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

                                    FORM 10-K

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

                      For the Year Ended December 31, 2008

                           Commission File No. 0-23512

                                 Biocoral, Inc.
               (Exact name of issuer as specified in its charter)

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

 38 rue Anatole France, 92594 Levallois     011-331-4757-9843            N/A
           Perret Cedex France             (Issuer's telephone       (Zip Code)
(Address of Issuer's principal executive    number, including
                offices)                       area code)

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                          Common Stock, $.001 par value
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_| No |X|

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|

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

Indicate by check mark if disclosure of delinquent filers, in response to Item
405 of Regulation S-K, is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |_|

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large Accelerated Filer |_|   Accelerated Filer |X|    Non-Accelerated Filer |_|

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

The issuer's revenues for the year ended December 31, 2008 were $499,437.

<PAGE>

The aggregate market value of the registrant's voting and non-voting common
equity held by non-affiliates as of June 30, 2008 was approximately
$170,906,805.

The number of outstanding shares of the registrant's common stock as of March 2,
2009 was 11,443,787.

Documents Incorporated by Reference: None.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                                                     Page
<S>                                                                                                        <C>
Item 1.    Description of Business.....................................................................    1
Item 1A.   Risk Factors................................................................................    9
Item 1B.   Unresolved Staff Comments...................................................................    12
Item 2.    Description of Property.....................................................................    12
Item 3.    Legal Proceedings...........................................................................    12
Item 4.    Submission of Matters to a Vote of Security Holders.........................................    12

PART II
Item 5.    Market for Common Equity and Related Stockholder Matters....................................    12
Item 6.    Selected Financial Data.....................................................................    13
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.......    14
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.                                     17-18
Item 8.    Financial Statements and Supplementary Data.................................................    F-1 - F-20
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........    19
Item 9A.   Controls and Procedures.....................................................................    19
Item 9B.   Other Information...........................................................................    19

PART III
Item 10    Directors, Executive Officers, Promoters and Control Persons................................    19
Item 11.   Executive Compensation......................................................................    21
Item 12.   Security Ownership of Certain Beneficial Owners and Management..............................    23
Item 13.   Certain Relationships and Related Transactions..............................................    24
Item 14    Principal Accountant Fees and Services......................................................    24

PART IV
Item 15.   Exhibits and Reports on Form 8-K............................................................    24
           Signatures..................................................................................    26
</TABLE>

                             -----------------------

      This Registration Statement contains trademarks, service marks and
registered marks of other companies, as indicated. Trademarks identified by (R)
and (TM) are registered trademarks or trademarks that are the properties of
their respective owners.

                             -----------------------

           PRELIMINARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

      This Registration Statement contains forward-looking statements that
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may," "should,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of these terms or other comparable
terminology. Specific forward-looking statements contained in this Registration
Statement include, but are not limited to, our (i) expectations for marketing
and sales opportunities in diverse markets; (ii) belief that we may require more
capital; (iii) belief that alternative sources of financing are available if
required; and (iv) anticipation that we will not pay a cash dividend on our
common stock in the near future. These statements are only predictions and
involve known and unknown risks, uncertainties, and other factors, including the
risks in Item 1A. Risk Factors, which may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

      While these forward-looking statements, and any assumptions upon which
they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein. Except as required by applicable
law, including the securities laws of the United States, we do not intend to
update any of the forward-looking statements to conform these statements to
actual results.

<PAGE>

PART I

Item 1. Description of Business

Background

Biocoral, Inc., a Delaware corporation, is an international biomaterials
"tissue-engineering" company specializing in the research, development and
commercialization of patented high biotechnologies and biomaterials in the
health care area. Through our subsidiaries, Biocoral, Inc. researches, develops,
manufactures and commercializes bone graft substitutes and other high technology
patented biomaterials in a number of countries outside the United States. We
entered the biomaterials field in 1995 when we acquired Inoteb, SA, a French
corporation from 10 individuals "the founders", all French citizens. The shares
and bonds of Inoteb acquired in 1995 represented, at such time, 51.5% of the
capital stock of Inoteb. We increased our ownership percentage through several
additional investments in Inoteb common stock to 67% in 1997 and to 100% in
1998. Since 2005, we have conducted the production and marketing of our products
through our wholly owned French subsidiary "Biocoral France" which was
established in that year. The only remaining operations in Inoteb involve
finalizing its previous programs of research and development.

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

Biocoral(R)

Biocoral(R) our primary product, is a natural coral "carbonate calcium" derived
wholly mineral bone graft substitute and is used by surgeons and practitioners
because of its biocompatibility, resorbability, osseo conduction and safety.
Certain chemical, physical and structural characteristics of coral are very
similar to that of human bone tissue. Biocoral(R) is derived from three
particular species of coral naturally present in abundance. Biocoral(R) is
primarily (more than 98%) comprised of calcium carbonate. Porous and resorbable,
Biocoral(R) is prepared in microgranules as well as in engineered shapes
according to specific indication. Due to its similarity to bone tissue,
Biocoral(R) is compatible, resorbed by the body as new bone growth invades the
Biocoral(R) and is replaced by neoformed invasion. It is highly porous with
numerous interconnected channels which allow a total migration to the center of
the implant free of contamination risk. Because Biocoral(R) is resorbed, it can
be combined with antimicrobials, anticancer agents or other pharmaceuticals for
slow release into bone tissue, resulting in an advantage over autologous bone
grafts. Since 2000 we have worked with an accredited European university
research group on purification of our raw material, coral, in order to produce a
natural wholly mineral product. After a long-term collaboration we have
finalized the development of a method for purification of our raw material coral
which will allow us to offer Biocoral(R) as a natural wholly mineral bone
substitute. We have filed the various international patents for this method of
purification and the final product issued using this method. This purification
method will allow us to offer what we believe will be the only natural wholly
mineral bone substitute. The French patent covering the purification of our raw
material and its uses in France has been granted during July 2006 and the
European Patent has been granted during April 2007. The Company believes that in
the near future the company's patents covering this technology will receive
approval in many other countries where the company has already filed its
applications.

The principal current alternative to Biocoral(R) is the utilization of
autologous (from the patient's own body) bone grafts. The use of autologous bone
grafts requires the patient to undergo one or more additional surgeries to
harvest the bone graft material. This is not always feasible due to the
condition of the patient or other contraindications, and must be shaped in a
separate procedure to fit the graft area.

According to our French subsidiary, Biocoral(R) has been used in approximately
500,000 patients in various countries, principally in Western Europe and Korea.
Biocoral(R) was originally patented in France in 1979, with patents granted in
the United States in 1982, and in Japan in 1989. Our French subsidiary acquired
the patent rights to Biocoral(R) from "National Agency for Valorization of
Research" (l'ANVAR), known currently as (OSEO) and "French National Center for
Scientific Research" (CNRS), both French governmental agencies. Through our
subsidiaries, we have developed twelve additional patent titles, in various
countries in Europe, Switzerland, Canada, Japan, Australia and United States,
for various applications and uses of our products, including, among others,
osteoporosis remediation, autologous glue and combination with growth factor. As
result of these twelve patent titles, we own, various patents covering our
technologies which have been granted by various countries' official government
patent office, including most European Union countries, Canada, and in the
United States by the US Department of Commerce Patent and Trademark Office.

We believe that our method for purification of our natural coral will reinforce
our technologies and the uses of our product in the various indications over
which we own patents.

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<PAGE>

Using proprietary manufacturing processes, our chief product, Biocoral(R), is a
resorbable biomaterial derived from natural carbonate calcium wholly mineral in
the metastable crystalline aragonite form in a natural condition that is
ocean-generated coral. It is used as bone graft substitutes and has certain
characteristics (including chemical composition, porosity, mineral content and
bioactive properties) that permit its safe, contamination-free use. Its
similarity to human bone facilitates its replacement by newly-formed bone.
Substantially all of our revenue has been derived from sales of the first
generation of our products. The second generation of products and their
application after long years of research and development and success of several
clinical applications now are ready for marketing. Our product application in
the treatment of bone disease associated with natural bone demineralization, for
example, such as in cases of osteoporosis fractures and their prevention, is
based on technology that is protected by strong patents which have thus far been
granted by various countries by their official government patent office,
including most European Union countries, Canada, Australia, Japan and in the
United States by the US Department of Commerce Patent and Trademark office.

We have not yet begun to seek FDA approval for sale of our products in the
United States but are preparing the documentation required for our product
homologation application in the United States. We have identified the
requirements for this application and approached a US medical supply distributor
in order to access the US market. An accredited scientific team in the US has
conducted human clinical studies with a five-year follow up to confirm bone
reconstruction in oral application. This study confirmed the stability of the
successful result and management believes that this study will facilitate FDA
approval for our product used in this indication when we file for FDA approval.
We anticipate submitting this application during 2009. Canadian approval of
Biocoral(R) has been renewed in 2004 by the Canadian Health Care Authority
"Sante Canada," and our products are already commercialized in the European
Union and Asia. During 2005, we entered into a distribution agreement with a
Canadian medical supply company in order to access the Canadian market.

Clinical Applications

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

Osteoporosis, "A Bone Disease Associated with Natural Bone Demineralization",
Patented Application

We have developed from 1994 and since successfully experimented with the
application of our product Biocoral(R) for the treatment and prevention of
osteoporotic and or low bone mass fracture. We developed and patented this
application in most countries around the world which covers the use of our
product and any other product based on the use of calcium salts.

Osteoporosis and its bone complications including hip fractures have been are
and will be in the future a public health problem for the major economies for
the world. Because of the increased life expectancy of the population, each
family had, has or will have a grandparent or close relative, fall victim to
what the public health authorities do not hesitate to call as an epidemic.

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

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

Some statistics

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


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<PAGE>

The clinical trials conducted by our subsidiaries over the past twelve years
have demonstrated the feasibility of this treatment to reduce the consequences
of fractures caused by osteoporosis and to avoid the occurrence of fracture as
well. We are developing several variants of our Biocoral(R) technology aimed at
treatment of bone disease due to natural bone demineralization (such as
osteoporosis), and Treatment and Prevention of Osteoporotic Fracture.
Biocoral(R) offers a superior method of preventing and repair of bone fractures
due to osteoporosis. It has the ability to help the skeletal system, reinforcing
it where it is weak and fragile. Biocoral(R) can serve both to heal bones that
are already fractured and to prevent bone fractures from occurring. Phase II
clinical trials in Europe demonstrated the efficacy of Biocoral(R) for local
osteoporosis treatment in rebuilding bone, particularly in combination with
osteodensimatic screening.

In 2000, we began Phase III multi-center clinical trials of our product,
"Biocoral(R)", for the treatment of hip fractures due to osteoporosis, in 14
clinics (Military and Civilian) in Europe. The study has been covering 123
elderly persons suffering from hip fractures associated with natural bone
demineralization and principally originating from Osteoporotic fractures. The
study was monitored by an independent organization in France called Biomatech
located in city of Lyon which has been chosen directly by the French government
agency "National Agency for Valorization of Research" (l'ANVAR), known currently
as (OSEO).

Following the presentation of the prospective report in March 11, 2006 to the
representatives of the participating hospital and clinic centres for review and
comments, the additional analysis have been conducted by Biomatech which confirm
the prospective report.

During January 2007, we received the final report produced by independent
monitoring and an independently directed investigation. The final report
confirms the therapeutic benefit of our product Biocoral(R) in the treatment of
such fractures which will permit better patient recovery, allowing patients
faster mobility and return to a healthy state with a very low risk of
refracture. The Company believes that the study is a unique and first in the
world covering this area. The Company is currently preparing to launch the use
of its products in this patented application.

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

We own, through our wholly-owned subsidiary, various patents in the application
of treatment of bone disease due to natural bone demineralization (such as
osteoporosis) and "Treatment and Prevention of Osteoporotic Fractures." Our
technology underlying this application is protected by strong patent
applications in many countries around the world where patent applications were
filed. Our patent applications in this application have thus far been filed and
granted by various countries' official government patent offices, including 17
European Union countries, Japan, Australia, and in the United States by the US
Department of Commerce Patent and Trademark Office. Our patent application in
Canada was granted during 2005. Our patent covering technologies in this
application in addition to protecting use of our Biocoral(R) product, also
covers any other product based on calcium salts. Most of the bone substitutes in
the market are based on calcium salts such as hydroxyapatite (phosphate of
calcium). In fact because of validity and coverage of our patents in this
particular application, our competitors cannot offer similar products composed
of phosphate of calcium for use in this treatment to compete with Biocoral(R),
even if a competitor were able to conduct successful clinical studies and
demonstrate that its product could produce a satisfactory result, any attempt to
manufacture or market the product would violate our patents. To the best of our
knowledge, as of the date of this report, none of our competitors have attempted
such a clinical study in this particular treatment.

Autologous Fibrin Glue

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

                                       3
<PAGE>

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

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

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

Having concluded our investigation of this problem, we determined that in order
to restart the program required by AFSSAPS, we had to replace the manufacturer
and the preparation materials used. We were in negotiations with several
accredited medical device manufacturers which specialize in the type of blood
bags needed for our medical device. However, these negotiations were
unsuccessful, and we do not believe at this time that we will be able to
complete the program successfully. Failure to successfully complete the program
effectively prevents us from restarting the marketing of this product and could
negatively affect our future financial prospects in that we will not realize
additional revenues as a result of our inability to market the glue than we
would have realized had we been able to market the glue.

As a result of this loss, in December 2008, we filed a suit seeking
approximately (euro)110,000,000 as damages which represent lost profits we would
have realized from the marketing of the glue. Pursuant to our agreement and
under a written proposal provided by us in 2001 and accepted by Macopharma,
Macopharma who requested to be in charge of the manufacture of the product and
distribute it under a worldwide license. As outlined in the proposal, projected
revenue was estimated through 2015 (the year of the expiration of the patents
covering our technology for the profit) at a minimum of (euro) 220,000,000.
Under the proposal, Macopharma was to pay us a 50% royalty of the estimated
projected revenue during the years of commercialization until the expiration of
the patents for the product. Thus we are suing for the (euro)110,000,000 we
would have realized through 2015. We also believe that Macopharma engaged unfair
competition as it entered into an agreement with one of our competitors to
produce a similar product.

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

During 2005, we entered into a collaboration agreement with TERUMO EUROPE N.V, a
European Subsidiary of TERUMO CORPORATION a Japanese company which is active in
healthcare area in order to conduct a test protocol to insure the feasibility of
producing Thrombin from Therapeutic plasma in contact with our product,
"Biocoral(R)".

The test protocol has been conducted by both companies during 2005. The report
of the study made by TERUMO EUROPE N.V. and countersigned by the company
confirmed such feasibility of our Technology.

