UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-KSB

                 Annual Report Pursuant to Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

   For the fiscal year ended December 31, 1999 Commission file number 0-23512

                                 BIOCORAL, INC.

           (Name of small business issuer as specified in its charter)

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

   38 rue Anatole France, 92594 Levallois Perret Cedex
   FRANCE                                                                N/A
(Address of Principal Executive Offices)                              (Zip Code)

                                011-3314-757-9843
                         (Registrant's telephone number)

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

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

                               Title of each class
                               -------------------

                          Common Stock. $.001 Par Value

      Indicate by check mark whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 |_|

           Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and no disclosure will be
contained, to the best of issuer'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. Yes |_| No |X|

      Issuer's revenues from continuing operations for its most recent fiscal
year were $433,207.

      The aggregate market value of the voting stock held by non-affiliates of
the Issuer, as of March 31, 2000, on a pro forma basis,


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was approximately $6,347,635.

      The Issuer had 19,235,260 shares of common stock outstanding (pro forma)
as of December 31, 1999.

Documents Incorporated by Reference - See Exhibit Index

PART I
Item 1. Description of Business

Background

      BioCoral, Inc., a Delaware corporation (the "Company") is an international
biomaterials company specializing in research and development in the areas of
health care high technology and biomaterials. Via its subsidiaries, the Company
researches, develops, manufactures and markets bone graft substitute and other
high tech biomaterials in a number of countries outside the United States. The
Company has developed what management believes is the world's first fully
autologous biological surgical glue. In 1993, the Company's scientists began
working on the development of a biological surgical glue that utilizes the
patient's own blood, thereby eliminating the risk of viral transmission. This
surgical glue has passed clinical trials in France, was approved by appropriate
French authorities (AFSSAPS and FFS, the French functional equivalent of the
Food and Drug Administration, is awaiting EC certification and will be ready for
market in Europe. The Company has recently begun Phase III multi-center clinical
trials of its product for the treatment of bone fractures due to osteoporosis
and is working on its prevention. The Company's chief product, BioCoral, derived
from natural coral using proprietary manufacturing processes, has certain
characteristics (chemical composition, porosity, etc.) similar to human bone
that facilitates its replacement of bone and concomitant bone strengthening.
Prior to 1995, the Company derived substantially all its revenue from other
unrelated businesses. Through the end of 1999, the Company had not yet realized
significant revenues from the sale of its products. The Company has not yet
begun to seek FDA approval for sale of its products in the United States,
although Canadian approval of certain products has been obtained.

      The Company entered the biomaterials field in 1995 by agreeing to acquire
Inoteb, SA, a French corporation ("Inoteb") from 10 individuals, all French
nationals. Among other things, Inoteb owns certain patent rights to BioCoral's
products. The shares and bonds of Inoteb acquired in 1995 represented, at such
time, 51.5% of the capital share of Inoteb and 86.67% of the convertible bonds
thereof. In December 1998, the Company increased its ownership percentage in
Inoteb to 100% by purchasing new shares of Inoteb directly from Inoteb in a new
offering of its capital and the Company acquired the remaining 16% of Inoteb via
Jean Darondel, then (but not currently) a director of the Company. Accordingly,
since December 1998, the Company owns 100% of Inoteb.


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<PAGE>

      The executive offices of the Company are located at 38 rue Anatole France,
Levallois Perret Cedex, France consisting of approximately 2000 square feet of
office space.

BioCoral

      BioCoral is a biomaterial produced from natural coral. Certain chemical,
physical and structural characteristics of coral are very similar to that of
human bone tissue. BioCoral is derived from three particular species of coral
naturally present in abundance. BioCoral is primarily (more than 97%) comprised
of calcium carbonate. Porous and resorbable, BioCoral is prepared in
microgranules as well as in engineered shapes according to specific indication.
Due to its similarity to bone tissue, BioCoral is compatible, resorbed by the
body as new bone growth invades the BioCoral 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 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 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 Inoteb, BioCoral has been used in over 180,000 patients,
principally in Western Europe and Korea. BioCoral was originally patented in
France in 1979, in the United States in 1982, and in Japan in 1989. Inoteb
acquired the patent rights to BioCoral from ANVAR/CNRS, the French National
Center for Scientific Research, a French governmental agency. In the interim,
Inoteb has developed an additional 9 patents for various applications and uses
of its products, such as osteoporosis remediation, autologous glue, combination
with growth factor, etc.

Clinical Applications

      BioCoral 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.

Osteoporosis

      Osteoporosis is a progressive bone disorder in which bone density
decreases, combined with increased bone brittleness and porosity, which
primarily affects post-menopausal women. The


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<PAGE>

number of women suffering from osteoporosis has grown significantly with the
aging of Western populations. The clinical trials Inoteb has run over the past 8
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. Inoteb is developing several variants of its BioCoral
technology aimed at osteoporosis treatment. BioCoral 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 can serve both to heal bones that are already fractured and to prevent
bone fractures from occurring.

      Phase II clinical trials in Europe demonstrated the efficacy of BioCoral
for local osteoporosis treatment in rebuilding bone, particularly in combination
with osteodensimatic screening. Phase III clinical trials in Europe have begun
at 9 clinics. The Company intends to raise additional capital to fund continued
Phase III clinical trials, which will be a prerequisite to human use in the
United States and Canada.

Surgical Glue

      Inoteb has developed what it believes to be the world's first fully
autologous biological surgical glue. This surgical glue is prepared using the
patient's own blood, in a closed system, eliminating immunological problems and
the risk of blood-borne disease transmission such as, for example, HIV and
hepatitis. In contrast, all surgical glues currently on the market (whether
autologous or homologous) require foreign protein 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.

      Inoteb has completed clinical trials in France of the surgical glue and
expects to have the product ready for distribution in France later in 2000.
Management believes that the world market segment for the surgical glue is in
excess of $600 million.

Composite BioCoral and Growth Factor

      For more than 10 years, studies have been undertaken to demonstrate that
it is possible to accelate the bone repair process by combining growth factors
with a support matrix such as Biocoral. Some scientific research has shown that
Biocoral, as biomaterial, represents a useful support for growth factors.
European clinical trials conducted over the past 2 years have had positive
results confirming the acceleration of the bone repairprocess as aforesaid.

Raw Materials and Manufacturing


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<PAGE>

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

      Manufacturing of BioCoral is conducted at Inoteb's facility in Saint
Gonnery, France. This facility, which covers approximately 350 square meters
(3150 square feet), has been ISO 9002 rated since August 1995. On October 25,
1996, Inoteb 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 and, on December 30, 1996, Inoteb was granted
the EC certificate allowing sales of BioCoral throughout the European Community.
The Company is audited three times a year to maintain such certifications, once
by AFAQ for the ISO 9002 and by GMED for the EN 46002. The Company believes this
facility is adequate to service the Company's present and medium-term-future
needs.

