 shares of common stock. On April
16, 2001, this was increased to 20,000,000 shares.

As of December 21, 2004, we cancelled all of the outstanding options and
replaced them with options having substantially similar terms and conditions,
but with an exercise price of $10.00 per share, in the following amounts:

                 Nasser Nassiri             100,000
                 Jean Darondel               50,000
                 Yuhko Grossman              50,000

A form of such option agreement is filed as Exhibit 4.2 to this Form 10-KSB.

Aggregated Option Exercises and Fiscal Year-End Option Values

The following table lists the number of securities underlying unexercised
options at December 31, 2003.

                                                     NUMBER OF
                                                     SECURITIES      VALUE OF
                                                     UNDERLYING     UNEXERCISED
                                                    UNEXERCISED     IN-THE-MONEY
                                                      OPTIONS         OPTIONS
                            SHARES                   AT FY-END       AT FY-END
                           ACQUIRED      VALUE      EXERCISABLE/    EXERCISABLE/
         NAME             ON EXERCISE   REALIZED   UNEXERCISABLE   UNEXERCISABLE
         ----             -----------   --------   -------------   -------------
Nasser Nassiri..........       --          --       100,000/ --         --/--
Jean Darondel...........       --          --        50,000/ --         --/--
Yuhko Grossman..........       --          --        50,000/ --         --/--

Director Compensation

Our directors do not receive compensation for their services as directors, but
are reimbursed for travel and all reasonable out-of-pocket expenses incurred in
connection with each board meeting attended or other company services.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information known to us with respect to
the beneficial ownership of our common stock as of May 15, 2005 by:

o all persons who are beneficial owners of five percent (5%) or more of our
common stock;

o each of our directors;

o each of our named executive officers; and

o all current directors and executive officers as a group.

Except as otherwise indicated, and subject to applicable community property
laws, the persons named in the table below have sole voting and investment power
with respect to all shares of common stock held by them.


<PAGE>

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of April 13, 2005 are deemed
outstanding. Such shares, however, are not deemed outstanding for the purpose of
computing the percentage ownership of any other person.

<TABLE>
<CAPTION>
                                                         AMOUNT AND NATURE
                                                           OF BENEFICIAL
                                                          OWNERSHIP AS OF      PERCENT OF
NAME AND ADDRESS OF BENEFICIAL                                MAY 15,           SHARES IN
OUTSTANDING OWNER                      TITLE OF CLASS          2005              CLASS(5)
-----------------                      --------------    -----------------      ---------
<S>                                     <C>                   <C>                   <C>
Jean Darondel ....................      Common Stock           50,000(1)            *
  38 rue Anatole France,
  92594 Levallois Perret Cedex,
  France

Yuhko Grossman ...................      Common Stock           50,000(2)            *
  38 rue Anatole France,
  92594 Levallois Perret Cedex,
  France

Nasser Nassiri ...................      Common Stock          100,000(3)            *
  38 rue Anatole France,
  92594 Levallois Perret Cedex,
  France

All officers and directors
as a group                              Common Stock          200,000(4)            *
</TABLE>

*- Indicates less than 1%

(1) Includes for Mr. Darondel options to purchase 50,000 shares of common stock,
which are exercisable at $10 per share.

(2) Includes for Mr. Grossman, options to purchase 50,000 shares of common
stock, which are exercisable at $10 per share.

(3) Includes for Mr. Nassiri, options to purchase 100,000 shares of common
stock, which are exercisable at $10 per share.

(4) The issuance of options to the officers and directors were not approved by
our shareholders.

(5) Based upon 11,353,818 shares of common stock outstanding.

       Securities Authorized for Issuance Under Equity Compensation Plans

Other than those listed on the table above, we do not have any equity securities
outstanding or authorized for issuance pursuant to any equity compensation
plans.

Item 12. Certain Relationships and Related Transactions

None.


<PAGE>

Item 13. Exhibits and Reports on Form 8-K.

(a) Unless otherwise indicated, the following is a list of exhibits filed as a
part of this annual report:

--------------------------------------------------------------------------------
Exhibit Number    Description of Document
--------------------------------------------------------------------------------
3.1               Certificate of Incorporation, as amended(1)(2)
--------------------------------------------------------------------------------
3.2               By-laws (1)
--------------------------------------------------------------------------------
3.3               Certificate of Amendment to Certificate of Incorporation
--------------------------------------------------------------------------------
3.4               Certificate of Amendment to Certificate of Incorporation
--------------------------------------------------------------------------------
4.1               Form of Company's 3 year 7% Convertible Redeemable Debenture
                  due December 31, 2006
--------------------------------------------------------------------------------
4.2               Form of Option Agreement
--------------------------------------------------------------------------------

31                Certification of Nasser Nassiri pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.
--------------------------------------------------------------------------------
32                Certification of Nasser Nassiri pursuant to Rule 13(a)

(1) Incorporated by reference to Exhibit 3.1 to the Company's Form 10-SB
Registration Statement filed with the Commission on February 25, 1994, as
amended.

(2) Incorporated by reference from Amendment No.1 to the Company's Form 10-SB
filed with the Commission on April 18, 1994.

(3) Incorporated by reference to Exhibit 10.21 to the Company's Annual Report on
Form 10-KSB filed December 27, 1996.

(4) Incorporated by reference from the Company's Annual Report on Form 10-KSB
filed April 17, 1998.

During the fourth quarter of 2004, we filed no current reports on Form 8-K.

Item 14. Principal Accountant Fees and Services.

Audit Fees for 2004

Our principal accountant for 2004 is Shelley International CPA. For services
rendered in connection with the audit of our 2004 financial statements, we have
paid them $7,500 to date, but we have not been billed for the balance of the
fees for this audit.

Audit Fees for 2003

Our principal accountant for 2003 was Weinberg & Company. For services rendered
in connection with the audit of our 2003 financial statements and review of
first quarter of 2004, including reissuance of their opinion for filing with the
financial statements in this Annual Report on Form 10-KSB, we paid them $33,000.

We paid Most & Company LLP approximately $12,000 for services in connection with
the review of our unaudited financial statements for filing with our Quarterly
Reports on Form 10-QSB of June 30, 2004 and September 30, 2004.


<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on our behalf by the
undersigned, thereunto duly authorized, on May 18, 2005.

                                         BIOCORAL, INC


                                         By: /s/ Nasser Nassiri
                                             ------------------
                                             Nasser Nassiri
                                             President, Chief Executive Officer
                                             and Principal Accounting Officer

In accordance with the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated.

Signature                Title                                      Date
-------------            -----                                      ----


/s/ Nasser Nassiri       President, Chief Executive Officer         May 18, 2005
------------------       and Chairman of the Board of Directors
    Nasser Nassiri       (Principal Executive Officer and
                         Principal Accounting Officer)


/s/ Yuhko Grossman       Secretary, Treasurer and Director          May 18, 2005
------------------
    Yuhko Grossman


/s/ Jean Darondel        Director                                   May 18, 2005
-----------------
    Jean Darondel