In addition, at the same time, we entered into a letter of intent "letter of
Intent" with TERUMO EUROPE N.V., pursuant to which TERUMO intends to obtain the
right to manufacture and market medical devices covered by our patents and by
the results of the laboratory test (including any future improvement patents
covering this technology) of which Biocoral, Inc. is or will be the owner. By
the same letter of Intent, Biocoral, Inc. commits itself to negotiate a possible
cooperation agreement regarding the "Thrombin preparation from Therapeutic
Plasma and Biocoral(R) with

                                       4
<PAGE>

TERUMO on an exclusive basis. These exclusive negotiations took place for a
period of three (3) months. The company declined to extend the exclusivity
period in order to be free to pursue any better proposal for development of its
technology relative to which we have received indications of interest.

Composite Biocoral(R) and Growth Factor

For more than 19 years, studies have been undertaken to demonstrate that it is
possible to accelerate the bone regeneration process and repair by combining
growth factors with a support matrix such as Biocoral(R). Some scientific
research has shown that Biocoral(R), as a biomaterial, represents a useful
support for growth factors. European clinical trials conducted over the several
years have had positive results confirming the acceleration of the bone
regeneration process and process. We hold various patents covering the
technology underlying this application (composite of Biocoral(R) and growth
factors) owned by our wholly-owned subsidiary in many countries around the world
where patent applications were filed. Our patent applications in this
application to date have been granted by various countries' official government
patent office, including most European Union countries, Canada, and in the
United States by the US Department of Commerce Patent and Trademark Office.

Raw Materials and Manufacturing

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

Since years 2000, the Company has collaborated with accredited scientists as
well as with a special laboratory located at one of most prestigious European
universities to develop a method of purification of its raw material "coral," in
order to remove the trace amounts (between 0.016 to 0.026% depending upon the
type of coral used) of amino acids which were present, without any change in
chemical and crystalline structure of the coral. As a result of these efforts,
the small percentage of amino acid can now be removed from our raw material. The
purification of raw materials permits us to improve their performance and to
offer what we believe to be the only natural wholly mineral bone substitute
product in the world. We also filed a patent for this purification method
including the final product issued from it. The patent will protect our main
product for an additional 20 years from the initial date when the patent was
filed. The patent was filed in France in 2003, with PCT extension in December
2004. Our new technology of purification of our natural coral will allow us to
offer what we believe will be the only natural wholly mineral bone substitute.
The French and European patents covering the purification of our raw material
and its uses have been already been granted.

Biocoral(R) has been marketed since the end of the 1980's and was the first bone
substitute registered in France with TIPS (Tarifs Interministeriels des
Prestation Sanitaires). Nevertheless within the framework of its registration,
Biocoral(R) has been received approving opinion of Microbiological Committee of
Health on July 05, 1995 referenced under the number 9600201B01.

On December 30, 1996, Biocoral(R) received "EC certification" allowing it to be
marketed in the European Union. This authorization has been renewed several
times and it is currently in force.

The Company's manufacturing facility is located in Saint-Gonnery in France, and
is complied with ISO 13485: 2003 certification which allows the Company to
continue offering and market its products in CANADA.

In December 2007, the Company was audited by LNE (Laboratoire national de
metrologie et d'essais) for the renewal of its EC certificate and ISO 13485:
2003 certification, which renewal was granted. The certificates are issued
according to the rules of G-MED certification/LNE/G-MED Notified Body for
Medical Devises. Additionally, we are audited annually by LNE to maintain our
certifications. To continue certification, the Company met annual requirements
in environmental policy, compliance, planning, management, structure and
responsibility, training, communication, document control, operational control,
emergency preparedness and response, record keeping and management review. In
December 2008, the Company was audited by LNE as part of annual requirement and
maintained its certifications.

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

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<PAGE>

Competition

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

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

In October of 1998, Interpore introduced resorbable Pro Osteon(TM). Pro
Osteon(TM) is harvested from marine coral exoskeletons that are hydrothermally
converted to calcium phosphate, known as hydroxyapatite.

Effective June 22, 2004, Interpore closed its merger with Biomet, Inc. pursuant
to which Biomet acquired all of the outstanding shares of Interpore stock for
cash at $14,50 per share with a 29% premium for a total amount of $259 million.

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

We believe that Biocoral(R) provides an attractive alternative to autograft and
allograft bone graft materials. In an autograft procedure, bone material is
first harvested from another part of the patient's skeleton and then, in a
second procedure, grafted to the site of the bone deficit. The harvesting
procedure increases operating time and expense, and can lead to complications
such as infection, excessive blood loss, chronic pain and deformity. When an
autograft is not feasible or desirable, allograft bone, typically obtained from
a cadaver, can be used. In order to maintain mechanical and biological
properties, some allograft bone is not sufficiently secure to avoid all risks of
disease transmission. Therefore, unlike Biocoral(R), which is a sterile and
biocompatible material, allograft bone carries the risks of implant rejection
and the transmission of infectious agents such as hepatitis and HIV. The use of
Biocoral(R) entails none of these risks and provides clinical results comparable
to those of autograft material in suitable condition for use. We believe
Biocoral(R) is the only natural wholly mineral bone graft substitute actually
available on the market.

Biocoral(R) was originally patented in France in 1979, in the United States in
1982, and in Japan in 1989. Our French subsidiary acquired the patent rights for
Biocoral(R) from "National Agency for Valorization of Research" (l'ANVAR), known
currently as (OSEO) and, the "French National Center for Scientific Research"
(CNRS), a French governmental agency. Through our subsidiaries, we have
developed twelve additional patent titles, in various countries in Europe,
Switzerland, Canada, Japan, Australia and United States, for various
applications and uses of our products, including, among others, osteoporosis
remediation, autologous glue and combination with growth factor. As result of
these twelve patent titles, we own various patents covering our technologies
which have been granted by various countries official government patent office,
including most European Union countries, Canada, Australia, Japan and in the
United States by the US Department of Commerce Patent and Trademark Office.

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

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

Our technology underlying this application is protected by strong patent titles
in many countries around the world where patent applications were filed. Thus
far, most of these have been granted and issued by the official government

                                       6
<PAGE>

patent offices in the countries where they were filed, including most European
Union countries, Canada and in the United States by the US Patent and Trademark
Office.

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

We have been able to compete in Europe against producers that also sell products
in the United States. Despite their significantly greater resources, management
believes that it will, once our products have been approved by the FDA, be able
to be competitive with such companies because of the quality of our products.
See "Business -- Government Regulation." Biocoral(R) has been used in European
dental applications for approximately more than 20 years. These multiple uses,
together with the scientific results of our in vivo use and clinical trials have
demonstrated the efficacy of using Biocoral(R) for bone regeneration in dental
applications. We compete with many businesses in the production and distribution
of biomaterials for filling bone cavities before rehabilitation of partially and
totally edentulous patients. These businesses compete primarily on the basis of
product performance and price, as well as customer loyalty and service.
Biocoral(R) also competes with bone grafts and bone graft substitutes. Companies
selling competitive products sometimes also sell dental implants, so bundling
these products is often a strategy. All of these businesses compete primarily on
the basis of product performance and price, as well as on customer loyalty and
service.

Management believes that our products are superior to our competitors' products.
We have identified the requirements for this application and approached a US
medical supply distributor in order to access the US market. An accredited
scientific team in the US has conducted human clinical studies with a 5 year
follow up to confirm bone reconstruction in oral application. This study
confirmed the stability of the successful result and management believes that
this study will facilitate FDA approval for our product used in this indication
when we file for FDA approval. We are focusing on increasing our European and
other sales of our products and entering into joint ventures with key strategic
partners for distribution of our products, research and development and the
like. No assurance can be given that any such arrangements will be reached or
that they will be profitable.

We believe that in certain cases, some of our competitors are infringing on our
patents. We are exploring various options for enforcing these patents where
necessary. Bio Holdings, our wholly-owned subsidiary and the owner of all of our
patents has sent a written warning to the infringing parties in France, England
and Germany and has limited its focus to a few companies in order to abate the
cost. The Company knows this type of litigation is costly in Europe and even
more so in the US and will only pursue action against infringers in the US if it
is able to obtain funding to cover the cost or if it can do so on a contingency
basis in order not to have it impact the Company's financial condition. If the
Company is unable to do either, it will not pursue such litigation.

Governmental Regulation

Biocoral(R) although marketed since the end of the 1980's, was the first bone
substitute registered in France with TIPS (Tarifs Interministeriels des
Prestation Sanitaires). Nevertheless within the framework of its registration,
Biocoral(R) has been received approving opinion of Microbiological Committee of
Health on July 05, 1995 referenced under the number 9600201B01.

Biocoral(R) received the authorization to be marketed in the European countries
"EC label" on December 30, 1996. Since, this authorization has been renewed
several times and it is current.

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

                                       7
<PAGE>

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

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

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

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

Employees

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

Subsidiaries

The Company conducts its operations in Europe via several subsidiaries,
including its French (Biocoral France and Inoteb) and UK (Biocoral UK Limited)
subsidiaries and Bio Holdings International Limited (see below).

Bio Holdings International Limited

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

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

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

      -     looks after and maintains patents.

                                       8
<PAGE>

Additional Information

      We maintain a website, www.biocoral.com, which includes financial and
other information for investors. We provide access to our SEC filings on our
website, free of charge, through a link to the OTC Bulletin Board's website.
Through that link, our filings are available as soon as reasonably practical
after we file the documents. These filings are also available on the SEC's
website at www.sec.gov. In addition, the public may read and copy any materials
that we file with the SEC at the SEC's Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549 and may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330.

Item 1A. Risk Factors

      AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN
ADDITION TO THE OTHER INFORMATION IN THIS ANNUAL REPORT ON FORM 10-K AND IN OUR
OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING OUR
SUBSEQUENT REPORTS ON FORMS 10-Q AND 8-K, YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS BEFORE DECIDING TO INVEST IN SHARES OF OUR COMMON STOCK
OR TO MAINTAIN OR INCREASE YOUR INVESTMENT IN SHARES OF OUR COMMON STOCK.
ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE
CURRENTLY DEEM IMMATERIAL MAY ALSO AFFECT OUR BUSINESS, FINANCIAL CONDITION AND
OPERATING RESULTS. IF ANY OF THE FOLLOWING RISKS, OR ANY OTHER RISKS NOT
DESCRIBED BELOW, ACTUALLY OCCUR, IT IS LIKELY THAT OUR BUSINESS, FINANCIAL
CONDITION AND OPERATING RESULTS COULD BE SERIOUSLY HARMED. AS A RESULT, THE
TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE PART OR ALL
OF YOUR INVESTMENT.

      To date, we have generated only limited revenues from sales of our
products and have an accumulated deficit.

      Until 2005, more than two-thirds of our business was in research and
development with an emphasis on developing our technology in order to produce
marketable products. We have completed most of our research program and are now
ready to begin commercialization and marketing of our products in new
applications and increase the commercialization efforts in actual products.
However, to date, we have generated only limited revenues and have had to raise
capital from investors through debt and equity offerings in order to sustain our
research and development efforts. For the fiscal year ended December 31, 2008,
we had net sales of approximately $499,437 an accumulated deficit of
$22,268,045.

      We can provide no assurance of the successful and timely marketability of
our products.

      Our success will depend on our ability to make out products commercially
competitive products on a timely basis. The pre-marketing schedules for our
products may be affected by a variety of factors, including difficulties,
proprietary technology of others, and changes in governmental regulation, many
of which will not be within our control. Any delay in the pre-marketing,
introduction or marketing of our products could result either in such products
being marketed at a time when their cost and performance characteristics would
not be competitive in the marketplace or in the shortening of their commercial
lives. In light of the long-term nature of our projects, the unproven technology
involved and the other factors, there can be no assurance that we will be able
to market our products successfully.

      We must comply with significant government regulations.

  The manufacture, pre-marketing and marketing of biotechnologies and
biomaterials for use in health care are subject to regulation, primarily by the
FDA in the United States and by comparable authorities in other countries. These
national agencies and other federal, state, local and foreign entities regulate,
among other things, research and development activities (including testing in
animals and in humans) and the testing, manufacturing, handling, labeling,
storage, record keeping, approval, advertising and promotion of the products
that we are developing. Noncompliance with applicable requirements can result in
various adverse consequences, including, delay in approving or refusal to
approve product licenses or other applications, suspension or termination of
clinical investigations, revocation of approvals previously granted, fines,
criminal prosecution, recall or seizure of products, injunctions against
shipping products and total or partial suspension of production and/or refusal
to allow a company to enter into governmental supply contracts.

                                       9
<PAGE>

We rely upon patents to protect our technology. We may be unable to protect our
intellectual property rights.

      Our ability to compete effectively will depend on our ability to maintain
the proprietary nature of our technologies, including Biocoral(R) and its use in
different applications. Through twelve patent title applications and as of the
date of this report, we own various patents covering our technologies which have
been granted by various countries' official government patent office, including
most European Union countries, Canada, and in the United States by the US
Department of Commerce Patent and Trademark Office. We depend upon
confidentiality agreements with our officers, employees and contracting
counterparties to maintain the proprietary nature of the technology. These
measures may not afford us sufficient or complete protection, and others may
independently develop technology similar to ours, otherwise avoid the
confidentiality agreements, violate our patents or produce patents that would
materially and adversely affect our business, prospects, financial condition,
and results of operations. Such competitive events, technologies and patents may
limit our ability to raise funds, prevent other companies from collaborating
with us, and in certain cases prevent us from further developing our technology
due to third party patent blocking right.

      We rely upon third parties for the manufacturing and distribution of some
of our products.

      We manufacture our main product, Biocoral(R), through our wholly-owned
manufacturing subsidiary. However, for manufacture of our medical device, which
allows the preparation of our autologous glue, once the product is ready for
marketing, we rely on third party manufacturers. Our reliance on third parties
for the manufacture of our products creates a dependency that could severely
disrupt our research and development, our clinical testing, and ultimately our
sales and marketing efforts if the source of such supply proves to be unreliable
or unavailable. If the contracted manufacturing source is unreliable or
unavailable, we may not be able to manufacture or market our products.

      If we are unable to establish or manage strategic collaborations in the
future, our revenue and product development may be limited.

      Our strategy includes substantial reliance upon strategic collaborations
for development, marketing and commercialization of our products in particular
in our patented application covering treatment of Osteoporosis fractures and
their prevention. Establishing strategic collaborations is difficult and
time-consuming. Our discussion with potential collaborators may not lead to the
establishment of collaborations on favorable terms, if at all. If we
successfully establish new collaborations, these relationships may not result in
the successful development or commercialization of our product candidates or the
generation of sales revenue. To the extent that we enter into co-promotion or
other collaborative arrangements, our product revenues are likely to be lower
than if we directly marketed and sold any products that we may develop.