Competition

      BioCoral. The Company's BioCoral product competes with (i) natural bone
obtained from autograft procedures and allograft sources and with (ii) two other
synthetic bone products, one marketed in the United States by Interpore, Inc. a
publicly-held company with significantly greater resources and distribution
capabilities than the Company, and another that was approved by the FDA in May
1993. Autograft and allograft bone have been used for graft material for a much
longer period of time than BioCoral and similar materials, and in order to
increase its future sales of BioCoral, the Company will have to demonstrate to
the medical community the surgical and patient advantages, safety, efficacy,
cost effectiveness and clinical results of BioCoral. Most of the Company's
competitors have substantially greater resources, larger market share and
greater research and development capabilities than the Company and may,
therefore, be expected to compete aggressively and successfully in the markets
for the Company's products.

      The Company believes that BioCoral 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 maintain mechanical
and biological properties, some allograft bone is not sufficiently secure to
avoid all risks of disease transmission. Therefore, unlike BioCoral, which is a
sterile and biocompatible material, allograft bone carries the risks of implant
rejection and the transmission of


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<PAGE>

infectious agents such as hepatitis and HIV. The use of BioCoral entails none of
these risks and provides clinical results comparable to those of autograft
material in suitable condition for use.

      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. The company believes 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, those are also risks to provide infection. In addition, many
countries have prohibited the commercialization of product utilizing bovine
collagen as a base.

      The Company has been able to compete in Europe with other products which
also sell their products in the United States. Despite their significantly
greater resources, management believes that it will, once its products have been
approved by the FDA, be able to be competitive with such companies because of
the quality of its products. The presence of these competitors' products in the
US market actually may benefit the Company by enabling it to seek foreshortened
FDA approval of its products. See "Business - Government Regulation".

      BioCoral has been used in European dental applications for more than 15
years. This use, together with the scientific results of its in vivo use and
clinical trials have demonstrated the efficacy of using BioCoral for bone
regeneration in dental applications. The Company competes 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 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 the Company's products are superior to its
competitors' products. The Company has begun to make arrangements for the
commencement of clinical trials for certain of its products with a long term/
medium term view toward FDA approval thereof . In the interim, the Company will
focus on increasing its European and other sales of its products, entering into
joint ventures with key strategic partners for distribution of its products,
research and development and the like. No assurance can be had that any such
arrangements will be reached or that they will be profitable.

Governmental Regulation

      BioCoral has been approved for marketing in more than 15 countries in
Europe, Korea, South Africa, Canada and Australia. BioCoral has been approved
for reimbursement by the Tarif Interministeriel des Prestations Sanitaires, the
French national health services agency.


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<PAGE>

      The Company's 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, the Company 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. Obtaining such approvals in the US
could take a long time and involve substantial expenditures. No clinical testing
on humans may be undertaken in the United States without first obtaining an
Investigational Device Exemption ("IDE") from the FDA.

      There are two principal methods by which FDA approval may be obtained to
market regulated products in the United States. One method is to seek FDA
approval through a premarket notification filing under Section 510(k) of the
Food, Drug and Cosmetics Act. Applicants under the 510(k) procedure must prove
that the device for which approval is sought is substantially equivalent to
devices on the market before the Medical Device Amendments of 1976 or devices
approved after the 510(k) procedure. The review period for a 510(k) application
is 90 days from the date of filing the application; if not rejected, within such
90 days, applications are deemed approved.

      The alternative method is to obtain premarket approval ("PMA") from the
FDA. Under the PMA procedure, the applicant must obtain an 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.

Employees

      The Company, except for its wholly-owned subsidiary Inoteb, currently has
no employees other than its officers and directors who devote as much time as
they believe necessary to carry out the affairs of the Company. Inoteb currently
has 11 employees, 10 of whom are full time and one of whom is part time. In
addition, the Company engages 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.

Item 2. Description of Property.

      Inoteb currently leases its principal executive offices from an unrelated
third party for an aggregate annual rent of approximately $56,000.


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<PAGE>

Item 3. Legal Proceedings.

      There are no material litigations pending against the Company at this
time.

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

      None.

PART II

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

      At December 31, 1999 there were 9,235,260 shares of the Company's Common
Stock issued and outstanding on a pro forma basis. A significant portion of the
outstanding shares of the Company are subject to resale restrictions and, unless
registered under the Securities Act of 1933 (the "Act"), or exempted under
another provision of the Act, are ineligible for sale in the public market.
Sales of substantial amounts of the Common Stock of the Company which are
presently restricted in the public market could adversely affect prevailing
market prices.

      The following table sets forth information regarding the high and low
price for the Company's common stock as reported on the Electronic Bulletin
Board. Such prices do not necessarily reflect actual transactions and do not
include retail mark-up, mark-down or commissions. The prices set forth below are
per share.

--------------------------------------------------------------------------------
Quarter                         High                       Low
--------------------------------------------------------------------------------
March 31, 1999                   $1.12                      $1.00
--------------------------------------------------------------------------------
June 30, 1999                    $1.00                      $0.56
--------------------------------------------------------------------------------
September 30,                    $0.56                      $0.18
1999
--------------------------------------------------------------------------------
December 31,                     $0.42                     $0.045
1999
--------------------------------------------------------------------------------

Holders

      As of December 31, 1999 there were approximately 100 holders of record of
the shares of the Company's common stock.


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<PAGE>

Dividends

      The Company has paid no cash dividends on its equity securities to date
and does not anticipate the payment of cash dividends on its equity securities
in the near future. The Company paid a dividend of one share of its 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.

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

      This Management's Discussion and Analysis of Financial Condition and
Results of Operations, as well as several other parts of this Annual Report on
Form 10-KSB, contain forward- looking statements and information that involve
significant risks and uncertainties. The Company's actual results could differ
materially from those anticipated by such forward-looking statements and
information. Factors that may cause such differences may not be foreseeable by
the Company at this time. This Management's Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with the
Company's consolidated financial statements and notes thereto included elsewhere
herein.

Results of Operations

      Total revenues from operations for the year ended December 31, 1999 ("FY
1999") were $433,207 as opposed to $405,900 for the year ended December 31, 1998
("FY 1998"), due principally to a slight increase in net sales in the company's
Inoteb subsidiary. The net loss for FY 1999 increased slightly from $1,197,380
in FY 1998 to $1,216,421 in FY 1999. Operating expenses were relatively stable
on a comparative basis, except that consulting and professional fees were
reduced by $100,488, while miscellaneous operating expenses increased by
$49,874. The loss per share remained constant at $0.15. Interest expense
increased from $89,379 in FY 1998 to $194,520 in FY 1999 due to the higher level
of long-term debt outstanding. The increase in amortization expense from $85,312
in FY 1998 to $132,538 in FY 1999 was due to the amortization of goodwill in
connection with the increase in the Company's ownership interest in Inoteb to
100% in FY 1998.

Financial Condition, Liquidity and Capital Resources

      The Company's liquidity was significantly better at December 31, 1998 as
opposed to December 31, 1999, but such situation was remediated during the first
quarter of 2000 due to the sale of certain shares and investor notes. The
Company's cash position decreased from $1,344,608 at December 31, 1998 to
$441,838 at December 31, 1999 primarily as the result of the use of cash to fund
operations. Through March 31, 2000, the Company received an infusion of
approximately $2,000,000 in connection with the sale of certain shares and
investor notes (the


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<PAGE>

sale of shares is reflected on the Company's balance sheet as a subscription
receivable at December 31, 1999). In addition, the Company recently issued, in
connection with a subscription from December 1999, an aggregate of 11,111,111
shares of its common stock. The Company's balance sheet was improved by the
conversion of a $700,000 note payable into 200,000 shares of the Company's
common stock during the fourth quarter of 1999. Management believes that it has
sufficient resources to fund the Company's operations through December 31, 2000.
The Company has, however, significant cash needs on an ongoing basis during the
short and medium term, resulting primarily from the Company's ordinary operating
expenses and for research and development.

      On January 1, 2000, the Company commenced a private offering ("Offering")
of units of 6% convertible promissory notes due December 31, 2002 ("Notes"). The
Notes are convertible at any time at the option of the note holder into shares
of the Company's common stock at a rate of $0.045 per share. Interest on the
Notes is payable annually, at the Company's option, either in cash or in shares
of the Company's common stock. The Company offered a minimum of 15 units (each
of $100,000 principal amount of the Notes), for an aggregate minimum of
$1,500,000 and a maximum of 30 units for an aggregate principal balance of
$3,000,000. As of March 31, 2000, the Company had sold 15 Notes, completing the
minimum requirements of the Offering.

Current Plans of the Company

      As disclosed above, the Company obtained approval of AFSSAPS and FFS, the
French functional equivalent of the FDA, for the commercialization of its
autologous surgical glue. Because of its nature (involving blood products), the
product is severely restricted in France. Due to the success of its
European-based clinical trials, the Company believes that it will obtain EC
label approval of the glue in the latter half of 2000 and will then begin
marketing same in Europe. In addition, the Company plans to establish a
subsidiary in Canada and has established authorizations necessary for the sale
of BioCoral in Canada, and is seeking authorization for the sale in Canada of
its other products as well.

      The Company intends to focus on the marketing and development of its
BioCoral and related products. To obtain approval for the sale of such products
in the United States will require a significant expenditure of capital over a
long period of time. The Company anticipates realizing some revenues from the
sale of BioCoral and related products in 2000 although they are not expected to
be sufficient to maintain the Company's operations. As mentioned above, the
Company is also actively seeking a significant investor/joint venturer to assist
in the funding of its operations in North America.

      The Company has not experienced and does not foresee experiencing any
operational difficulties relating to the Y2K issue.

      The Company has not been significantly affected by inflation during the
past fiscal year.


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<PAGE>

Special Note Regarding Forward-Looking Statements

Statements contained in various portions of this Annual Report on Form 10-KSB
(including, without limitation, this Item 6 and Item 1) regarding, among other
things, the dates upon which the Company anticipates commencing 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. With respect to such dates, the Company's management has
made certain assumptions regarding, among other things, timeliness in payment by
the parties with which it deals, the successful and timely completion of
pre-clinical tests, obtaining certain approvals of the clinical trials from the
FDA, the availability of adequate clinical supplies, the absence of delays in
patient enrollment and the availability of adequate capital resources necessary
to complete the clinical trials. The Company's ability to commence clinical
trials on the dates anticipated is subject to certain risks and the Company's
ability to recognize revenue is subject to both ordinary and extraordinary
business risks. Undue reliance should not be placed on the dates on which the
Company anticipates recognizing revenues or commencing clinical trials. These
estimates are based upon the current expectations of Company's management, which
may change in the future due to a large number of potential events, including
unanticipated future developments.

Item 7. Financial Statements.

      Attached.

Item 8. Changes In and Disagreement with Accountants on Accounting and Financial
        Disclosure:

      None.

PART III

Item 9. Directors. Executive Officers, Promoters and Control Persons; Compliance
        With Section 16 (a) of the Exchange Act

      The following is certain information with respect to directors, executive
officers and key employees of the Company as of March 31, 2000:

      Nasser Nassiri, Age 36, Chairman of the Board, President and a Director
Yuhko Grossmann, Age 35, Secretary, Treasurer and a Director


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<PAGE>

      Each of such persons was elected or appointed for a one-year term to serve
and hold office until their respective successors are elected or appointed.

      Nasser Nassiri is the Chief Executive Officer, Chairman of the Board and a
director of the Company. Mr. Nassiri is a Paris-based financier active in Europe
and the Middle East. Since 1990, he has been a private investor and financial
advisor to several European financial and portfolio institutions, as well as
family 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.

      Yuhko Grossmann is Secretary, Treasurer and a director of the Company. Ms.
Grossmann 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.
Grossmann 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. Grossmann holds degrees from Simon Fraser University in Modern
European History, Political Science and Physics.

      BioCoral also has a Scientific Advisory Board to aid it in the strategic
development of its products. Its members include Dr. Jean Louis Patat, Dr. Jean
Darondel, Dr. Alberto Jussman, Dr. Jean - Pierre Ouhayoun and Dr. Rosy Eloy. Dr.
Patat, a former President Director General of Inoteb, is a member of the
European Society of Biomaterials and La Societe de Medicine de Paris. Dr. Patat
has been involved with the development of BioCoral since 1979 focusing on its
osteoporosis applications since 1991. 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. Ouhayoun is doctor of dental surgery
and Professor and Chairman of the Department of Periodontology at the University
of Paris 7 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. Rosy Eloy,
former Vice President of the Administrative Council of INSERM, is Director of
Biomatech, a French company that tests and evaluates biomaterials and
pharmaceutical products.

Compliance with Section 16(a) of the Exchange Act

      Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of stock ownership and reports of changes in stock
ownership. Due to administrative oversight, Ms. Grossmann is late in reporting
her initial statement of beneficial ownership.


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<PAGE>

Item 10. Executive Compensation

      Directors do not receive compensation for their duties as directors.

      On September 1, 1997, the Company entered into a Consulting Agreement with
Nasser Nassiri, its Chairman, pursuant to which Mr. Nassiri serves as Chairman
of the Company. The Agreement, which is for a three year term, provides 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. Due to the Company's financial condition, through
December 31, 1999, Mr. Nassiri had taken no cash compensation pursuant to his
Consulting Agreement.

      During 1999, the Company reimbursed all directors (collectively) the
aggregate sum of $34,300. In addition, there is no prohibition on advances being
made by the Company to its officers and directors although no such advances have
been made to date. Management is not currently aware of any circumstances under
which it would institute a policy of prohibiting advances from being made to its
officers and directors. The stockholders of the Company will not have the
opportunity to vote on or approve such compensation. There is no maximum dollar
amount of compensation that may be paid to management.