      If we enter into manufacturing and marketing collaborations, our success
will in part depend on the performance of our collaborators. We will not
directly control the amount or timing of resources devoted by our collaborators
to activities related to our product candidates. Our corporate collaborators may
not commit sufficient resources to our pre-marketing and manufacturing programs
or the commercialization, marketing or distribution of our products. If any
collaborator fails to commit sufficient resources, our pre-marketing and
marketing programs related to this collaboration could be delayed or terminated.
Also, our collaborators may pursue other existing or development-stage products
or alternative technologies in preference to those being developed in
collaboration with us. Finally, if we fail to observe our obligations in our
agreements with them, our collaborators may have the right to terminate those
agreements.

      We may incur substantial liabilities from any product liability claims if
our insurance coverage for those claims is inadequate.

      We currently have product liability insurance which we believe adequately
covers potential liability which may arise from our products. However, we cannot
be certain that our insurance will be adequate to cover every claim we may face.
We may face an inherent risk of product liability exposure related to the sale
and use of our products. An individual may bring a liability claim against us if
one of the products causes, or merely appears to have caused, an injury. If we
cannot successfully defend ourselves against the product liability claim, we
will incur substantial liabilities. Regardless of merit or eventual outcome,
liability claims may result in decreased demand for our product candidates,
injury to our reputation, withdrawal of clinical trial participants, costs of
related litigation, substantial monetary awards to patients or other claimants,
loss of revenues, the inability to commercialize product candidates, and
increased difficulty in raising required additional funds in the private and
public capital markets.

      We depend upon our senior management and key consultants and their loss or
unavailability could put us at a competitive disadvantage.

                                       10
<PAGE>

      We depend upon the efforts and abilities of our senior executive, Nasser
Nassiri, and other members of our management team and scientific advisors. The
loss or unavailability of the services of any of these individuals for any
significant period of time could have a material adverse effect on our business,
prospects, financial condition and results of operations. We have not obtained,
do not own, nor are we the beneficiary of, key-person life insurance. See
"Management--Employment Agreements".

      The biotechnology and biomaterials industries are characterized by a high
degree of competition. We may be unable to compete with more substantial
enterprises.

      The biotechnology and biomaterials industries are characterized by a high
degree of competition. Competition in the biomaterials industry is based
significantly on scientific and technological factors. These factors include the
availability of patent and other protection for technology and products, the
ability to commercialize technological developments and the ability to obtain
governmental approval for testing, manufacturing and marketing. We compete with
specialized biotechnology firms in the United States, Europe, Japan and
elsewhere, as well as pharmaceutical companies that are applying biotechnology
to their operations. Our ability to compete successfully with other companies in
the pharmaceutical field will also depend to a considerable degree on our
ability to raise capital to fund the development and marketing of our products.

      We are aware of certain competitors who are attempting to utilize our
technology and produce products similar to or competitive with ours. Our
technologies are protected by strong patents in many countries around the world.
Accordingly, we believe we can successfully challenge any misappropriation of
our technology by our competitors.

      Our competition will be determined in part by the potential applications
for which our products are developed and ultimately approved by regulatory
authorities. Additionally, the timing of market introduction of some of our
potential products or of competitors' products may be an important competitive
factor. Accordingly, the relative speed with which we can develop products,
complete pre-clinical testing, clinical trials and approval processes and supply
commercial quantities to market are expected to be important competitive
factors. We expect that competition among products approved for sale will be
based on various factors, including product efficacy, safety, reliability,
availability, price and patent position. (See "Item 1. Description of Business
-- Competition.")

      We may incur increased costs as a result of recently enacted and proposed
changes in laws and regulations relating to corporate governance matters.

      Recently enacted and proposed changes in the laws and regulations
affecting public companies, including the provisions of the Sarbanes-Oxley Act
of 2002 and rules adopted or proposed by the SEC and, will result in increased
costs to us as we evaluate the implications of these laws and regulations and
respond to their requirements. These laws and regulations could make it more
difficult or more costly for us to obtain certain types of insurance, including
director and officer liability insurance, and we may be forced to accept reduced
policy limits and coverage or incur substantially higher costs to obtain the
same or similar coverage. The impact of these events could also make it more
difficult for us to attract and retain qualified persons to serve on our Board
of Directors, our board committees or as executive officers. We are continuously
evaluating and monitoring developments with respect to these laws and
regulations and cannot predict or estimate the amount or timing of additional
costs we may incur to respond to their requirements.

      A limited public trading market may cause volatility in the price of our
common stock and may cause it to be illiquid.

      Our common stock is quoted on the OTC Bulletin Board under the symbol
BCRA. The quotation of our common stock on the OTC Bulletin Board does not
assure that a meaningful, consistent and liquid trading market currently exists,
and, in fact, in recent years the market for our stock has experienced extreme
price fluctuations and traded in low volume. The illiquidity of our common stock
could make it difficult for a stockholder to sell or otherwise dispose of
shares.

      We do not intend to pay dividends.

      We do not expect to pay any cash dividends in the foreseeable future.

                                       11
<PAGE>

Item 1B. Unresolved Staff Comments.

As part of a review by the staff of the Securities and Exchange Commission of
our Annual Report on Form 10-K for the year ended December 31, 2007, we have
received and responded to the staff's comments. As of the date of the filing of
this Annual Report on Form 10-K, we believe that we have satisfactorily resolved
all of the issues raised in the staff comments. However, we have not yet
received a final confirmation of this from staff. The company believes that any
further adjustments that result from the staff's review will not have a material
effect on our financial statements.

Item 2. Description of Property.

Our French subsidiary currently leases its principal executive offices from an
unrelated third party for an aggregate annual rent of approximately $68,000
(approximately (euro)51,000 euros). The lease has expired and we are currently
in negotiation for its renewal.

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

Item 3. Legal Proceedings.

None.

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, 2008, there were 11,443,787 shares of our common stock issued
and outstanding. Our common stock trades on the OTC Bulletin Board. The
following table sets forth information regarding the high and low closing price
per share for our common stock on the OTC Bulletin Board as reported by
Yahoo.com(TM). Such prices do not necessarily reflect actual transactions and do
not include retail mark-ups, mark-downs or commissions.

--------------------------------------------------------------------------------
Quarter Ended                             High                            Low
-------------                             ----                            ---
--------------------------------------------------------------------------------
December 31, 2008                        $43.00                          $23.00
--------------------------------------------------------------------------------
September 30, 2008                       $23.00                          $ 8.00
--------------------------------------------------------------------------------
June 30, 2008                            $56.00                          $15.00
--------------------------------------------------------------------------------
March 31, 2008                           $80.00                          $40.00
--------------------------------------------------------------------------------

December 31, 2007                        $97.00                          $60.00
--------------------------------------------------------------------------------
September 30, 2007                       $97.00                          $27.50
--------------------------------------------------------------------------------
June 30, 2007                            $33.50                          $28.00
--------------------------------------------------------------------------------
March 31, 2007                           $50.00                          $28.40
--------------------------------------------------------------------------------

December 31, 2006                        $51.25                          $39.40
--------------------------------------------------------------------------------
September 30, 2006                       $47.00                          $30.00
--------------------------------------------------------------------------------
June 30, 2006                            $30.00                          $14.00
--------------------------------------------------------------------------------
March 31, 2006                           $26.00                          $19.00
--------------------------------------------------------------------------------

Holders

As of December 31, 2008, there were approximately 400 holders of record of the
shares of our common stock including several European financial and portfolio
institutions.

                                       12
<PAGE>

Dividends

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

Recent Sales of Unregistered Securities

During 2008, we issued 7% non-convertible promissory notes payable (the "7% Non-
Convertible Promissory Notes") in the aggregate principal amount of $100,000.
(See Note 9.)

During 2008, the company also received short-term loans for the total amount of
$128,500 from its "accredited investors". These short-term loans are expected to
be converted into new 7% Non-Convertible Promissory Notes when the company's
board of director approves the issuance of additional notes. (See Note 8.)

During 2007, we received $200,000 in connection with the issuance of additional
new 7% non-convertible promissory notes payable (the "7% Non- Convertible
Promissory Notes"). (See Note 9.)

During 2006, we received $400,000. Pursuant to an agreement dated December 20,
2006 with all of the note holders, the total of outstanding 7% convertible
promissory notes payable and 6% convertible promissory note payable together
with the $400,000 received during 2006 in the total aggregate principal amount
of $2,700,000 were exchanged to 7% non-convertible promissory notes payable.

In December 2006, we issued, the new 7% non-convertible promissory notes payable
(the "7% Non- Convertible Promissory Notes") in the aggregate principal amount
of $2,700,000. (See Note 9.)

During January 2005, we received $300,000 in connection with the subscription of
the 7% Notes sold on December 2004. During September 2005, we sold to an
accredited investor an additional $200,000 of the 7% Notes. (See Note 9.)

All Notes as described above were sold to "accredited investors" only in a
private placement intended to be exempt from registration pursuant to the
provisions of Regulation D of the Securities Act of 1933.

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

Item 6.  Selected Financial Data

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                    Fiscal Year ended December 31,
------------------------------------------------------------------------------------------------------------------------------
                                          2008               2007               2006               2005               2004
------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                <C>                <C>                <C>                <C>
        Net sales                     $    499,437       $    464,225       $    408,205       $    316,200       $    351,600
------------------------------------------------------------------------------------------------------------------------------
        Operating loss                     388,281            438,209            269,741            723,874            562,199
------------------------------------------------------------------------------------------------------------------------------
        Net income (loss)                 (586,384)          (630,685)        (1,473,425)        (997, 758)            198,216
------------------------------------------------------------------------------------------------------------------------------
        Net income (loss) per
        common share                  $      (0.05)      $      (0.06)      $      (0.13)      $      (0.09)      $       0.02
------------------------------------------------------------------------------------------------------------------------------
        Weighted average common         11,421,842         11,353,787         11,353,817         11,353,816         11,299,267
        shares outstanding                  Shares             shares             shares             shares             shares
------------------------------------------------------------------------------------------------------------------------------

Balance Sheet Data:
------------------------------------------------------------------------------------------------------------------------------
        Total assets                  $  1,414,803       $  1,411,565       $  1,324,618       $  1,075,810       $    950,308
------------------------------------------------------------------------------------------------------------------------------
        Total liabilities                4,964,268          5,358,318          4,686,785          3,345,364          2,230,290
------------------------------------------------------------------------------------------------------------------------------
        Stockholders' deficiency         3,549,465          3,946,753          3,362,167          2,269,554          1,279,982
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       13
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

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

Introduction

Patents and Product Development

We are an international biomaterials "tissue-engineering" company specializing
in the research, development and commercialization of patented high
biotechnologies and biomaterials in the health care area. The Company's
management is primarily focused on securing our existing patents, continuing the
development, manufacture and commercialization of products under our patents and
pursuing patent titles in additional countries and for additional applications.

Biocoral(R), our primary product, is a natural coral "carbonate calcium"
derived, wholly mineral bone graft substitute and is used by surgeons and
practitioners because of its biocompatibility, resorbability, osseo conduction
and safety. Since 2000, we have worked with an accredited European university
research group on purification of our raw material, coral, in order to produce a
natural wholly mineral product. After a long-term collaboration we have
finalized the development of a method for purification of our raw material coral
which will allow us to offer Biocoral(R) as a natural wholly mineral bone
substitute. We have received patents for this purification method in France and
the European Union and expect to receive additional patents on it in the near
future. According to our French subsidiary, Biocoral(R) has been used in
approximately 500,000 patients in various countries, principally in Europe, Asia
and Canada.

Through our subsidiaries, we have developed twelve additional patent titles, in
various countries in Europe, Switzerland, Canada, Japan, Australia and United
States, for various applications and uses of our products, including, among
others, osteoporosis remediation and combination of Biocoral(R) with growth
factor. As result of these twelve patent titles, we own, various patents
covering our technologies which have been granted by various countries official
government patent office, including most European Union countries, Canada,
Australia, Japan and in the United States by the US Department of Commerce
Patent and Trademark Office.

We believe that the pursuit of additional patents and continuing to work toward
commercialization of Biocoral(R) and related products presents our greatest
opportunity for revenue generation. To a lesser extent we have devoted some
resources to development of the additional application for our product in
particular the treatment of bone disease associated with demineralization of
bone such as osteoporosis fracture and their prevention.

We have encountered challenges to our attempts to protect our patents and
develop, manufacture and commercialize our products primarily from companies
seeking to infringe our patents and also in our reliance on an outside
manufacturer. We intend to defend our patents vigorously to the extent that our
funding permits. In addition, where our reliance on an outside manufacturer to
produce our autologous fibrin glue resulted in the failure of this product, we
have now commenced a lawsuit against this manufacturer for approximately
(euro)110,000,000 in lost profits which is based upon our written proposal,
which was accepted by the manufacturer and which estimated profits during the
commercialization period at approximately (euro)220,000,000. Under the proposal,
we were to receive a royalty of 50% of this amount.

Summary of Significant Accounting Policies and Estimates

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

Intangible Assets. Intangible assets consist primarily of developed technology
and patents (developed and purchased), trademarks, trade names and customer
relationships. Intangible assets with an indefinite life, including certain
trademarks and trade names, are not amortized. The useful life of indefinite
life intangible assets is assessed annually to determine whether events and
circumstances continue to support an indefinite life. Amortization is computed
using the

                                       14
<PAGE>

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

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

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

Results of Operations

As discussed below, our operations are conducted outside the United States of
America, and as such, our functional currency is the Euro and not the US Dollar.
In order to comply with accounting principles generally accepted in the United
States of America, our financial statements, as well as the following discussion
regarding our results of operations are in terms of U.S. dollars. Accordingly,
part of the variance in revenues and expenses discussed below may partially
differ as a result of the fluctuating exchange rates in addition to the other
factors discussed.

Fiscal 2008 vs. 2007

Net sales, which are solely attributable to our wholly owned European
subsidiaries, totalled approximately $499,400 for the year ended December 31,
2008, an increase of approximately $35,200 or approximately 7.5% from
approximately $464,200 for the year ended December 31, 2007. This increase is
partially attributable to an increase in sales of products in the orthopaedic
surgery area in export.

Cost of sales was approximately $211,300 for the year ended December 31, 2008, a
decrease of approximately $34,500 or approximately 14% from approximately
$245,800 for the year ended December 31, 2007. The gross profit percentage for
the year ended December 30, 2008 and 2007 was approximately $288,200 or 57% and
$218,400 or 47%, respectively. The main factor contributing to this increase in
gross profit was an increase in sales and a decrease in costs of sales.

Operating expenses were approximately $676,400 during the year ended December
31, 2008, an increase of approximately $19,800 or approximately 3% from
approximately $656,600 for the year ended December 31, 2007. This increase was
primarily due to an increase in the company's depreciation and amortization,
consulting and professional fees and research and development activities.

Consulting and professional fees during the year ended December 31, 2008 were
approximately $215,400 an increase of $4,800 or approximately 2% compared to
approximately $210,600 during the year ended December 31, 2007. This increase is
attributable to an increase in the fees needed during 2008 for the development
of next generation of products.