      On November 15, 1999, the Company granted to each of Nasser Nassiri, its
Chairman and a director, and Ramine Almassi and Jean Darondel, each then (but
not now) directors of the Company options to purchase up to 100,000 shares of
the Company's common stock at an exercise price of $ 0.20 per share. The
consideration for the grant of such options was nominal. The option was
exercisable at any time during the five year period following its grant. The
option exercise price was in excess of the market price of the shares of the
Company's common stock on the date of grant.

On December 30, 1999, the Company granted to each of Nasser Nassiri, its
Chairman and a director, and Yuhko Grossmann, Secretary/ Treasurer and a
director of the Company options to purchase up to 250,000 shares of the
Company's common stock at an exercise price of $ 0.08 per share. The
consideration for the grant of such options was nominal. The option was
exercisable at any time during the five year period following its grant. The
option exercise price was in excess of the market price of the shares of the
Company's common stock on the date of grant.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

      The following table sets forth, as of December 31, 1999, information
relating to the beneficial ownership of the Company's Common Stock by those
persons beneficially holding more than 5% of the Company's Common Stock, by the
Company's directors and executive officers, and by all of the Company's
directors and executive officers as a group. Unless otherwise indicated, the
address for each person listed below is in care of the Company.


                                       13
<PAGE>

--------------------------------------------------------------------------------
Name and Address                  Amount and Nature of          Percent of Class
                                  Beneficial Ownership
--------------------------------------------------------------------------------

Yuhko Grossmann                         250,000*                     1.3%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Nasser Nassiri                          350,000 **                   1.7%
--------------------------------------------------------------------------------
All Officers/Directors as a             600,000                        3%
Group (2 persons)
--------------------------------------------------------------------------------

* Includes 250,000 currently exercisable stock options.

** Includes 350,000 currently exercisable stock options.

Item 12. Certain Relationships And Related Transactions. -

      During 1999, the Company granted stock purchase options to each of Nasser
Nassiri, its current Chairman, and Ramine Almassi and Jean Darondel, former
directors of the Company, and Yuhko Grossmann, a director of the Company. See
Item 10 - "Executive Compensation".

      In December 1999 and January 2000, one subsidiary of the Company, Inoteb
SA, sold to another subsidiary of the Company, Bio Holdings International, Ltd.,
certain patents and other rights owned by Inoteb in exchange, in part, for a
license back to commercialize such technology. The Company treated this
transaction as an intercompany transfer the effect of which was eliminated in
consolidation.

      There are no arrangements, agreements or understandings between
non-management shareholders and the Company's management under which
non-management shareholders may directly or indirectly participate in or
influence the management of the Company's affairs. There are no arrangements,
agreements or understandings pursuant to which non-management shareholders have
agreed to exercise their voting rights to continue to elect the current
directors to the Company's Board of Directors.

PART IV

Item 13. Exhibits


                                       14
<PAGE>

      (a) See Index to Exhibits. The Exhibits therein listed and attached hereto
and the Exhibits therein incorporated by reference are filed as part of this
report.

      (b) Reports on Form 8-K. -- None.


                                       15
<PAGE>

      SIGNATURES

            Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                       BIOCORAL, INC.

Date: 4/14/00                          By: s/ Nasser

Nassiri

                                       Nasser Nassiri, Chairman of the Board and
                                                       Chief Executive Officer

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

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


s/ Nasser Nassiri
-----------------------------
Nasser Nassiri                  Chairman of the Board                   4/14/99
                                and a director


s/ Yuhko Grossmann
-----------------------------
Yuhko Grossmann                 Treasurer, Secretary and                4/14/99
                                a director


                                       16
<PAGE>

                                    I N D E X

                                                                            PAGE

REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS                                 F-2/3

CONSOLIDATED BALANCE SHEETS
   DECEMBER 31, 1999 AND 1998                                             F-4

CONSOLIDATED STATEMENTS OF OPERATIONS
   YEARS ENDED DECEMBER 31, 1999 AND 1998                                 F-5

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
   YEARS ENDED DECEMBER 31, 1999 AND 1998                                 F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS
   YEARS ENDED DECEMBER 31, 1999 AND 1998                                 F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                F-8/18




                                      * * *


                                      F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and
    Stockholders
BioCoral, Inc.


We have audited the accompanying consolidated balance sheets of BIOCORAL, INC.
AND SUBSIDIARIES as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' deficiency and cash flows for the years
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 audits. We did not audit the financial statements of
Inoteb SA, a 100%-owned subsidiary as of December 31, 1999 and 1998,
respectively, which statements reflect total assets of approximately $455,000
and $1,313,000 as of December 31, 1999 and 1998, respectively, and losses from
continuing operations of approximately $480,000 and $670,000 for the years ended
December 31, 1999 and 1998, respectively. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for Inoteb SA, is based solely on the report of
the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of BioCoral, Inc. and Subsidiaries as
of December 31, 1999 and 1998, and their results of operations and cash flows
for the years then ended, in conformity with generally accepted accounting
principles.



                                                      J.H. COHN LLP

Roseland, New Jersey
March 21, 2000


                                      F-2
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and
     Stockholders
Inoteb SA


We have audited the consolidated balance sheets of INOTEB SA (a French
corporation) AND SUBSIDIARY as of December 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' deficiency and cash flows
for the years then ended. These financial statements, which are not presented
separately herein, are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. 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 audits provide 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 Inoteb SA and
Subsidiary as of December 31, 1999 and 1998, and their results of operations and
cash flows for the years then ended, in conformity with generally accepted
accounting principles in the United States.



                                                      CONSULTAUDIT S.A.

Paris, France
February 13, 2000


                                      F-3
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

                               ASSETS                       1999         1998
                                                        -----------  -----------

Current assets:
   Cash                                                $   441,838  $ 1,344,608
   Accounts receivable, net of allowance
     for doubtful accounts of $262,100 in 1998             112,900       96,500
   Inventories                                             191,900      197,500
   Net assets of discontinued operations                                230,639
   Common stock subscription receivable                    500,000
   Other current assets                                     14,500      101,900
                                                       -----------  -----------
        Total current assets                             1,261,138    1,971,147
Property and equipment, net of accumulated
   depreciation of $267,630 and $230,030                    67,442       47,837
Goodwill, net of accumulated amortization of
   $132,538 in 1999                                         11,033      143,571
Other assets                                               159,267      167,290
                                                       -----------  -----------

        Totals                                         $ 1,498,880  $ 2,329,845
                                                       ===========  ===========


               LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
   Current portion of long-term debt                   $   431,800  $   226,260
   Notes payable to related parties                        347,015      428,811
   Accounts payable and accrued liabilities                835,169      667,417
                                                       -----------  -----------
        Total current liabilities                        1,613,984    1,322,488
Long-term debt, net of current portion                     986,100    2,092,140
                                                       -----------  -----------
        Total liabilities                                2,600,084    3,414,628
                                                       -----------  -----------

Commitments and contingencies

Stockholders' deficiency:
   Preferred stock, par value $.001 per share;
     1,000,000 shares authorized; none issued                   --           --
   Common stock, par value $.001 per share;
     20,000,000 shares authorized; 19,235,260 and
     7,924,149 shares issued and outstanding                19,235        7,924
   Additional paid-in capital                           13,589,355   12,400,666
   Accumulated deficit                                 (14,709,794) (13,493,373)
                                                       -----------  -----------
        Total stockholders' deficiency                  (1,101,204)  (1,084,783)
                                                       -----------  -----------

        Totals                                         $ 1,498,880  $ 2,329,845
                                                       ===========  ===========


See Notes to Consolidated Financial Statements.


                                      F-4
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                        1999           1998
                                                     -----------    -----------
Revenues:
   Net sales                                         $   414,800    $   405,900
   Other income                                           18,407
                                                     -----------    -----------
     Totals                                              433,207        405,900
                                                     -----------    -----------

Operating expenses:
   Cost of sales                                         157,600        142,700
   Research and development                              435,763        463,138
   Interest                                              194,520         89,379
   Depreciation of property and equipment                 37,600         80,530
   Amortization of goodwill                              132,538
   Amortization of unearned compensation                                 85,312
   Consulting and professional fees                      283,673        384,161
   Other operating expenses                              407,934        358,060
                                                     -----------    -----------
     Totals                                            1,649,628      1,603,280
                                                     -----------    -----------

Net loss                                             $(1,216,421)   $(1,197,380)
                                                     ===========    ===========



Basic net loss per common share                      $      (.15)   $      (.15)
                                                     ===========    ===========

Basic weighted average common shares outstanding       7,993,464      7,785,272
                                                     ===========    ===========

See Notes to Consolidated Financial Statements.


                                      F-5
<PAGE>
                         BIOCORAL, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                           Common Stock
                                      ----------------------
                                        Number                    Additional                                       Total
                                          of                       Paid-In      Accumulated      Unearned       Stockholders'
                                        Shares       Amount        Capital        Deficit      Compensation      Deficiency
                                      ----------     -------     -----------    ------------   ------------      -----------
<S>                                    <C>           <C>         <C>            <C>             <C>              <C>
Balance, January 1, 1998               7,697,215     $ 7,697     $12,509,248    $(12,295,993)   $ (455,000)      $  (234,048)

Issuance of common stock to pay
   accrued liabilities                   226,934         227         261,106                                         261,333

Amortization of unearned compensation                                                               85,312            85,312

Cancellation of stock options                                       (369,688)                      369,688

Net loss                                                                          (1,197,380)                     (1,197,380)
                                      ----------     -------     -----------    ------------    ----------       -----------

Balance, December 31, 1998             7,924,149       7,924      12,400,666     (13,493,373)        --           (1,084,783)

Conversion of long-term debt to
   common stock                          200,000         200         699,800                                         700,000

Subscriptions for purchase of
   common stock                       11,111,111      11,111         488,889                                         500,000

Net loss                                                                          (1,216,421)                     (1,216,421)
                                      ----------     -------     -----------    ------------    ----------       -----------

Balance, December 31, 1999            19,235,260     $19,235     $13,589,355    $(14,709,794)   $    --          $(1,101,204)
                                      ==========     =======     ===========    ============    ==========       ===========
</TABLE>
See Notes to Consolidated Financial Statements.


                                       F-6
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1999 AND 1998

                                                        1999           1998
                                                     -----------    -----------
Operating activities:
   Net loss                                          $(1,216,421)   $(1,197,380)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation of property and equipment               37,600         80,530
     Loss on disposal of property and equipment                          28,300
     Amortization of goodwill                            132,538
     Amortization of unearned compensation                               85,312
     Changes in operating assets and liabilities:
        Accounts receivable                              (16,400)         8,100
        Inventories                                        5,600        (20,000)
        Other current assets                              87,400         (6,900)
        Other assets                                       8,023         21,392
        Accounts payable and accrued liabilities         167,752        312,448
                                                     -----------    -----------
            Net cash used in operating activities       (793,908)      (688,198)
                                                     -----------    -----------
Investing activities:
   Capital expenditures                                  (57,205)       (47,614)
   Purchase of additional interest in subsidiary                       (143,571)
   Net proceeds from disposal of discontinued
     real estate operations                              230,639        199,361
                                                     -----------    -----------
            Net cash provided by
               investing activities                      173,434          8,176
                                                     -----------    -----------
Financing activities:
   Principal payments on notes payable to
     related parties                                     (81,796)
   Proceeds from long-term obligations                                1,613,500
   Principal payments on long-term obligations          (200,500)       (95,800)
                                                     -----------    -----------
            Net cash provided by (used in)
               financing activities                     (282,296)     1,517,700
                                                     -----------    -----------

Net increase (decrease) in cash                         (902,770)       837,678
Cash, beginning of year                                1,344,608        506,930
                                                     -----------    -----------

Cash, end of year                                    $   441,838    $ 1,344,608
                                                     ===========    ===========

Supplemental disclosure of cash flow data:
   Interest paid                                     $    88,397    $    36,431
                                                     ===========    ===========

See Notes to Consolidated Financial Statements.


                                      F-7
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Business and summary of accounting policies:
         Business:
            BioCoral, Inc. ("BioCoral") was incorporated under the laws of the
            State of Delaware on May 4, 1992 and organized originally as a
            "blind pool" or "blank check" company for the purpose of either
            merging with or acquiring an operating company. BioCoral was a
            "development stage company" for accounting purposes until March 25,
            1994 when it acquired all of the issued and outstanding stock of
            Cabestan, Inc. ("Cabestan"), which concurrently acquired commercial
            real estate properties from a commonly-controlled related party. As
            further explained in Note 2, Cabestan entered into an agreement to
            sell its real estate properties in October 1996, and the Company
            received the final portion of the sales proceeds from its
            discontinued real estate operations in 1999.

            During 1995, BioCoral commenced biomaterials operations when it
            acquired an option to purchase a controlling interest in Inoteb SA
            ("Inoteb"), a French corporation, that was a developer and
            manufacturer of medical products. During July 1996, BioCoral
            exercised its option for the purchase of the controlling interest in
            Inoteb and increased its interest through additional purchases of
            common stock to 67% in 1997 and 100% in 1998 (see Note 2).

            BioCoral, Inoteb, Cabestan and BioCoral's other subsidiaries are
            referred to collectively herein as the "Company."

            As of December 31, 1999, substantially all of the Company's
            continuing operations were biomaterials operations conducted through
            Inoteb. Such operations consist primarily of researching and
            developing, manufacturing and marketing bone substitute materials
            made from coral and other orthopedic, oral and maxillo-facial
            products, including products marketed under the trade name of
            BioCoral. The Company has obtained regulatory approvals to market
            its products throughout Europe and in Canada and certain other
            countries. However, the Company has not applied for the regulatory
            approvals needed to market its products in the United States.
            Obtaining such approvals in the United States could take a long time
            and involve substantial expenditures.

            During 1994, BioCoral filed a registration statement under the
            Securities Exchange Act of 1934 and, as a result, it became subject
            to requirements to file periodic reports with the United States
            Securities and Exchange Commission.