Other income (net of expenses) totalled approximately $(198,100) of expense for
the year ended December 31, 2008 as compared to approximately $(192,500) of
expense for the year ended December 31, 2007. This increase was primarily due to
increase in interest expense on our short and long terms notes payables.

As a result of the above, our net loss for the year ended December 31, 2008
totalled approximately $586,400 or $.05 per share compared to a net loss of
approximately $630,700 or $.06 per share for the year ended December 31, 2007.

These losses per share were based on weighted average common shares outstanding
of 11,421,842 & 11,353,787 for the years ended December 31, 2008 and 2007
respectively.

                                       15
<PAGE>

Fiscal 2007 vs. 2006

Net sales, which are solely attributable to our wholly owned European
subsidiaries, totalled approximately $464,200 for the year ended December 31,
2007, an increase of approximately $56,000 or approximately 14% from
approximately $408,200 for the year ended December 31, 2006. This increase is
partially attributable to an increase in sales of products in the
maxillocraniofacial surgery area in France and the dental market area in export.

Cost of sales was approximately $245,800 for the year ended December 31, 2007,
an increase of approximately $124,600 or approximately 103% from approximately
$121,200 for the year ended December 31, 2006. The gross profit percentage for
the year ended December 30, 2007 and 2006 was approximately $218,400 or 47% and
$287,000 or 70%, respectively. The main factor contributing to this increase was
an increase in costs to acquire part of current inventory.

Operating expenses were approximately $656,600 during the year ended December
31, 2007, an increase of approximately $99,900 or approximately 18% from
approximately $556,700 for the year ended December 31, 2006. This increase was
primarily due to an increase in the company's research and development
activities and in administrative expenses in general.

Consulting and professional fees during the year ended December 31, 2007 were
approximately $210,600, a decrease of $11,400 or approximately 5% compared to
approximately $222,000 during the year ended December 31, 2006. This decrease is
attributable to a decrease in the fees needed during 2007 for the development of
next generation of products.

Other income (net of expenses) totalled approximately $(192,500) of expense for
the year ended December 31, 2007 as compared to approximately $(1,203,700) of
expense for the year ended December 31, 2006. This increase was primarily due to
the sale of all of the available for sale securities during December 2006 and we
realized a loss of approximately $433,500 and the increase in the loss on the
embedded derivative in our long term debt that was called in December 2006 of
approximately $582,400.

As a result of the above, our net loss for the year ended December 31, 2007
totalled approximately $630,700 or $.06 per share compared to a net loss of
approximately $1,473,400 or $.13 per share for the year ended December 31, 2006.

These losses per share were based on weighted average common shares outstanding
of 11,353,787 & 11,353,817 for the years ended December 31, 2007 and 2006
respectively.

Financial Condition, Liquidity and Capital Resources

Fiscal 2008 vs. 2007

As shown in the accompanying consolidated financial statements, we had net
losses of approximately $586,400 and $630,700 in 2008 and 2007, respectively.
Management believes that it is likely that we will continue to incur net losses
through at least 2009. We had a working capital deficiency of approximately
$1,217,500 and $898,400 at December 31, 2008 and 2007 respectively. We also had
a stockholders' deficiency of approximately $3,549,500 and $3,946,800 at
December 31, 2008 and 2007, respectively.

We had a negative cash flow from operating activities of approximately $251,500
and $195,500 at December 31, 2008 and 2007 respectively. We also had cash
provided by financing activities of $178,500 and $250,000 at December 31, 2008
and 2007 respectively. Our net loss of approximately $586,400 and $630,700
increased our accumulated deficit to approximately $22,268,000 and $21,682,000
at December 31, 2008 and 2007 respectively.

These factors raise substantial doubt about the Company's ability to continue as
a going concern. The Company will need additional working capital and plans to
pursue strategic alliances with well capitalized entities to improve its
financial condition. Also the Company will seek additional financing from
prospective investors as it has successfully done in years 2008, 2007, 2006 and
prior years. However, there is no assurance that it will be successful in
accomplishing these objectives. In March 2008, the Company received a commitment
from an "accredited investor" to provide the company with funds up to $250,000,
of which the Company received $128,500 in 2008 (See Note 8), and has $121,500
available for use in 2009. Management believes that these funds, together with
the funds to be raised from the efforts described above, will provide sufficient
working capital to operate through 2009.

                                       16
<PAGE>

In additional, during 2008, we issued additional 7% non-convertible promissory
notes payable (the "7% Non- Convertible Promissory Notes") in the original
principal amount of $100,000.

Fiscal 2007 vs. 2006

As shown in the accompanying consolidated financial statements, we had net
losses of approximately $630,700 and 1,473,000 in 2007 and 2006, respectively.
We had a working capital deficiency of approximately $898,400 and $495,200 at
December 31, 2007 and 2006 respectively. We also had a stockholders' deficiency
of approximately $3,946,800 and $3,362,200 at December 31, 2007 and 2006,
respectively.

We had a negative cash flow from operating activities of approximately $195,500
and $212,000 at December 31, 2007 and 2006 respectively. We also had cash
provided by financing activities of $250,000 and $400,000 at December 31, 2007
and 2006 respectively. Our net loss of approximately $630,700 and $1,473,000
increased our accumulated deficit to approximately $21,682,000 and $21,051,000
at December 31, 2007 and 2006 respectively.

During 2007, we received $200,000 in connection with the additional subscription
of the new 7% non-convertible promissory notes payable. We also received during
2006, the total amount of $400,000 of additional funds which were converted on
December 31, 2006 to 7% non-convertible notes payable. In addition, during 2006,
we received proceeds of approximately $210,000 from the sale of marketable
securities.

Long-term Debt

As described in the notes to our financial statements and under Financial
Condition, Liquidity and Capital Resources above, our long-term debt consists
entirely of 7% promissory notes. As of December 31, 2008, the outstanding
balance of principal due on such notes was $3,000,000. Such notes mature in
December 2012 at which time we will have the option of either paying the balance
of principal and interest on the notes in cash or in shares of our common stock.

                           Forward-Looking Statements

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

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

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

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of business, operations of the Company are exposed to
fluctuations in interest rates and foreign currencies. These fluctuations can
vary the cost of financing, investment yields and operations of the Company.

The Company does not have any investments that would be classified as trading
securities under generally accepted accounting principles.

                                       17
<PAGE>

The Company's foreign currency risk exposure results from fluctuating currency
exchange rates, primarily the U.S. dollar against the European currencies. The
Company faces transactional currency exposures that arise when its foreign
subsidiaries (or the Company itself) enter into transactions, generally on an
intercompany basis, denominated in currencies other than their local currency.
The Company also faces currency exposure that arises from translating the
results of its global operations to the U.S. dollar at exchange rates that have
fluctuated from the beginning of the period. The Company has not used financial
derivatives to hedge against fluctuations in currency exchange rates. Based on
the Company's overall exposure for foreign currency at December 31, 2008, a
hypothetical 10 percent change in foreign currency rates would not have a
material impact on the Company's balance sheet, net sales, net income or cash
flows over a one-year period.

We conduct much of our business operations (and incur substantially all of our
operating costs other than professional and consulting fees) through our
European subsidiaries in Euros and, as such, are exposed to risk resulting from
the fluctuation of exchange rates between the Euro and the US Dollar. We do not
engage in any hedging or other transactions for the purpose of minimizing this
risk.

Marketable Securities

      A portion of our Euro/Dollar exchange rate exposure arises from our
investment in marketable securities. Prior to 2006, we classified our
investments in marketable securities as available for sale, and those that we
intend to hold for more than one year as non-current. Unrealized holding gains
and losses are reported as a separate component of stockholders' deficiency, as
part of accumulated other comprehensive income (loss), until realized.

During December 2006, the company sold all available for sale securities and
recorded a loss of approximately $433,000. Since that date, the Company has held
no marketable securities available-for-sale.

                                       18
<PAGE>

Item 8. Financial Statements and Supplementary Data

Biocoral, Inc. and Subsidiaries Index to Consolidated Financial Statements and
Schedule.

Financial Statements:

<TABLE>
<S>                                                                                                         <C>
Management's Report on Internal Control over Financial Reporting                                            F-2
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting        F-3
Report of Independent Registered Public Accounting Firm                                                     F-4
Report of Independent Registered Public Accounting Firm                                                     F-5
Consolidated Balance Sheets as of December 31, 2007, 2007 and 2006 (Restated)                               F-6
Consolidated Statements of Operation and Comprehensive loss for the years ended December 31, 2008,
2007 and 2006 (Restated)                                                                                    F-7
Consolidated Statements of Changes in Stockholders' Deficiency for the years ended December 31, 2008,
2007 and 2006 (Restated)                                                                                    F-8
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006 (Restated)       F-9
Notes to Consolidated Financial Statements                                                                  F-10 - F-20
</TABLE>


                                      F-1
<PAGE>

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company. Internal control over
financial reporting is defined in Rule 13a-15(f) or Rule 15d-15(f) promulgated
under the Securities Exchange Act of 1934, as a process designed by, or under
the supervision of, our principal executive and principal financial officers and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles in the United States of America and
includes those policies and procedures that:

      o     Pertain to the maintenance of records that in reasonable detail
            accurately and fairly reflect the transactions and dispositions of
            our assets;

      o     Provide reasonable assurance that transactions are recorded as
            necessary to permit preparation of financial statements in
            accordance with generally accepted accounting principles, and that
            receipts and expenditures of the Company are being made only in
            accordance with authorizations of our management and directors; and

      o     Provide reasonable assurance regarding prevention or timely
            detection of unauthorized acquisition, use or disposition of the
            Company's assets that could have a material effect on the financial
            statements.

      Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

      Management assessed the effectiveness of the Company's internal control
over financial reporting as of December 31, 2008. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in this Internal
Control-Integrated Framework.

      Based on our assessment, we concluded that the Company's maintains
effective internal control over financial reporting as of December 31, 2008,
based on criteria established in "Internal Control - Integrated Framework"
issued by the COSO.

      Michael T. Studer CPA P.C., our independent registered public accounting
firm, has issued an audit report, on our internal control over financial
reporting which is included in page F-3.


                                      F-2
<PAGE>

Report of Independent Registered Public Accounting Firm on Internal Control Over
                              Financial Reporting

To the Board of Directors and Stockholders of
Biocoral, Inc.

I have audited the internal control over financial  reporting of Biocoral,  Inc.
and  subsidiaries  (the  "Company")  as of December 31, 2008,  based on criteria
established in "Internal Control - Integrated Framework" issued by the Committee
of Sponsoring  Organizations of the Treadway  Commission  (COSO).  The Company's
management  is  responsible  for  maintaining  effective  internal  control over
financial  reporting  and for its  assessment of the  effectiveness  of internal
control over  financial  reporting,  included in the  accompanying  Management's
Report on Internal Control over Financial  Reporting.  My  responsibility  is to
express an opinion on the Company's  internal  control over financial  reporting
based on my audit.

I conducted my audit in  accordance  with the  standards  of the Public  Company
Accounting Oversight Board (United States).  Those standards require that I plan
and perform the audit to obtain  reasonable  assurance  about whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects.  My audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating  effectiveness of internal control based
on the assessed  risk,  and  performing  such other  procedures  as I considered
necessary in the  circumstances.  I believe that my audit  provides a reasonable
basis for my opinion.

A company's internal control over financial  reporting is a process designed by,
or under the  supervision  of, the company's  principal  executive and principal
financial officers, or persons performing similar functions, and effected by the
company's  board of  directors,  management,  and  other  personnel  to  provide
reasonable  assurance  regarding the reliability of financial  reporting and the
preparation  of financial  statements for external  purposes in accordance  with
generally  accepted  accounting  principles.  A company's  internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

Because  of  the  inherent   limitations  of  internal  control  over  financial
reporting,  including  the  possibility  of  collusion  or  improper  management
override of controls,  material  misstatements  due to error or fraud may not be
prevented or detected on a timely basis. Also,  projections of any evaluation of
the  effectiveness  of the internal  control over financial  reporting to future
periods are subject to the risk that the controls may become inadequate  because
of changes in conditions,  or that the degree of compliance with the policies or
procedures may deteriorate.

In my opinion,  the Company  maintained,  in all  material  respects,  effective
internal control over financial  reporting as of December 31, 2008, based on the
criteria established in "Internal Control - Integrated  Framework" issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).

I have also  audited in  accordance  with the  standards  of the Public  Company
Accounting Oversight Board (United States) the Company's  consolidated financial
statements  as of  December  31,  2008 and for the year then ended and my report
dated March 27, 2009 expressed an unqualified opinion thereon.


                                          /s/ Michael T. Studer CPA P.C.
                                          ------------------------------

Freeport, New York
March 27, 2009


                                      F-3
<PAGE>

            Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of
Biocoral, Inc.

I have audited the accompanying consolidated balance sheet of Biocoral, Inc. and
subsidiaries   (the   "Company")  as  of  December  31,  2008  and  the  related
consolidated  statements  of  operations  and  comprehensive  loss,  changes  in
stockholders'  deficiency,  and  cash  flows  for the  year  then  ended.  These
financial  statements are the  responsibility  of the Company's  management.  My
responsibility  is to express an opinion on these financial  statements based on
my  audit.  The  consolidated   financial  statements  of  Biocoral,   Inc.  and
subsidiaries  as of December 31, 2007 and 2006 were  audited by another  auditor
whose report  dated March 28, 2008  expressed  an  unqualified  opinion on those
statements.

I conducted my audit in  accordance  with the  standards  of the Public  Company
Accounting Oversight Board (United States).  Those standards require that I 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.  I believe that my audit provides a reasonable
basis for my opinion.

In my opinion,  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, 2008 and the results of their  operations  and
cash  flows for the year then ended in  conformity  with  accounting  principles
generally accepted in the United States.

The  accompanying  financial  statements  referred  to above have been  prepared
assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements,  the Company's present financial condition raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard  to this  matter  are also  described  in Note 2. The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.

I have also  audited in  accordance  with the  standards  of the Public  Company
Accounting  Oversight Board (United States) the Company's  internal control over
financial  reporting as of December 31, 2008, based on the criteria  established
in  "Internal  Control  -  Integrated  Framework"  issued  by the  Committee  of
Sponsoring  Organizations of the Treadway Commission (COSO), and my report dated
March 27, 2009 expressed an unqualified opinion thereon.