         Principles of consolidation:
            The consolidated financial statements include the accounts of
            BioCoral and its wholly-owned subsidiaries. All significant
            intercompany accounts and transactions have been eliminated in
            consolidation.

         Use of estimates:
            The preparation of financial statements in conformity with generally
            accepted accounting principles requires management to make estimates
            and assumptions that affect certain reported amounts and
            disclosures. Accordingly, actual results could differ from those
            estimates.


                                      F-8
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Business and summary of accounting policies (continued):
         Cash:
            The Company maintains cash deposits in domestic and foreign banks.
            At December 31, 1999, the Company had cash balances that exceeded
            insurance limits by approximately $285,000. The Company reduces its
            exposure to credit risk by maintaining such deposits in major
            financial institutions and monitoring their credit ratings.

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

         Property and equipment:
            Property and equipment are recorded at cost. Depreciation is
            computed using the straight-line method over the estimated useful
            lives of the assets (15 years for properties and three to ten years
            for equipment).

         Goodwill:
            Goodwill representing the excess of the costs of increasing the
            Company's interest in Inoteb to 100% from 67% in 1998 over the
            Company's proportionate interest in the fair value of the underlying
            net assets at the date of acquisition is amortized using the
            straight-line method over an estimated useful life of thirteen
            months.

         Impairment of long-lived assets:
            The Company has adopted the provisions of Statement of Financial
            Accounting Standards No. 121, "Accounting for the Impairment of
            Long-Lived Assets and for Long-Lived Assets to be Disposed of"
            ("SFAS 121"). Under SFAS 121, impairment losses on long-lived
            assets, such as property and equipment, licenses and goodwill, are
            recognized when events or changes in circumstances indicate that the
            undiscounted cash flows estimated to be generated by such assets are
            less than their carrying value and, accordingly, all or a portion of
            such carrying value may not be recoverable. Impairment losses are
            then measured by comparing the fair value of assets to their
            carrying amounts.

         Advertising:
            The Company expenses the cost of advertising and promotions as
            incurred. Advertising costs charged to operations were not material
            in 1999 and 1998.

         Research and development:
            Costs and expenses related to research and product development are
            expensed as incurred.


                                      F-9
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Note 1 - Business and summary of accounting policies (concluded):
          Income taxes:
            The Company accounts for income taxes pursuant to the asset and
            liability method which requires deferred tax assets and liabilities
            to be computed annually for temporary differences between the
            financial statement and tax bases of assets and liabilities that
            will result in taxable or deductible amounts in the future based on
            enacted tax laws and rates applicable to the periods in which the
            temporary differences are expected to affect taxable income.
            Valuation allowances are established when necessary to reduce
            deferred tax assets to the amount expected to be realized. The
            income tax provision or credit is the tax payable or refundable for
            the period plus or minus the change during the period in deferred
            tax assets and liabilities.

         Earnings (loss) per common share:
            The Company presents "basic" earnings (loss) per common share and,
            if applicable, "diluted" earnings per common share pursuant to the
            provisions of Statement of Financial Accounting Standards No. 128,
            "Earnings per Share" ("SFAS 128") and certain other financial
            accounting pronouncements. Basic earnings (loss) per common share is
            calculated by dividing net income or loss by the weighted average
            number of common shares outstanding during the period. The
            calculation of diluted earnings per common share is similar to that
            of basic earnings per common share, except that the denominator is
            increased to include the number of additional common shares that
            would have been outstanding if all potentially dilutive common
            shares, such as those issuable upon the exercise of stock options,
            were issued during the period.

            Since the Company had losses in 1999 and 1998, the assumed effects
            of the exercise of stock options were anti-dilutive and,
            accordingly, diluted per share amounts have not been presented in
            the accompanying consolidated statements of operations.

         Foreign currency translation and transactions:
            Assets and liabilities of Inoteb are translated at current exchange
            rates and related revenues and expenses are translated at average
            exchange rates in effect during each year. Resulting translation
            adjustments, which are recorded as a separate component of
            stockholders' deficiency if material, and foreign currency
            transaction gains and losses, which are included in net income or
            loss in each year, were not material as of December 31, 1999 and
            1998 and for the years then ended.

         Recent pronouncements:
            The Financial Accounting Standards Board and the Accounting
            Standards Executive Committee of the American Institute of Certified
            Public Accountants had issued certain accounting pronouncements as
            of December 31, 1999 that will become effective in subsequent
            periods; however, management of the Company does not believe that
            any of those pronouncements would have significantly affected the
            Company's financial accounting measurements or disclosures had they
            been in effect during 1999 and 1998.


                                      F-10
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Acquisitions and dispositions:
         Acquisition of Inoteb:
            From July 1996 through December 31, 1997, the Company effectively
            acquired 67% of Inoteb's common stock for consideration comprised of
            1,840,516 shares of common stock with a fair value of $230,000 and
            an intercompany transfer of approximately $678,000. The acquisition
            was accounted for as a purchase. Based on recurring losses and
            uncertainties related to its ability to generate profits in future
            periods from the Inoteb technology, the Company deemed the goodwill
            associated with the acquisition of the 67% interest in Inoteb to be
            impaired and the remaining carrying value of $153,984 was written
            off in 1997.

            During December 1998, concurrent with a corporate reorganization of
            Inoteb, the Company increased its ownership interest in Inoteb's
            outstanding capital stock to 100% for consideration of $890,000, or
            $143,571 after elimination of an intercompany transfer of $746,429.
            The cost of the additional interest in Inoteb, which was purchased,
            effectively, from employees and other related and unrelated parties,
            exceeded the Company's proportionate interest in the underlying net
            assets by $143,571. Such excess was allocated to goodwill. Based on
            the uncertainties related to its ability to generate profits in the
            future from the Inoteb technology, the goodwill associated with the
            purchase of the additional interest will be written off over
            thirteen months (the shortest period allowable under generally
            accepted accounting principles). Amortization expense totaled
            $132,538 in 1999.

         Sale of real estate operations:
            On March 25, 1994, Cabestan commenced real estate operations when it
            purchased commercial rental properties and certain other assets from
            a commonly-controlled entity for total consideration of
            approximately $9,860,000. In October 1996, the Company decided to
            discontinue its real estate operations and entered into an agreement
            to sell the commercial real estate owned for total consideration of
            approximately $6,800,000 before costs directly related to the sale.
            The sale was consummated on February 18, 1997. As of December 31,
            1997, all of the assets and liabilities of the discontinued
            operations had been liquidated except for $430,000 that had been
            deposited in escrow to secure certain minimum rent guarantees made
            to the purchaser. A total of $199,361 was released from escrow
            during 1998 and the remaining escrow account balance of $230,639 as
            of December 31, 1998 was released during 1999. Accordingly, there
            were no remaining assets or liabilities attributable to discontinued
            real estate operations as of December 31, 1999 and there were no
            charges to discontinued operations in 1999 and 1998.


                                      F-11
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Income taxes:
            As of December 31, 1999, the Company had net operating loss
            carryforwards of approximately $8,400,000 available to reduce future
            Federal taxable income which, if not used, will expire at various
            dates through 2019. The Company had no other material temporary
            differences as of that date. Due to the uncertainties related to,
            among other things, the changes in the ownership of the Company,
            which could subject those loss carryforwards to substantial annual
            limitations, and the extent and timing of its future taxable income,
            the Company offset the deferred tax assets attributable to the
            potential benefits of approximately $2,853,000 from the utilization
            of those net operating loss carryforwards by an equivalent valuation
            allowance as of December 31, 1999.

            The Company had also offset the potential benefits of $2,482,000 and
            $2,109,000 from net operating loss carryforwards by equivalent
            valuation allowances as of December 31, 1998 and 1997, respectively.
            As a result of the increases in the valuation allowance of $371,000
            and $373,000 during the years ended December 31, 1999 and 1998,
            respectively, there are no credits for income taxes reflected in the
            accompanying consolidated statements of operations to offset pre-tax
            losses.


Note 4 - Property and equipment:
            Property and equipment used in the Company's medical products
            operations consisted of the following:

                                                             1999        1998
                                                           ---------   ---------
            Land                                           $  10,000   $  10,000
            Buildings and improvements                       219,600     182,110
            Equipment and furnishings                        105,472      85,757
                                                           ---------   ---------
                                                             335,072     277,867
            Less accumulated depreciation                    267,630     230,030
                                                           ---------   ---------

              Totals                                       $  67,442   $  47,837
                                                           =========   =========


Note 5 - Short-term notes payable to related parties:
            At December 31, 1999 and 1998, the Company had outstanding notes
            payable to related parties with aggregate principal balances of
            $347,015 and $428,811, respectively, that are due on demand and bear
            interest at 10%. The notes are secured by 5,221 shares of Inoteb's
            common stock. At December 31, 1999, the noteholders have the option
            to convert the notes at any time into a total of approximately
            405,000 shares of common stock of the Company (which is equivalent
            to a conversion rate of $.8576 per share). Interest on such
            borrowings totaled approximately $41,000 and $43,000 in 1999 and
            1998, respectively. In January 2000, the Company repaid outstanding
            notes payable to related parties with aggregate principal balances
            of approximately $87,000.


                                      F-12
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Long-term debt:
            Long-term debt at December 31, 1999 and 1998 consisted of the
            following:


                                                            1999        1998
                                                        -----------  -----------
            Term loans payable monthly in varying
               installments, including interest
               at rates ranging from 7.75% to
               9.5%, through December 2001 (A)          $   310,500  $   388,700
            Noninterest bearing advances initially
               scheduled to be paid in monthly
               installments through 2002 (B)                307,400      429,700
            8% callable convertible promissory
               notes payable (C)                            800,000    1,500,000
                                                        -----------  -----------
                                                          1,417,900    2,318,400
            Less current portion                            431,800      226,260
                                                        -----------  -----------

            Long-term debt                              $   986,100   $2,092,140
                                                        ===========   ==========

            (A) The loans were secured by equipment with a net carrying value of
                approximately $67,000 at December 31, 1999.

            (B) The advances were made 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. The Company did not receive any material subsidies
                in 1999 and 1998.

            (C) The 8% callable convertible promissory notes payable (the "8%
                Notes") are due on December 31, 2001 and are convertible at any
                time at the holder's option at the rate of $3.50 per share.
                Interest on the 8% Notes is payable annually, at the Company's
                option, either in cash or shares of the Company's common stock.
                The Company sold 8% Notes in the aggregate principal amount of
                $1,500,000 to "accredited investors" during 1998 through a
                private placement intended to be exempt from registration
                pursuant to the provisions of Regulation D of the Securities Act
                of 1933 (the "Act"). Of the total consideration received by the
                Company, $1,250,000 was paid in cash and the balance was paid
                through the exchange of 8% Notes in the principal amount of
                $250,000 for previously outstanding short-term notes payable
                with the same principal amount. During 1999, noteholders
                converted 8% Notes in the principal amount of $700,000 into
                200,000 shares of common stock at $3.50 per share. The
                conversion of shares in 1999 and the exchange of notes in 1998
                were noncash transactions that are not reflected in the
                accompanying consolidated statements of cash flows.


                                      F-13
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Long-term debt (concluded):
          Principal payment requirements on long-term obligations in each of the
          years subsequent to December 31, 1999 are as follows:

             Year Ending
            December 31,                                                 Amount
            ------------                                                 ------
               2000                                                     $431,800
               2001                                                      894,200
               2002                                                       91,900

          Management of the Company believes that the term loans, the
          noninterest bearing advances and the 8% Notes had carrying values that
          approximated their fair values as of December 31, 1999 because the
          interest rates and other relevant terms of such financial instruments
          were the equivalent of those that the Company could have obtained for
          new loans as of that date.


Note 7 - Preferred and common stock:
          As of December 31, 1999, the Company was authorized to issue up to
          1,000,000 shares of preferred stock with a par value of $.001 per
          share. The preferred stock may be issued in one or more series with
          dividend rates, conversion rights, voting rights and other terms and
          preferences to be determined by the Company's Board of Directors. No
          shares of preferred stock had been issued by the Company as of
          December 31, 1999.

          On October 1, 1997, the Company formed a Scientific Advisory Board
          ("SAB") with four members who advise the Company on scientific and
          medical developments relating to its products. Although the Company
          was not contractually obligated to compensate the members of the SAB,
          management decided to issue shares of the Company's common stock with
          a fair value of $78,000 at the effective date of issuance to them to
          compensate them for their services during the twelve month period that
          ended September 30, 1998 and, accordingly, the Company charged $58,500
          to consulting and professional fees for such compensation in 1998. The
          $78,000 of compensation was paid through the issuance of a total of
          62,926 shares of common stock during 1998 with an average fair market
          value at the effective dates of issuance of $1.24 per share.

          During 1998, the Company issued a total of 164,008 shares of common
          stock with a fair market value of $183,333, or an average of $1.12 per
          share, to pay accrued liabilities for consulting services provided to
          the Company during 1998 and 1997, including 155,675 shares issued to
          the Company's Chief Executive Officer.

          The issuances of shares to advisors and consultants described above
          were noncash transactions that are not reflected in the accompanying
          1998 consolidated statement of cash flows.


                                      F-14
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Preferred and common stock (concluded):
          On December 30, 1999, an accredited investor entered into a
          subscription agreement for the purchase of 11,111,111 shares of the
          Company's common stock with a total purchase price of $500,000, or
          $.045 per share. The Company received the proceeds as of March 21,
          2000. Accordingly, the Company has reflected a receivable for the
          amount of the subscription and an equivalent amount of additional
          paid-in capital in the accompanying consolidated balance sheet as of
          December 31, 1999.