                                              /s/ Michael T. Studer CPA P.C.
                                              ------------------------------

Freeport, New York
March 27, 2009


                                      F-4
<PAGE>

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Biocoral, Inc.:

We have audited the accompanying  consolidated balance sheets of Biocoral,  Inc.
and  subsidiaries  (the "Company") as of December 31, 2007 and 2006  (restated),
and the related  consolidated  statements of operations and comprehensive  loss,
changes in stockholders' deficiency, and cash flows for each of the two years in
the  period  ended  December  31,  2007.  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  Biocoral  France  SAS and  Inoteb  SAS,  wholly-owned
subsidiaries,  as of  December  31,  2007 and 2006  (restated),  and the related
statements  of  operations  and  comprehensive  loss,  changes in  stockholders'
deficiency,  and cash  flows  for  each of the two  years  in the  period  ended
December  31,  2007,  which   statements   reflect  total  assets  and  revenues
constituting  54.11 percent and 100 percent,  and 54.56 percent and 100 percent,
respectively,  of the related consolidated totals. Those statements were audited
by other  auditors  whose  reports  have been  furnished to us, and our opinion,
insofar as it relates to the amounts included for Biocoral France SAS and Inoteb
SAS, is based solely on the reports of the other auditors.

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

      In our opinion,  based on our audit 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 at
December 31, 2007 and 2006 (restated), and the results of its operations and its
cash flows for each of the two years in the period ended  December 31, 2007,  in
conformity with accounting principles generally accepted in the United States of
America.


/s/ Moore & Associates, Chartered
Moore & Associates, Chartered

Las Vegas, Nevada
March 28, 2008


                                      F-5
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                            ASSETS
                                                                        December 31,       December 31,       December 31,
                                                                            2008               2007               2006
                                                                        ------------       ------------       ------------
                                                                                                                (Restated)
<S>                                                                     <C>                <C>                <C>
 Current Assets:
    Cash                                                                $     17,797       $    147,681       $    287,773
    Accounts receivable, net of allowance for doubtful accounts              147,085            138,144            175,900
    Inventories                                                              402,376            335,775            244,675
    Prepaid expenses and other current assets                                 23,707             32,104             27,744
                                                                        ------------       ------------       ------------

      Total Current Assets                                                   590,965            653,704            736,092

 Property and equipment, net                                                  21,597             26,748             25,279
 Restricted cash held in escrow                                                9,512             11,049             11,049
 Investment in limited partnership                                                --                 --              4,162
 Intangible assets, net                                                      774,081            705,496            527,879
 Other assets                                                                 18,648             14,568             20,157
                                                                        ------------       ------------       ------------

      Total Assets                                                      $  1,414,803       $  1,411,565       $  1,324,618
                                                                        ============       ============       ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

 Current  Liabilities:
    Accounts payable                                                    $    810,510       $    893,231       $    726,555
    Short-term bank borrowings                                                13,777                 --                 --
    Short-term notes payable                                                 128,500             50,000                 --
    Current portion due to officer                                           223,192            187,192            190,937
    Accrued interest payable                                                 632,444            421,712            313,762
                                                                        ------------       ------------       ------------

      Total Current Liabilities                                            1,808,423          1,552,135          1,231,254

 Due to officer, net of current portion                                      150,000            900,000            750,000
 Long-term notes payable                                                   3,000,000          2,900,000          2,700,000
 Deferred employee benefits                                                    5,845              6,183              5,531
                                                                        ------------       ------------       ------------

        Total Liabilities                                                  4,964,268          5,358,318          4,686,785
                                                                        ------------       ------------       ------------

 Commitments and contingencies

 Stockholders' Deficiency:
    Preferred stock, par value $.001 per share; 1,000,000  shares
      authorized; none issued                                                     --                 --                 --
    Common Stock; $.001 par value;  100,000,000 shares authorized;
      11,443,787 shares issued and outstanding December 31, 2008
      11,353,787 shares issued and outstanding December 31, 2007
      11,353,817 shares issued and outstanding December 31, 2006              11,444             11,354             11,354
    Additional paid-in capital                                            18,800,000         17,900,090         17,900,090
    Accumulated other comprehensive loss                                     (92,864)          (176,536)          (222,635)
    Accumulated deficiency                                               (22,268,045)       (21,681,661)       (21,050,976)
                                                                        ------------       ------------       ------------

      Total Stockholders' Deficiency                                      (3,549,465)        (3,946,753)        (3,362,167)
                                                                        ------------       ------------       ------------

      Total Liabilities and Stockholders' Deficiency                    $  1,414,803       $  1,411,565       $  1,324,618
                                                                        ============       ============       ============
</TABLE>

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


                                      F-6
<PAGE>

                   BIOCORAL, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                                       Year ended December 31,
                                                             2008               2007               2006
                                                        ------------       ------------       ------------
                                                                                               (Restated)
<S>                                                     <C>                <C>                <C>
Net sales                                               $    499,437       $    464,225       $    408,205
Cost of sales                                                211,276            245,832            121,244
                                                        ------------       ------------       ------------

   Gross Profit                                              288,161            218,393            286,961
                                                        ------------       ------------       ------------

Operating Expenses:
   Research and development                                   63,889             59,695             49,892
   Consulting and professional fees                          215,356            210,556            222,075
   Depreciation and amortization                              77,096             61,646             52,454
   Administrative expenses                                   320,101            324,705            232,281
                                                        ------------       ------------       ------------

     Total Operating Expenses                                676,442            656,602            556,702
                                                        ------------       ------------       ------------

   Loss From Operations                                     (388,281)          (438,209)          (269,741)
                                                        ------------       ------------       ------------

Other Income (Expense):
   Interest, net                                            (215,883)          (191,705)          (186,645)
   Equity in loss on sale of marketable securities                --                 --             (6,282)
   Realized loss on sale of marketable securities                 --                 --           (433,446)
   Loss on embedded derivatives                                   --                 --           (582,395)
   Dividend income                                                --                 --              3,878
   Other                                                      17,780               (771)             1,206
                                                        ------------       ------------       ------------

     Total Other Income (Expense)                           (198,103)          (192,476)        (1,203,684)
                                                        ------------       ------------       ------------

Loss before provision for income taxes                      (586,384)          (630,685)        (1,473,425)

Provision For Income Taxes                                        --                 --                 --
                                                        ------------       ------------       ------------

Net Loss                                                    (586,384)          (630,685)        (1,473,425)

Other Comprehensive Income (Loss):
   Foreign translation gain (loss)                            83,672             46,099            (71,463)
   Unrealized gain (loss) on marketable securities                --                 --            452,275
                                                        ------------       ------------       ------------

Comprehensive Loss                                      $   (502,712)      $   (584,586)      $ (1,092,613)
                                                        ============       ============       ============

Basic and diluted net loss per common share             $      (0.05)      $      (0.06)      $      (0.13)
                                                        ============       ============       ============

Basic and diluted weighted average number
        of common shares outstanding                      11,421,842         11,353,787         11,353,817
                                                        ============       ============       ============
</TABLE>

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


                                      F-7
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
      FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, AND 2006 (RESTATED ONLY)

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                           Common Stock                                      Other
                                                     --------------------------       Additional        Comprehensive
                                                        Shares         Amount      Paid-in Capital           Loss
                                                     -----------     ----------    ---------------      -------------
<S>                                                   <C>              <C>              <C>             <C>
 Balance, January 1, 2006                             11,353,816       11,354           17,900,090      $    (603,447)

 Other comprehensive income (loss) -
   foreign currency translation loss                          --           --                   --            (71,463)

 Other comprehensive income (loss) - unrealized
   gain on marketable securities                              --           --                   --            452,275

 Other                                                         1           --                   --                 --

 Net loss                                                     --           --                   --                 --
                                                     -----------       ------      ---------------      -------------

 Balance, December 31, 2006                           11,353,817       11,354           17,900,090           (222,635)

 Other comprehensive income (loss) -
   foreign currency translation gain                          --           --                   --             46,099

 Adjustment for redemption of fractional shares              (30)          --                   --                 --

 Net loss                                                     --           --                   --                 --
                                                     -----------       ------      ---------------      -------------

 Balance, December 31, 2007                           11,353,787       11,354           17,900,090           (176,536)

 Other comprehensive income (loss) -
   foreign currency translation gain                          --           --                   --             83,672

 Exercise of stock options                                90,000           90              899,910                 --

 Net loss                                                     --           --                   --                 --
                                                     -----------       ------      ---------------      -------------

 Balance, December 31, 2008                           11,443,787       11,444      $    18,800,000      $     (92,864)
                                                     ===========       ======      ===============      =============

<CAPTION>

                                                                            Total
                                                      Accumulated       Stockholders'
                                                      Deficiency          Deficiency
                                                     ------------       -------------

<S>                                                  <C>                <C>
 Balance, January 1, 2006                            $(19,577,551)      $  (2,269,554)

 Other comprehensive income (loss) -
   foreign currency translation loss                           --             (71,463)

 Other comprehensive income (loss) - unrealized
   gain on marketable securities                               --             452,275

 Other                                                         --                  --

 Net loss                                              (1,473,425)         (1,473,425)
                                                     ------------       -------------

 Balance, December 31, 2006                           (21,050,976)         (3,362,167)

 Other comprehensive income (loss) -
   foreign currency translation gain                           --              46,099

 Adjustment for redemption of fractional shares                --                  --

 Net loss                                                (630,685)           (630,685)
                                                     ------------       -------------

 Balance, December 31, 2007                           (21,681,661)         (3,946,753)

 Other comprehensive income (loss) -
   foreign currency translation gain                           --              83,672

 Exercise of stock options                                     --             900,000

 Net loss                                                (586,384)           (586,384)
                                                     ------------       -------------

 Balance, December 31, 2008                          $(22,268,045)      $  (3,549,465)
                                                     ============       =============
</TABLE>

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


                                      F-8
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                           Year ended December 31,
                                                                    2008              2007              2006
                                                                -----------       -----------       -----------
                                                                                                     (Restated)
<S>                                                             <C>               <C>               <C>
Cash flows from operating activities:
   Net loss                                                     $  (586,384)      $  (630,685)      $(1,473,425)
   Adjustments to reconcile net loss to net cash (used in)
     provided by operating activities:
       Depreciation and amortization                                 77,096            61,646            52,454
       Equity loss of partnership                                        --             4,162             6,282
       Provision for doubtful accounts                                   --                --            (2,300)
       Realized loss on sale of securities                               --                --           433,446
       Loss on embedded deritivtives                                     --                --           582,395
   Change in operating assets and liabilities:
     Accounts receivable                                             (8,941)           37,756           (37,524)
     Inventories                                                    (66,601)          (91,100)         (119,575)
     Prepaid expenses and other current assets                        8,397            (4,360)           (5,237)
     Other assets                                                    (2,543)            5,589            (7,524)
     Accounts payable                                               (82,721)          166,676           176,493
     Short-term bank borrowings                                      13,777                --                --
     Current portion due to officer                                  36,000            (3,745)           32,002
     Accrued interest payable                                       210,732           107,950                --
     Due to officer, net of current portion                         150,000           150,000           150,000
     Deferred employee benefits                                        (338)              652               531
                                                                -----------       -----------       -----------

Net cash (used in) provided by operating activities                (251,527)         (195,459)         (211,982)
                                                                -----------       -----------       -----------

Cash flows from investing activities:
   Purchase of property and equipment                                (6,309)           (8,888)          (15,312)
   Capitalization of intangible assets                             (134,220)         (231,844)         (153,292)
   Proceeds from sale of marketable securities                           --                --           212,611
                                                                -----------       -----------       -----------

Net cash provided by (used in) investing activities                (140,529)         (240,732)           44,007
                                                                -----------       -----------       -----------

Cash flows from financing activities:
   Proceeds from short-term notes payable                            78,500            50,000                --
   Proceeds from long-term notes payable                            100,000           200,000           400,000
                                                                -----------       -----------       -----------

Net cash provided by (used in) financing activities                 178,500           250,000           400,000
                                                                -----------       -----------       -----------

Effects of changes in exchange rates on cash                         83,672            46,099           (71,463)
                                                                -----------       -----------       -----------

Increase (decrease) in cash                                        (129,884)         (140,092)          160,562

Cash, beginning of period                                           147,681           287,773           127,211
                                                                -----------       -----------       -----------

Cash, end of period                                             $    17,797       $   147,681       $   287,773
                                                                ===========       ===========       ===========

Supplemental Disclosures of Cash Flow Information:
   Cash paid during the year for:
     Interest                                                   $        --       $        --       $        --
                                                                ===========       ===========       ===========
     Income taxes                                               $        --       $        --       $        --
                                                                ===========       ===========       ===========
   Non-cash financing activities:
     Exercise of stock options in exchange for reduction
       of due to officer                                        $   900,000       $        --       $        --
                                                                ===========       ===========       ===========
</TABLE>

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


                                      F-9
<PAGE>

                         BIOCORAL, INC AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Description of Business

      Biocoral,  Inc.  ("Biocoral") was incorporated under the laws of the State
      of Delaware on May 4, 1992.  Biocoral is a holding  company that  conducts
      its operations primarily through its wholly-owned  European  subsidiaries.
      Biocoral,   Inc.,   together  with  its  subsidiaries,   are  referred  to
      collectively herein as the "Company."

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

Note 2 - Liquidity

      The  Company  had net  losses  of  approximately  $586,400,  $630,700  and
      $1,473,400 in 2008, 2007 and 2006, respectively.  Management believes that
      it is likely that the Company will continue to incur net losses through at
      least 2009. The Company had a working capital  deficiency of approximately
      $1,217,500,  $898,400 and  $495,200 at December  31, 2008,  2007 and 2006,
      respectively.   The  Company  also  had  a  stockholders'   deficiency  of
      approximately $3,549,500,  $3,946,800 and $3,362,000 at December 31, 2008,
      2007 and 2006,  respectively.  These factors raise substantial doubt about
      the  Company's  ability to continue as a going  concern.  The Company will
      need additional  working capital and plans to pursue  strategic  alliances
      with well capitalized  entities to improve its financial  condition.  Also
      the Company will seek additional  financing from prospective  investors as
      it has  successfully  done in years  2008,  2007,  2006 and  prior  years.
      However, there is no assurance that it will be successful in accomplishing
      these objectives. In March 2008, the Company received a commitment from an
      "accredited investor" to provide the company with funds up to $250,000, of
      which the Company received $128,500 in 2008 (See Note 8), and has $121,500
      available for use in 2009.  Management believes that these funds, together
      with the funds to be raised from the efforts described above, will provide
      sufficient working capital to operate through 2009.

Note 3 - Summary of Significant Accounting Policies

      (A) Basis of Presentation

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

      (B) Principles of Consolidation

      The  accompanying  consolidated  financial  statements  include all of the
      accounts of Biocoral, Inc. and its wholly-owned subsidiaries as of and for
      the  years  ended   December  31,  2008,   2007  and  2006.  All  material
      intercompany   balances  and   transactions   have  been   eliminated   in
      consolidation.