Note 8 - Stock option plan:
          On May 4, 1992, the Company adopted a stock option plan (the "Plan")
          pursuant to which options to purchase an aggregate of up to 2,000,000
          shares of common stock may be issued. The exercise price, the manner
          of exercise and the other terms of each option are to be determined by
          the Company's Board of Directors.

          A summary of the status of the Company's shares subject to options as
          of December 31, 1999 and 1998 and the changes during the years then
          ended is presented below:

<TABLE>
<CAPTION>
                                                          1999                    1998
                                                 -----------------------  ---------------------
                                                                Weighted               Weighted
                                                   Shares       Average     Shares      Average
                                                     or         Exercise      or        Exercise
                                                   Price         Price      Price        Price
                                                 ---------       -----    ----------     -----
<S>                                              <C>             <C>         <C>          <C>
            Outstanding, at beginning of year                              1,758,334     $3.56
            Granted                                800,000       $.125       200,000      3.25
            Canceled                                                      (1,958,334)     3.52
                                                   -------                ----------

            Outstanding, at end of year            800,000       $.125        --         $  --
                                                   =======       =====    ==========     =====

            Options exercisable, at end of year    800,000
                                                   =======

            Weighted average fair value of
               options granted during the year       $.125                    $3.25
                                                     =====                    =====
</TABLE>

          Each option under the Plan has been granted to an employee. Options
          for the purchase of 1,200,000 shares were available for grant at
          December 31, 1999.


                                      F-15
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Stock option plan (concluded):
          The Company granted options to employees for the purchase of 650,000
          shares of common stock exercisable at $3.75 per share on December 31,
          1996 which were cancelled on October 1, 1998. The fair value of the
          common stock underlying those options exceeded the exercise price.
          Therefore, the Company charged $1,137,500 to unearned compensation and
          additional paid-in capital upon issuance based on the number of shares
          subject to option and the difference between the estimated fair value
          of an underlying share and the per share exercise price. Unearned
          compensation, which is reflected as a separate component in the
          accompanying 1998 consolidated statement of stockholders' deficiency,
          was being amortized on a straight-line basis over a period of five
          years. General and administrative expenses include amortization of
          $85,312 in 1998. The unamortized unearned compensation of $369,688 as
          of October 1, 1998, the date of the cancellation of the options, was
          charged against additional paid-in capital.

          The issuances of shares to advisors and consultants described above
          were noncash transactions that are not reflected in the accompanying
          1998 consolidated statement of cash flows.

          The Company has elected to make pro forma disclosures, as required by
          Statement of Financial Accounting Standards No. 123, "Accounting for
          Stock-Based Compensation" ("SFAS 123"), of net income or loss as if a
          fair value based method of accounting for stock options had been
          applied if such pro forma amounts differ materially from the
          historical amounts. Therefore, the Company will account for stock
          options in accordance with the provisions of Accounting Principles
          Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
          recognize compensation costs as a result of the issuance of stock
          options based on the excess, if any, of the fair value of the
          underlying stock at the date of grant (or at an appropriate subsequent
          measurement date) over the amount the employee must pay to acquire the
          stock.

          In the opinion of management, if compensation cost for the stock
          options granted to employees had been determined based on the fair
          value of the options at the grant date under the provisions of SFAS
          123 using the Black-Scholes option-pricing model, the Company's pro
          forma net loss and pro forma basic net loss per share arising from
          such computations would not have differed materially from the
          corresponding historical amounts presented in the accompanying
          consolidated statements of operations.

Note 9 - Segment and geographic information:
          During 1998, the Company adopted the provisions of Statement of
          Financial Accounting Standards No. 131, "Disclosures about Segments of
          an Enterprise and Related Information" ("SFAS 131"). Pursuant to the
          provisions of SFAS 131, the Company is reporting segment information
          in the same format reviewed by the Company's management (the
          "management approach"). The Company operates principally in one
          industry segment which includes the research and development,
          manufacture and sale of biomedical materials used in medical products.
          The Company conducts operations outside of the United States,
          principally in France.


                                      F-16
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9 - Segment and geographic information (concluded):

            Information about the Company's operations and assets in different
            geographic locations for 1999 and 1998 is shown below:

<TABLE>
<CAPTION>
                                           United
                                           States      France       Others    Consolidated
                                         ----------  -----------   --------   ------------

<S>                                      <C>         <C>           <C>        <C>
         1999


         Revenues:
            Net sales                                $   414,800              $   414,800
            Other income                 $   15,333        3,074                   18,407
                                         ----------  -----------              -----------
                Totals                       15,333      417,874                  433,207
                                         ----------  -----------              -----------

         Operating expenses:
            Interest                        162,320      32,200                   194,520
            Depreciation of property
              and equipment                              37,600                    37,600
            Amortization of goodwill        132,538                               132,538
            Other operating expenses        449,524     828,845    $  6,601     1,284,970
                                         ----------  -----------   --------   -----------
                Totals                      744,382      898,645      6,601     1,649,628
                                         ----------  -----------   --------   -----------

         Net loss                        $ (729,049) $ (480,771)   $ (6,601)  $(1,216,421)
                                         ==========  ===========   ========   ===========


         Total assets                    $1,044,039  $  454,841    $     --     $ 1,498,880
                                         ==========  ===========   ========   ===========

         1998


         Revenues - net sales                        $   405,900              $   405,900
                                                     -----------              -----------

         Operating expenses:
            Interest                     $   73,879       15,500                   89,379
            Depreciation of property
              and equipment                     430       80,100                   80,530
            Amortization of unearned
              compensation                   85,312                                85,312
            Other operating expenses        329,111      980,300   $ 38,648     1,348,059
                                         ----------  -----------   --------   -----------
                Totals                      488,732    1,075,900     38,648     1,603,280
                                         ----------  -----------   --------   -----------

         Net loss                        $ (488,732) $  (670,000)  $(38,648)  $(1,197,380)
                                         ==========  ===========   ========   ===========

         Total assets                    $1,016,510   $1,313,335   $   --     $ 2,329,845
                                         ==========  ===========   ========   ===========
</TABLE>


                                      F-17
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Subsequent event:

            On January 1, 2000, the Company commenced a private offering (the
            "New Offering") to "Accredited Investors" of units of 6% convertible
            promissory notes payable that are due December 31, 2002 (the "6%
            Notes"). The New Offering will expire on March 31, 2000 (unless
            extended by the Company for up to three months) and is intended to
            be exempt from registration pursuant to the provisions of Regulation
            D of the Act. The 6% Notes will be convertible at any time at the
            holder's option, subject to Company approval, at the rate of $.045
            per share. Interest on the 6% Notes will be payable annually, at the
            Company's option, either in cash or shares of the Company's common
            stock. Each unit subject to the New Offering consists of 6% Notes in
            the principal amount of $100,000. The Company initially offered a
            minimum of 15 units, with an aggregate principal balance of
            $1,500,000, and a maximum of 30 units, with an aggregate principal
            balance of $3,000,000. As of March 21, 2000, the Company had sold 15
            units, completing the minimum requirement under the new offering.

                                     * * *


                                      F-18