      (C) Cash and Cash Equivalents

      The  Company  considers  cash on  hand,  cash in  banks,  certificates  of
      deposit,  time deposits and other short term securities with maturities of
      three months or less when  purchased as cash and cash  equivalents.  There
      were no cash  equivalents  held by the Company at December 31, 2008,  2007
      and 2006.

      (D) Concentration of Credit Risk

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


                                      F-10
<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (E) Allowance for Doubtful Accounts

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

      (F) Investments in Marketable Securities

      Prior  to  2006,   the  Company   invested  in  European   common  stocks.
      Available-for-sale  securities  are  carried at fair  market  value,  with
      unrealized gains and losses,  net of tax, reported as a separate component
      of stockholders' deficiency. In determining realized gains and losses, the
      cost of the  securities  sold is based  upon the  specific  identification
      method. The Company reviews each marketable  security to determine whether
      a decline in fair market value is other than temporary.  If the decline is
      deemed other than temporary,  the cost basis of the individual security is
      written down to the fair value as a new cost basis and the amount  written
      down is included in operations as a realized loss.

      (G) Inventories

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

      (H) Property and Equipment

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

      (I) Investment in Limited Partnership

      The Company owns an approximately 9.3% interest in Bensenville  Associates
      Ltd.,  a limited  partnership,  which is  accounted  for under the  equity
      method of  accounting.  Under  this  method,  the  initial  investment  is
      recorded at cost.  Subsequently,  the investment is increased or decreased
      for the Company's  pro-rata share of the partnership's  income and losses.
      The  Company's  share of the loss in the  partnership  for the years ended
      December  31, 2008,  2007 and 2006 was  approximately  $7,700,  $7,400 and
      $6,300, respectively, and the book value of the investment at December 31,
      2008, 2007 and 2006 was $0, $0 and $4,162,  respectively.  However, we are
      not  responsible  for the losses in excess of our investment and therefore
      only approximately $0, $4,100 and $6,300 of the losses for the years ended
      December  31,  2008,  2007  and  2006  are  included  in the  consolidated
      financial statements.

      (J) Intangible Assets

      Intangible  assets consist of legal fees paid to various patent  attorneys
      related to  world-wide  patent  applications  or  litigation  on  existing
      patents.  The patent costs are  amortized  over the shorter of the life of
      the patent or the estimated  useful life of the  technology,  which ranges
      from 10 to 20 years, using the straight line method.

      Amortization of the intangible  assets for the next five years is expected
      as follows:

                  2009                $68,300

                  2010                $68,300

                  2011                $68,300

                  2012                $68,300

                  2013                $68,300

        Thereafter                   $432,581


                                      F-11
<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (J) Intangible Assets - continued

      The components of intangible  assets and costs  capitalized in 2008,  2007
      and 2006 are as follows:

      --------------------------------------------------------------------
                                          2008         2007         2006
      --------------------------------------------------------------------
      Beginning Intangible Assets      $ 849,141    $ 617,297    $ 454,273
      --------------------------------------------------------------------
      Add: Capitalized Costs             134,221      231,844      163,024
      --------------------------------------------------------------------
      Less: Accumulated Amortization    (209,281)    (143,645)     (89,418)
      --------------------------------------------------------------------
      Net Intangible Assets            $ 774,081    $ 705,496    $ 527,879
      --------------------------------------------------------------------

      (K) Impairment of Long-Lived Assets

      In accordance with Statement of Financial  Accounting  Standards  ("SFAS")
      No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
      the   Company   reviews   long-lived   assets  for   impairment   whenever
      circumstances  and situations change such that there is an indication that
      the carrying  amounts may not be  recovered.  In such  circumstances,  the
      Company will  estimate  the future cash flows  expected to result from the
      use of the asset and its eventual  disposition.  Future cash flows are the
      future cash  inflows  expected to be generated by an asset less the future
      outflows  expected to be necessary to obtain those inflows.  If the sum of
      the expected future cash flows (undiscounted and without interest charges)
      is less than the carrying amount of the asset,  the Company will recognize
      an  impairment  loss to adjust to the fair value of the asset.  Management
      believes  that there are no impaired  long-lived  assets at  December  31,
      2008, 2007 and 2006.

      (L) Income Taxes

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

      (M) Revenue Recognition

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

      (N) Shipping and Handling Costs

      Shipping  and handling  costs are included in cost of sales in  accordance
      with  guidance  established  by the  Emerging  Issues Task Force Issue No.
      00-10, "Accounting for Shipping and Handling Costs." During 2008, 2007 and
      2006, there were no material shipping and handling costs.

      (O) Research and Development

      The Company expenses all research and development costs as incurred.

      (P) Stock Based Compensation

      Effective   January  1,  2006  the  Company   adopted  SFAS  No.   123(R),
      "Share-Based  Payment"  ("SFAS  123R").  This  statement  requires  us  to
      estimate  the fair value of  stock-based  awards  exchanged  for  employee
      services and recognize compensation cost based on this fair value over the
      requisite service period.


                                      F-12
<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (P) Stock Based Compensation- continued

      With respect to stock based  compensation  granted to non  employees,  the
      Company  records an  expense  equal to the fair value of the option on the
      measurement  date,  which is the earlier of the date at which a commitment
      for performance is reached or the date at which the service is complete.

      (Q) Computation of Net Loss per Share

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

      Under SFAS 128 basic net loss per share is computed  by  dividing  the net
      loss for the year by the  weighted  average  number of shares  outstanding
      during the year.  Diluted net loss per share is  computed by dividing  the
      net earnings for the year by the weighted  average number of common shares
      and common share  equivalents  outstanding  during the year.  Common share
      equivalents  include stock options and other convertible  securities.  For
      the years  ended  December  31,  2008,  2007 and 2006,  the  common  share
      equivalents   were  not  included  in  the  diluted  net  loss  per  share
      computation as the effect is anti-dilutive.

      (R) Foreign Currency Translation and Transactions

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

      The change in cumulative  translation  adjustments  during the years ended
      December 31, 2008, 2007 and 2006 was as follows:

<TABLE>
<CAPTION>
      ---------------------------------------------------------------------------------------
                                                             2008         2007         2006
      ---------------------------------------------------------------------------------------
<S>                                                       <C>          <C>          <C>
      Beginning accumulated translation adjustments       $(176,536)   $(222,635)   $(151,172)
      ---------------------------------------------------------------------------------------
      Translation adjustments for the period then ended      83,672       46,099      (71,463)
      ---------------------------------------------------------------------------------------
      Ending accumulated translation adjustments          $ (92,864)   $(176,536)   $(222,635)
      ---------------------------------------------------------------------------------------
</TABLE>

      (S) Comprehensive Loss

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

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

      The  change  in  accumulated  unrealized  gain  (loss) on  investments  in
      marketable  securities  during the year ended December 31, 2008,  2007 and
      2006 was as follows:

<TABLE>
<CAPTION>
      -----------------------------------------------------------------------------------
                                                           2008        2007        2006
      -----------------------------------------------------------------------------------
<S>                                                     <C>         <C>         <C>
      Beginning accumulated unrealized gain (loss) on   $      --   $      --   $(452,274)
      marketable securities
      -----------------------------------------------------------------------------------
      Unrealized gain (loss) arising during the year           --          --     452,274
      -----------------------------------------------------------------------------------
      Ending accumulated unrealized gain (loss) on      $      --   $      --   $      --
      marketable securities
      -----------------------------------------------------------------------------------
</TABLE>


                                      F-13
<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (T) Fair Value of Financial Instruments

      The Financial  Accounting  Standards  Board ("FASB")  issued SFAS No. 107,
      "Disclosure  about Fair Value of Financial  Instruments",  which  requires
      disclosure of fair value information  about financial  instruments when it
      is practicable to estimate that value.  The carrying  amounts of financial
      instruments,  including cash,  accounts  receivable,  accounts payable and
      accrued  interest  payable,  approximate  fair value at December 31, 2008,
      2007 and 2006,  due to the relatively  short maturity of the  instruments.
      The investment in limited  partnership is recorded using the equity method
      and it is not  practical  to  estimate  the fair value of this  investment
      without  incurring  excessive  cost,  as this  investment  is not publicly
      traded.  Short-term and long-term  notes payable  approximates  fair value
      based upon debt terms available for entities under similar terms.

      (U) Use of Estimates

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

      (V) Recent Accounting Pronouncements

      In December  2007 the FASB issued SFAS No. 141R  "Business  Combinations".
      FAS 141R amends and  replaces  FAS 141 in order to improve the  relevance,
      representational  faithfulness,  and  comparability of information that an
      entity provides in its financial  reports about business  combinations and
      its  effects.   This  statement  applies  to  business   combinations  for
      acquisitions  with an  effective  date for the first  fiscal  period after
      December 15, 2008. The Company has not yet determined what the effect will
      be, if any, on its future financial statements.

      In December 2007 the FASB issued SFAS No. 160 "Noncontrolling Interests in
      Consolidated  Financial   Statements".   FAS  160  seeks  to  improve  the
      relevance,  comparability,  and transparency of the financial  information
      that a reporting entity provides in its consolidated  financial statements
      by  establishing  accounting  and reporting  standards.  This statement is
      effective for fiscal years  beginning after December 15, 2008. The Company
      has not yet  determined  what the  effect  will be, if any,  on its future
      financial statements.

      In March 2008 the FASB issued SFAS No. 161,  "Disclosures about Derivative
      Instruments  and Hedging  Activities--an  amendment of FASB  Statement No.
      133, Accounting for Derivative  Instruments and Hedging Activities".  This
      Statement requires enhanced  disclosures about an entity's  derivative and
      hedging  activities  and thereby  improves the  transparency  of financial
      reporting. This Statement is effective for financial statements issued for
      fiscal years and interim  periods  beginning after November 15, 2008, with
      early  application  encouraged.  This Statement  encourages,  but does not
      require,  comparative disclosures for earlier periods at initial adoption.
      The Company does not expect  adoption of this statement to have a material
      effect on future financial statements.

      Management  does not believe that any other recently  issued,  but not yet
      effective accounting  pronouncements,  when adopted,  will have a material
      effect on future financial statements.

      (W) Reclassifications

      Certain  reclassifications have been made to the 2007 financial statements
      to conform to the 2008 presentation.

Note 4 - Investments in Marketable Securities

      In 2008 and 2007, the Company had no investments in marketable securities.
      During  2006,  the  Company   classified  its  investments  in  marketable
      securities as available for sale,  and those  intended to be held for more
      than one year as  non-current.  Unrealized  holding  gains and  losses are
      reported as a separate  component of  stockholders'  deficiency as part of
      accumulated other comprehensive income (loss) until realized.

      In December,  2006, the Company sold all available for sale securities and
      recorded an actual loss of  approximately  $433,000.  Since that date, the
      Company has held no marketable securities available for sale.


                                      F-14
<PAGE>

Note 5- Inventories

      Inventories consist of the following at December 31:

      ----------------------------------------------------------
                                    2008       2007       2006
      ----------------------------------------------------------
      Raw materials               $ 45,814   $ 50,417   $ 27,100
      ----------------------------------------------------------
      Work in process               92,039     58,749     54,700
      ----------------------------------------------------------
      Finished goods               264,523    226,609    162,900
                                   -------    -------    -------
      ----------------------------------------------------------
      Total                       $402,376   $335,775   $244,700
      ----------------------------------------------------------

Note 6 - Property and Equipment

      Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
      --------------------------------------------------------------------------------------
                                                            2008         2007         2006
      --------------------------------------------------------------------------------------
<S>                                                      <C>          <C>          <C>
      Land                                               $  12,160    $  12,160    $  12,160
      --------------------------------------------------------------------------------------
      Buildings and improvements                           185,000      185,000      185,000
      --------------------------------------------------------------------------------------
      Equipment and furnishings                            231,772      232,228      223,340
                                                         ---------    ---------    ---------
      --------------------------------------------------------------------------------------
      Total                                                428,932      429,388      420,500
      --------------------------------------------------------------------------------------
      Less: Accumulated depreciation and  amortization    (407,335)    (402,640)    (395,220)
                                                         ---------    ---------    ---------
      --------------------------------------------------------------------------------------
      Net                                                $  21,597    $  26,748    $  25,280
      --------------------------------------------------------------------------------------
</TABLE>

Note 7 - Intangible Assets

      Intangible assets consist of the following at December 31:

      --------------------------------------------------------------------
                                          2008         2007         2006
      --------------------------------------------------------------------
      Patent costs                     $ 983,362    $ 849,141    $ 617,297
      --------------------------------------------------------------------
      Less: Accumulated amortization    (209,281)    (143,645)     (89,418)
                                       ---------    ---------    ---------
      --------------------------------------------------------------------
      Intangible assets, net           $ 774,081    $ 705,496    $ 527,879
      --------------------------------------------------------------------

Note 8 - Short-Term Notes Payable

      During 2008, the company received  short-term loans totaling $128,500 from
      "accredited  investors".   These  short-term  loans  are  expected  to  be
      converted into new 7% Non-Convertible  Promissory Notes when the Company's
      board of directors approves the issuance of additional notes.

      The short-term  notes payable bear interest at 7%, are unsecured,  and are
      due on demand.

Note 9 - Long-Term Notes Payable

      The  long-term  notes  payable  are due to  "accredited  investors",  bear
      interest at 7%, are unsecured, and are due in full on December 31, 2012.

      In December 2006, the Company issued  $2,700,000 (of the $3,000,000  total
      long-term  non-convertible notes payable at December 31, 2008) in exchange
      for the retirement of $700,000 of 6% convertible promissory notes payable,
      $1,600,000 of 7% convertible  promissory  notes  payable,  and $400,000 of
      notes payable.

      During 2007, the Company issued additional 7%  non-convertible  promissory
      notes payable in the aggregate principal amount of $200,000 to "accredited
      investors"  through  a  private  placement  intended  to  be  exempt  from
      registration  pursuant to the provisions of Regulation D of the Securities
      Act of 1933  increasing the outstanding  amount of new 7%  non-convertible
      promissory notes payable to $2,900,000.


                                      F-15
<PAGE>

Note 9 - Long-Term Notes Payable - continued

      During 2008, the company issued additional 7%  non-convertible  promissory
      notes payable in the aggregate principal amount of $100,000 to "accredited
      investor"  through  a  private  placement   intended  to  be  exempt  from
      registrant pursuant to the provision of Regulation D of the Securities Act
      of  1933  increasing  the  outstanding  amount  of new 7%  non-convertible
      promissory notes payable from $2,900,000 to $3,000,000.

      At the request of the Company, on February 20, 2009, the holders of the 7%
      non-convertible  notes payable  agreed to extend the due date of the notes
      from December 31, 2009 to December 31, 2012.

      The  aggregate  maturities  of long-term  debt at December 31, 2008 are as
      follows:

                     December 31,
                     -----------
                     2009                      $       --
                     ----                      ----------
                     2010                      $       --
                     ----                      ----------
                     2011                      $       --
                     ----                      ----------
                     2012                      $3,000,000
                     ----                      ----------
                     Total                     $3,000,000
                     ----                      ----------

      The 7%  convertible  notes  described  above,  exchanged in December 2006,
      contained a feature that permitted the Company to pay the note with either
      cash or unregistered  shares of the Company's common stock. In the case of
      payment in shares of common stock, the conversion of debt to equity was to
      be determined  based on the average  closing sale price of such shares for
      the 20 trading days immediately preceding notice. That feature constitutes
      an embedded derivative that is substantially equivalent to a "put" option.
      Such a  derivative  is required to be  accounted  for at fair value on the
      balance sheet,  with changes in fair value included in earnings.  In 2006,
      the Company recognized a $582,395 loss on embedded derivatives as a result
      of changes in fair value. The 2006 financial statements have been restated
      to give effect to this loss.

      The following  table  summarizes the components of long-term notes payable
      based on this accounting treatment:

<TABLE>
<CAPTION>
                                                        2008         2007          2006
                                                    -------------------------------------
<S>                                                 <C>          <C>          <C>
      6% convertible promissory notes payable:      $       --   $       --   $   700,000
                                                    -----------------------   -----------
      7% convertible promissory notes payable:
         Intrinsic value portion                            --           --       813,548
         Fair value portion                                 --           --     1,321,195
                                                    -----------------------   -----------
                                                                                2,134,743
                                                    -----------------------   -----------

      Total                                                 --           --     2,834,743

      Conversion to 7% non-convertible promissory
      notes payable (see table below)                       --           --    (2,834,743)

      7% non-convertible promissory notes payable    3,000,000    2,900,000     2,700,000
                                                    -----------------------   -----------

      Total                                         $3,000,000   $2,900,000   $ 2,700,000
                                                    ==========   ==========   ===========
</TABLE>


                                      F-16
<PAGE>

Note 9 - Long-Term Notes Payable - continued

The unrealized gain or (loss)  attributable to changes in the fair value portion
occurred as follows:

<TABLE>
<CAPTION>
                                                                  2008         2007          2006
                                                              -----------------------   -----------
<S>                          <C>                              <C>          <C>          <C>
         Quarter ended March 31                               $       --   $       --   $     3,897
         Quarter ended June 30                                        --           --      (245,542)
         Quarter ended September 30                                   --           --      (436,519)
         Quarter ended December 31                                    --           --       (38,975)
                                                              -----------------------   -----------

         Total annual unrealized gain (loss)                          --           --      (717,138)
         Cumulative unrealized gain (loss)                            --           --      (134,743)
                                                              -----------------------   -----------

      Net unrealized and realized gain (loss)
         included in earnings                                 $       --   $       --   $  (582,395)
                                                              ==========   ==========   ===========
</TABLE>


      The cumulative  unrealized loss of $134,743 was written off as of December
      31,  2006  upon  conversion  of  the 6% and  7%  convertible  notes  to 7%
      non-convertible notes

 Note 10 - Due to Officer

      Due to  officer  represents  amounts  due the  Company's  chief  executive
      officer and consists of the following at December 31:

<TABLE>
<CAPTION>
                                                  2008           2007         2006
                                               ---------    -----------    ---------
<S>                                            <C>          <C>            <C>
      Unpaid consulting fees pursuant to the
      Consulting Agreement                     $ 150,000    $   900,000    $ 750,000
      Unreimbursed travel and other expenses     223,192        187,192      190,937
                                               ---------    -----------    ---------
      Total                                      373,192      1,087,192      940,937
      Current portion                           (223,192)      (187,192)    (190,937)
      Non-current portion                      $ 150,000    $   900,000    $ 750,000
                                               =========    ===========    =========
</TABLE>

      The  Consulting  Agreement  between the Company  and the  Company's  chief
      executive  office  provides  for  annual   compensation  of  $150,000  and
      reimbursement of out-of-pocket expenses. The term of the agreement,  which
      originally  was three years from September 1, 1997 to August 31, 2000, has
      been extended to August 31, 2011. On March 31, 2008,  the chief  executive
      office  exercised  90,000 (of the 100,000  granted to him on December  21,
      2004) stock options at a price of $10.00 per share,  or $900,000 total, in
      exchange  for a  $900,000  reduction  of  unpaid  consulting  fees  due to
      officer.

Note 11 - Income Taxes

      At December 31, 2008, the Company had net operating loss carry forwards of
      approximately  $12,700,000  available  to reduce  future  Federal  taxable
      income,  which, if not used, will expire at various dates through December
      31, 2028.  These net operating loss carry  forwards  create a deferred tax
      asset of approximately $4,400,000. There are no other material differences
      between  amounts used for financial  reporting  purposes and tax reporting
      purposes.  Since it is more  likely  than not  that the  Company  will not
      realize a benefit from these net  operating  loss carry  forwards,  a 100%
      valuation  allowance has been recorded to reduce the deferred tax asset to
      its net realizable value.


                                      F-17
<PAGE>

Note 11 - Income Taxes - continued

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

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

       ------------------------------------------------------------------
                                         2008         2007         2006
       ------------------------------------------------------------------
      Income tax benefit at 35%       $(205,000)   $(220,000)   $(515,000)
      -------------------------------------------------------------------
      Change in valuation allowance     205,000      220,000      515,000
      -------------------------------------------------------------------
      Provision for income taxes      $      --    $      --    $      --
      -------------------------------------------------------------------

Note 12 - Stock Option Plan

      A summary of the  Company's  stock  option  activity is as follows for the
      years ended December 31, 2008, 2007 and 2006:

      --------------------------------------------------------------------------
                                                        Common Stock
      --------------------------------------------------------------------------
                                                               Weighted average
                                                Shares           Exercise Price
      --------------------------------------------------------------------------
      Outstanding, January 01, 2006             200,000            $  10.00
      --------------------------------------------------------------------------
      Granted                                        --
      --------------------------------------------------------------------------
      Exercised                                      --
      --------------------------------------------------------------------------
      Outstanding, December 31, 2006            200,000            $  10.00
      --------------------------------------------------------------------------
      Granted                                        --
      --------------------------------------------------------------------------
      Exercised                                      --
      --------------------------------------------------------------------------
      Outstanding, December 31, 2007            200,000            $  10.00
      --------------------------------------------------------------------------
      Granted                                        --
      --------------------------------------------------------------------------
      Exercised                                 (90,000)
      --------------------------------------------------------------------------
      Outstanding, December 31, 2008            110,000            $  10.00
      --------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
      -----------------------------------------------------------------------------------------------------------
                                       Options Outstanding                         Options Exercisable
      -----------------------------------------------------------------------------------------------------------
                                                                Weighted-                        Weighted-
                                       Weighted- Average         Average                          Average
                         Number       Remaining Contractual     Exercise         Number           Exercise
       Exercise Price  Outstanding           Life                 Price        Exercisable         Price
      -----------------------------------------------------------------------------------------------------------
<S>        <C>           <C>                 <C>                 <C>             <C>               <C>
           $10.00        110,000             1.00                $10.00          110,000           $10.00
      -----------------------------------------------------------------------------------------------------------
</TABLE>

      The 110,000 options expire on December 21, 2009.

Note 13 - Segment and Geographic Information

      Information  about the  Company's  assets and its  operations in different
      geographic  locations at December  31, 2008,  2007 and 2006 is shown below
      pursuant to the provisions of SFAS No. 131, "Disclosures about Segments of
      an Enterprise and Related Information."


                                      F-18
<PAGE>

Note 13 - Segment and Geographic Information - continued

      The following shows information about the Company's foreign  operations at
      December 31, 2008, 2007 and 2006:

      ------------------------------------------------------------------------
                                        2008            2007            2006
      ------------------------------------------------------------------------
      Net Sales:
      ------------------------------------------------------------------------

      France                        $  219,800      $  222,900      $  182,800
      ------------------------------------------------------------------------

      Other European countries         248,800         181,500         139,500
      ------------------------------------------------------------------------

      Others                            30,837          59,825          85,905
      ------------------------------------------------------------------------

      Total net sales               $  499,437      $  464,225      $  408,205
      ------------------------------------------------------------------------
      Total Assets:
      ------------------------------------------------------------------------

      United States                 $  814,719      $  759,467      $  905,418
      ------------------------------------------------------------------------

      France                           600,084         652,098         419,200
      ------------------------------------------------------------------------
      Total                         $1,414,803      $1,411,565      $1,324,618
      ------------------------------------------------------------------------

Note 14 - Commitments and Contingencies

      The Company rents certain office space in Levallois (Paris region), France
      on a quarter to quarter  basis.  Rent expense for the years ended December
      31,  2008,  2007  and  2006  were  approximately  $68,700*,  $64,500*  and
      $59,400*, respectively.

      *The Euro to Dollar  conversions are based upon an average conversion rate
      of $1.47 to (euro)1.00 for 2008, $1.38 to (euro)1.00 for 2007 and $1.27 to
      (euro)1.00  for  2006.  This is an  average  estimated  over  the  periods
      indicated and is subject to fluctuation during such periods.

Note 15 - Selected Quarterly Financial Data - (Unaudited)

      The results of  operations  by quarter for the years  ended  December  31,
      2008, 2007 and 2006 (Restated) are presented below (unaudited):

<TABLE>
<CAPTION>
                                              Three Months         Three Months           Three Months             Three Months
                                                 Ended                Ended                  Ended                    Ended
                                             March 31, 2008       June 30, 2008        September 30, 2008       December 31, 2008
                                             --------------       --------------       ------------------       ------------------
<S>                                          <C>                  <C>                  <C>                      <C>
Net sales                                    $      149,236       $      173,422       $           84,833       $           91,946

Cost of sales                                       116,377               94,438                   61,949                  (61,488)

          Gross Profit                               32,859               78,984                   22,884                  153,434
                                             --------------       --------------       ------------------       ------------------

             Total Operating Expenses               188,906              173,397                  148,419                  165,720
                                             --------------       --------------       ------------------       ------------------

          Loss From Operations                     (156,047)             (94,413)                (125,535)                 (12,286)
                                             --------------       --------------       ------------------       ------------------

             Total Other Income (Expense)           (55,136)             (54,746)                 (54,651)                 (33,570)
                                             --------------       --------------       ------------------       ------------------

Net (Loss) Income                                  (211,183)            (149,159)                (180,186)                 (45,856)

Other Comprehensive Income (Loss):
          Foreign translation gain (loss)            80,189                7,275                   23,305                  (27,097)
                                             --------------       --------------       ------------------       ------------------

Comprehensive (Loss) Income                  $     (130,994)      $     (141,884)      $         (156,881)      $          (72,953)
                                             ==============       ==============       ==================       ==================
</TABLE>


                                      F-19
<PAGE>

Note 15 - Selected Quarterly Financial Data - (Unaudited) -continued

<TABLE>
<CAPTION>
                                             Three Months         Three Months           Three Months             Three Months
                                                Ended                Ended                  Ended                    Ended
                                            March 31, 2007       June 30, 2007        September 30, 2007       December 31, 2007
                                            --------------       --------------       ------------------       ------------------
<S>                                         <C>                  <C>                  <C>                      <C>
Net sales                                   $      149,500       $       93,276       $          105,124       $          116,325

Cost of sales                                       60,400               64,489                   40,374                   80,569

          Gross Profit                              89,100               28,787                   64,750                   35,756
                                            --------------       --------------       ------------------       ------------------

             Total Operating Expenses              146,462              161,303                  169,145                  179,692
                                            --------------       --------------       ------------------       ------------------

          Loss From Operations                     (57,362)            (132,516)                (104,395)                (143,936)
                                            --------------       --------------       ------------------       ------------------

             Total Other Income (Expense)          (44,102)             (52,306)                 (58,314)                 (37,754)
                                            --------------       --------------       ------------------       ------------------

Net (Loss) Income                                 (101,464)            (184,822)                (162,709)                (181,690)

Other Comprehensive Income (Loss):
          Foreign translation gain (loss)            4,983               (1,865)                  17,977                   25,004
                                            --------------       --------------       ------------------       ------------------

Comprehensive (Loss) Income                 $      (96,481)      $     (186,687)      $         (144,732)      $         (156,686)
                                            ==============       ==============       ==================       ==================
</TABLE>

<TABLE>
<CAPTION>

                                            Three Months         Three Months           Three Months             Three Months
                                                Ended                Ended                  Ended                    Ended
                                            March 31, 2006       June 30, 2006        September 30, 2006       December 31, 2006
                                              (Restated)           (Restated)             (Restated)               (Restated)
                                            --------------       --------------       ------------------       ------------------
<S>                                         <C>                  <C>                  <C>                      <C>
Net sales                                   $       70,900       $       91,800       $           88,800       $          156,705

Cost of sales                                       47,800               64,200                   75,100                  (65,856)

     Gross Profit                                   23,100               27,600                   13,700                  222,561
                                            --------------       --------------       ------------------       ------------------

        Total Operating Expenses                   165,910              149,491                  145,236                   96,065
                                            --------------       --------------       ------------------       ------------------

     Loss From Operations                         (142,810)            (121,891)                (131,536)                 126,496
                                            --------------       --------------       ------------------       ------------------

        Total Other Income (Expense)               (47,711)            (296,070)                (480,634)                (379,269)
                                            --------------       --------------       ------------------       ------------------

Net (Loss) Income                                 (190,521)            (417,961)                (612,170)                (252,773)

Other Comprehensive Income (Loss):
     Foreign translation gain (loss)                27,517               (9,184)                   1,223                  (91,019)
     Unrealized gain (loss) on marketable
     securities                                      8,765              (25,935)                  39,286                  430,159
                                            --------------       --------------       ------------------       ------------------

Comprehensive (Loss) Income                 $    (154,.239)      $     (453,080)      $         (571,661)      $           86,367
                                            ==============       ==============       ==================       ==================
</TABLE>


                                      F-20

<PAGE>

Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

None.

Item 9A. Controls and Procedures

a) Evaluation of Disclosure Controls and Procedures. We conducted an evaluation
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer of the effectiveness of
the design and operation of our disclosure controls and procedures. The term
"disclosure controls and procedures," as defined in Rule 13a-15(e) and Rule
15d-15(e) under the Securities and Exchange Act of 1934, as amended ("Exchange
Act"), means controls and other procedures of a company that are designed to
ensure that information required to be disclosed by the company in the reports
it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures also include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the company's
management, including its principal executive and principal financial officers,
or persons performing similar functions, as appropriate, to allow timely
decisions regarding required disclosure. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of December 31, 2008 at the reasonable
assurance level.

(b) Management's Report on Internal Control over Financial Reporting. Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations
adopted pursuant thereto, the Company included a report of management's
assessment of the effectiveness of its internal control over financial reporting
as of December 31, 2007 as part of this report. The Company's independent
registered public accounting firm also attested to, and reported on,
management's assessment of the effectiveness of internal control over financial
reporting as of December 31, 2008. Management's report and the independent
registered public accounting firm's attestation report are included in Item 8
hereof, of this report and are incorporated herein by reference.

(c) Changes in Internal Control over financial reporting. There were no changes
in our internal control over financial reporting during the quarter ended
December 31, 2008 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Item 9B. Other Information.

None.

                                    PART III

Item 10. Directors, Executive Officers, Promoters and Control Persons

Directors and Executive Officers

The following persons are our executive officers and directors:

Name                       Age            Positions with our Company
----                       ---            --------------------------

Nasser Nassiri             45             President, Chief Executive Officer and
                                          Chairman of the Board

Yuhko Grossman             44             Secretary, Treasurer and Director

Jean Darondel              66             Director

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

Ms. Yuhko Grossman has been our Secretary, Treasurer and a director since 1999.
Ms. Grossman has 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. Prior to 2004 Ms. Grossmann was serving as
independent consultant to various portfolios in Europe. Ms. Grossmann then
earned her MBA in finance in Monaco. Since 2008, Ms. Grossmann has been Vice
President, Investment Banking of Haywood Securities (UK) Limited.

                                       19
<PAGE>


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

Board of Directors

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

Scientific Advisory Board

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

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

Professor L'Hocine Yahia is a full professor at the mechanical department of
engineering of the polytechnic school of Montreal (l'Ecole Polytechnique de
Montreal) where he is in charge of research group of biomechanics and
biomaterials (Groupe de recherche en biomecanique et biomateriaux "GRBB"). He is
also the professor associated with the hospital complex with Montreal (Centre
Hospitalier de Montreal "CHUM"). Professor Yahia has a distinguished track
record in tissue engineering and advanced biomaterials "Intelligent Materials,
Polymers and Ceramics".

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

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

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

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

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

Prof. Yann Le Petitcorps is a professor at the University of Bordeaux where he
holds a chair in material sciences and heads a research group focused on
engineering and material science which, among other areas, includes metallic and
ceramic structural biomaterials. Prof. Le Petitcorps received his PhD in
material science from the University of Bordeaux in 1985 and, in 2003, received
the Prize of Metallurgy from the French Academy of Science. Prof. Le Petitcorp
supervises a laboratory belonging to the French National Center for Scientific
Research, and conducts research in the field of materials for structural or
biomaterial applications in collaboration with several industrial (dental and
orthopaedic) companies.

                                       20
<PAGE>

Limitation on Liability of Directors

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

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

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors and executive officers, and persons who own more than ten percent of a
registered class of our Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
our Common Stock. Officers, directors and ten-percent stockholders are required
by SEC regulations to furnish us with copies of all Section 16(a) forms they
file. During the fiscal year ended December 31, 2007, no such reports were
submitted to us for review and, based upon this, to our knowledge, all Section
16(a) filing requirements applicable to our officers and directors have been
complied.

Code of Ethics

We have not yet adopted a code of ethics for our company because our management
team currently consists of only three individuals, each of whom is a director
and two of whom are executive officers. Because our management team is small, we
have determined that a formal code is unnecessary at this time.

Audit Committee/Audit Committee Financial Expert

We have not yet formed an audit committee of our board of directors since we are
not required to do so under the rules of the OTC Bulletin Board and we have only
one non-executive director on our board. In addition, we currently do not have
an audit committee financial expert because we do not believe that the cost of
retaining such an expert outweighs the benefit of having one given the size of
our company and the simplicity of our operations.

Item 11. Executive Compensation

Compensation Discussion and Analysis

Our management compensation consists primarily stock options and, to a lesser
extent, cash. We believe that through issuance of options, we are able to retain
our management without using our limited cash resources.

Presently, none of our executive officers receive any salary. However, on
September 1, 1997, we entered into a Consulting Agreement with Nasser Nassiri,
our President, CEO and Chairman, pursuant to which Mr. Nassiri serves as such.
The agreement, which was originally for a three year term, provided for base
compensation of $150,000 per annum, reimbursement of certain expenses and for a
payment of two years' compensation thereunder in the event of a change in
control of the Company. The agreement was renewed, on the same terms, in 2000
for an additional two years until August 30, 2002. In 2002, it was again renewed
for an additional three years to August 2005 and, in August 2005, for an
additional three year to August 2008. In the year ended December 31, 2008, to
help the Company's cash position, the president has deferred receipt of any cash
compensation for 2008 pursuant to his consulting agreement. In 2008, Mr. Nassiri
applied amounts from prior years' deferred cash compensation to the exercise of
his then-outstanding options to purchase 90,000 share of our common stock.

Under our compensation structure, Mr. Nassiri is entitled to significantly more
compensation than our Secretary/Treasurer and our other non-executive director.
This compensation difference reflects the fact that Mr. Nassiri devotes
significantly more time to the affairs of the company than do the other
directors. Also, prior to the exercise of his options for share of our common
stock Mr. Nassiri had not received the majority of this amount for the

                                       21
<PAGE>

past seven years.  Mr. Nassiri is also the President and CEO of Biocoral France,
our  wholly-owned  subsidiary  through  which we conduct most of our  operations
including  all product  sales.  He is also the  President  of Bio  Holdings  our
wholly-owned  subsidiary  which holds all of our patents.  Mr. Nassiri  conducts
these  activities  on behalf of the company and does not receive any  additional
compensation for this work.

      The following table lists amounts due to Mr. Nassiri at December 31:

<TABLE>
<CAPTION>
      -------------------------------------------------------------------------------------------
                                                      2008              2007              2006
      -------------------------------------------------------------------------------------------
<S>                                               <C>               <C>               <C>
      Unpaid consulting fees pursuant to the      $   150,000       $   900,000       $   750,000
      Consulting Agreement
      -------------------------------------------------------------------------------------------
      Unreimbursed travel and other expenses          223,192           187,192           190,937
      --------------------------------------          -------           -------           -------
      -------------------------------------------------------------------------------------------
      Total                                           373,192         1,087,192           940,937
      -------------------------------------------------------------------------------------------
      Current portion                             $  (223,192)      $  (187,192)      $  (190,937)
      -------------------------------------------------------------------------------------------
      Non-current portion                         $   150,000       $   900,000       $   750,000
      -------------------------------------------------------------------------------------------
</TABLE>

The Consulting Agreement between the company and Mr. Nassiri provides for annual
compensation of $150,000 and reimbursement of out-of-pocket expenses. The term
of the agreement, which originally was three years from September 1, 1997 to
August 31, 2000, has been extended to August 31, 2011. On March 31, 2008, Mr.
Nassiri exercised 90,000 of the 100,000 stock options granted to him on December
21, 2004 at a price of $10.00 per share, or $900,000 total, in exchange for a
$900,000 reduction of unpaid consulting fees due to officer.

Stock Option Plan

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

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

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

On March 31, 2008, Mr. Nassiri exercised 90,000 of the 100,000 stock options
granted to him on December 21, 2004.

Aggregate Option Exercises and Fiscal Year-End Option Values

The following table lists the number of securities underlying unexercised
options at December 31, 2008.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                                                NUMBER OF
                                                                                SECURITIES           VALUE OF
                                                                                UNDERLYING         UNEXERCISED
                                                                               UNEXERCISED         IN-THE-MONEY
                                                                                 OPTIONS            OPTIONS AT
                                             SHARES                             AT FY-END              FY-END
                                            ACQUIRED             VALUE         EXERCISABLE/         EXERCISABLE/
               NAME                        ON EXERCISE         REALIZED       UNEXERCISABLE        UNEXERCISABLE
               ----                        -----------         --------       -------------        -------------
------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                  <C>            <C>                <C>
Nasser Nassiri...................            90,000               --             10,000/ --          400,000/ --
------------------------------------------------------------------------------------------------------------------
Jean Darondel....................              --                 --             50,000/ --         2,000,000/ --
------------------------------------------------------------------------------------------------------------------
Yuhko Grossman...................              --                 --             50,000/ --         2,000,000/ --
------------------------------------------------------------------------------------------------------------------
</TABLE>

Director Compensation

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

                                       22
<PAGE>

The following table lists the amount and type of compensation received by each
of our directors for the fiscal year ended December 31, 2008:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                      Director Compensation
----------------------------------------------------------------------------------------------------------------------------
                                                                                Change in
                                                                                 Pension
                                                                                Value and
                                                              Non-Equity       Nonqualified
                      Fees Earned                             Incentive          Deferred            All
                      or Paid in      Stock      Option          Plan          Compensation         Other
       Name              Cash         Awards     Awards      Compensation        Earnings        Compensation       Total
----------------------------------------------------------------------------------------------------------------------------
<S>                    <C>             <C>        <C>            <C>               <C>               <C>         <C>
Nasser Nassiri......   $150,000        --         --             --                --                --          $150,000
----------------------------------------------------------------------------------------------------------------------------

Jean Darondel.......      --           --         --             --                --                --              --
----------------------------------------------------------------------------------------------------------------------------

Yuhko Grossman......      --           --         --             --                --                --              --
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information known to us with respect to
the beneficial ownership of our common stock as of March 2, 2009 by:

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

      o     each of our directors;

      o     each of our named executive officers; and

      o     all current directors and executive officers as a group.

Except as otherwise indicated, and subject to applicable community property
laws, the persons named in the table below have sole voting and investment power
with respect to all shares of common stock held by them. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of common stock subject to
options held by that person that are currently exercisable or exercisable within
60 days of March 2, 2009 are deemed outstanding. Such shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of any
other person.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                             AMOUNT AND NATURE
                                                                               OF BENEFICIAL
                                                                              OWNERSHIP AS OF           PERCENT OF
NAME AND ADDRESS OF BENEFICIAL                                                    March 2,               SHARES IN
OUTSTANDING OWNER                                    TITLE OF CLASS                2009                   CLASS(5)
-----------------                                    --------------                ----                   --------
-----------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                        <C>                         <C>
Jean Darondel................................         Common Stock               50,000(1)                   *
   38 rue Anatole France,
   92594 Levallois Perret Cedex, France
-----------------------------------------------------------------------------------------------------------------------
Yuhko Grossman...............................         Common Stock               50,000(2)                   *
   38 rue Anatole France,
   92594 Levallois Perret Cedex, France
-----------------------------------------------------------------------------------------------------------------------
Nasser Nassiri...............................         Common Stock               100,000(3)                  *
   38 rue Anatole France,
   92594 Levallois Perret Cedex, France
-----------------------------------------------------------------------------------------------------------------------
All officers and directors                            Common Stock               200,000(4)                  *
as a group
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

*- Indicates less than 1%

                                       23
<PAGE>

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

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

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

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

(5) Based upon 11,443,787 shares of common stock outstanding.

       Securities Authorized for Issuance Under Equity Compensation Plans

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

Item 13. Certain Relationships and Related Transactions

None.

Item 14. Principal Accountant Fees and Services.

Audit Fees for 2008

Our principal accountant for year ended December 31, 2008 is Michael T. Studer
CPA P.C. We have not yet been billed for their services rendered in connection
with the audit of our 2008 consolidated financial statements. However, as of the
date of this report, we have paid them $9,750 as a retainer fee.

Our principal accountant during 2008 was Moore & Associates, Chartered. For
services rendered in connection with the review of our unaudited consolidated
financial statements for filing with our Quarterly Reports on Form 10-Q for the
three-month periods ended March 31, 2008, June 30, 2008 and September 30, 2008,
we have paid them $9,000.

Audit Fees for 2007

Our principal accountant for year ended December 31, 2007 was Moore &
Associates, Chartered. For services rendered in connection with the audit of our
2007 consolidated financial statements, we have paid them $12,500.

We also paid Moore & Associates, Chartered, approximately $7,500 for services in
connection with the review of our unaudited consolidated financial statements
for filing with our Quarterly Reports on Form 10-Q for the three-month periods
ended March 31, June 30, and September 30, 2007.

                                     PART IV

Item 15. Exhibits and Reports on Form 8-K.

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

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------

Exhibit Number    Description of Document
----------------------------------------------------------------------------------------------------------------------
<S>               <C>
3.1               Certificate of Incorporation, as amended(1)(2)
----------------------------------------------------------------------------------------------------------------------

3.2               By-laws (1)
----------------------------------------------------------------------------------------------------------------------

3.3               Certificate of Amendment to Certificate of Incorporation(4)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       24
<PAGE>

<TABLE>
<S>               <C>
3.4               Certificate of Amendment to Certificate of Incorporation(4)
----------------------------------------------------------------------------------------------------------------------

4.1               Form of Company's 3 year 7% Convertible Redeemable Debenture due December 31, 2006(4)
----------------------------------------------------------------------------------------------------------------------

4.2               Form of Option Agreement(3)(4)
----------------------------------------------------------------------------------------------------------------------

4.3               Form of Company's 3 Year 7 Percent Non-Convertible Promissory Note Due December 31, 2009(5)
----------------------------------------------------------------------------------------------------------------------

10.1              Consulting Agreement between the Company and Mr. Nasser Nassiri(6)
----------------------------------------------------------------------------------------------------------------------

31                Certification of Nasser Nassiri pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
----------------------------------------------------------------------------------------------------------------------

32                Certification of Nasser Nassiri pursuant to Rule 13a-14(a)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

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

(4) Incorporated by reference to Exhibit 4.2 to the Company's Annual Report on
Form 10-KSB/A filed May 19, 2005.

(5) Incorporated by reference to Exhibit 4.3 to the Company's Annual Report on
Form 10-K filed March 30, 2007.

(6) Incorporated by reference to Exhibit No. 10.30 to Form 10-KSB for the year
ended December 31, 1997, filed on April 17, 1998.

(a) During the fourth quarter of 2008, we filed no current reports on Form 8-K.

On January 26, 2009, we filed a report on Form 8-K in connection to Item 4.01
Changes in Registrant's Certifying Accountant.

On February 17, 2009, we filed a report on Form 8-K in connection to Item 4.01
Changes in Registrant's Certifying Accountant.

                                       25
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on our behalf by the
undersigned, thereunto duly authorized, on March 31, 2009.

                                     BIOCORAL, INC

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

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

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Signature                               Title                                     Date
-----------------------------------------------------------------------------------------------------
<S>                                     <C>                                       <C>
/s/ Nasser Nassiri                      President, Chief Executive Officer        March 31, 2009
------------------                      and Chairman of the Board of Directors
     Nasser Nassiri                     (Principal Executive Officer and
                                        Principal Accounting Officer)

-----------------------------------------------------------------------------------------------------
/s/ Yuhko Grossman                      Secretary, Treasurer and Director         March 31, 2009
------------------
     Yuhko Grossman

-----------------------------------------------------------------------------------------------------
/s/ Jean Darondel                       Director                                  March 31, 2009
------------------
     Jean Darondel
-----------------------------------------------------------------------------------------------------
</TABLE>

                                       26