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, 2007

                           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, 2007 were $464,200.

The aggregate market value of the registrant's voting and non-voting common
equity held by non-affiliates as of March 7, 2008 was approximately
$454,151,480.

The number of outstanding shares of the registrant's common stock as of March 7,
2008 was 11,353,787.

Documents Incorporated by Reference: None.

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                                TABLE OF CONTENTS

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PART I
Item 1.    Description of Business.....................................................................   1
Item 1A.   Risk Factors................................................................................   8
Item 1B.   Unresolved Staff Comments...................................................................   11
Item 2.    Description of Property.....................................................................   11
Item 3.    Legal Proceedings...........................................................................   11
Item 4.    Submission of Matters to a Vote of Security Holders.........................................   11

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.......   13
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.                                    16
Item 8.    Financial Statements and Supplementary Data.................................................   F-1 - F-25
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........   18
Item 9A.   Controls and Procedures.....................................................................   18
Item 9B.   Other Information...........................................................................   18

PART III
Item 10    Directors, Executive Officers, Promoters and Control Persons................................   18
Item 11.   Executive Compensation......................................................................   20
Item 12.   Security Ownership of Certain Beneficial Owners and Management..............................   21
Item 13.   Certain Relationships and Related Transactions..............................................   22
Item 14    Principal Accountant Fees and Services......................................................   22

PART IV
Item 15.   Exhibits and Reports on Form 8-K............................................................   23
           Signatures..................................................................................   24
</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 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) belief that our trading
platform is uniquely positioned to become a preferred platform of many varying
markets worldwide; (ii) belief that our trading system and processes will
withstand competition and regulatory changes; (iii) expectations for marketing
and sales opportunities in diverse markets; (iv) belief that we may require more
capital; (v) belief that alternative sources of financing are available if
required; and (vi) 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.

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

Biocoral(R)

Biocoral(R) our primary product, is a natural coral "carbonate calcium" derived
bone graft substitute and is used by surgeons and practitioners because of its
biocompatibility, resorbability, osseo conduction and safety. Certain chemical,
physical and structural characteristics of coral are very similar to that of
human bone tissue. Biocoral(R) is derived from three particular species of coral
naturally present in abundance. Biocoral(R) is primarily (more than 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 finally developed 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 owns, as of date of this report,
approximately 166 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. In addition, we own
approximately 53 pending patents applications around the world.

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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Using proprietary manufacturing processes, our chief product, Biocoral(R), is a
resorbable biomaterial derived from natural carbonate calcium in the metastable
crystalline aragonite form in a natural condition 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 2007. 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.

We are preparing new clinical human trials for autologous fibrin glue in
different indications which we expect to begin during 2008. We believe that the
results of these clinical trials may allow us to extend the market for our
innovative products for use in other indications. However, there can be no
assurance that we will be able to extend the market for our products.

Osteoporosis, "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 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

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remaining lifetime. In fact, someone in Europe has a fracture every 30 seconds
as a result of osteoporosis. Furthermore, they estimate that the number of
osteoporosis patients will double over the next 50 years with the projected
increase in the aging population and as a result of lifestyle factors. However,
despite the fact that the incidence of osteoporotic fractures is growing, the
problem is under-recognized with only one in two osteoporotic spinal fractures
being diagnosed.

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

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 the official government patent offices of various countries,
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).

Autologous Fibrin Glue

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

Surgical glue represents a fast growing segment of the biotech industry.
Clinical trials have been done especially for skin replacement and skin grafts
eliminating the need for protein based skin grafts. Following the successful

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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 new
autologous fibrin glue that was developed by us. Before we can commence
commercialization of the autologous fibrin glue, AFSSAPS requires that the
French blood bank known as Etablissement Francaise du Sang ("EFS"), the
exclusive operator of blood transfusions in France, prepare a report following
up on the progress of the first fifty (50) patients treated with the autologous
fibrin glue.

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

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

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

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

For more than 18 years, studies have been undertaken to demonstrate that it is
possible to accelerate the bone repair process by combining growth factors with
a support matrix such as Biocoral(R). Some scientific research has shown that
Biocoral(R), as a biomaterial, represents a useful support for growth factors.
European clinical trials conducted over the past six years have had positive
results confirming the acceleration of the bone repair process. Our technology

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underlying this application is protected by strong patents owned by our
wholly-owned subsidiary in many countries around the world where patents
applications were filed. Our patent applications in this application have thus
far been granted in every country where filed by their official government
patent offices, including 17 European Union countries, Canada, Japan, Australia,
and in the United States by the US Department of Commerce Patent and Trademark
Office.

Raw Materials and Manufacturing

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

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.

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

Competition

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

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

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poses risk of infection. In addition, many countries have prohibited the
commercialization of product utilizing bovine collagen as a base.

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

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 will have to demonstrate to the medical
community the surgical and patient advantages, safety, efficacy, cost
effectiveness and clinical results of Biocoral(R). Most of our competitors have
substantially greater resources, larger market share and greater research and
development capabilities than ours and may, therefore, be expected to compete
aggressively and successfully in the markets for our products.

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

Biocoral(R) was originally patented in France in 1979, in the United States in
1982, and in Japan in 1989. Our French subsidiary acquired the patent rights to
Biocoral(R) from "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 owns, as of date of this report, approximately
166 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. In addition, we own approximately 53
pending patents applications around the world.

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

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

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

One of our patent titles covers technology called "method for preparation of
biological adhesive enriched with platelet factors and application". Our patent
applications in this application have thus far been filed and granted by the

                                        6

<PAGE>

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

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

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, Korea, South Africa,
Canada, Australia 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.

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

                                        7

<PAGE>

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. French
subsidiaries currently have nine employees all of whom are full time. In
addition, we engage the services of various scientific and research consulting
teams under consulting contracts, working on research and development projects
in different laboratories and hospitals in France and other countries.

Subsidiaries

The company conducts its operation in Europe via several subsidiaries, including
its French (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.

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. THE
RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES WE FACE.
ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE
CURRENTLY DEEM IMMATERIAL MAY ALSO AFFECT OUR BUSINESS, FINANCIAL CONDITION AND

                                        8

<PAGE>

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. 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, 2007, we had net
sales of approximately $464,200 an accumulated deficit of $21,681,661.

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

      Products using our technology are in the late stages of research and
development. Further testing will be required to determine their commercial
viability. 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.

      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 approximately 166 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. In
addition, we own approximately 53 patents applications pending around the world.
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.

                                        9

<PAGE>

      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. 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.

      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

                                       10

<PAGE>

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.

Item 1B. Staff Comments.

None.

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 $63,500
(approximately 46,000 euros).

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

                                       11

<PAGE>

                                     PART II

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

At December 31, 2007 there were 11,353,787 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, 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

December 31, 2005       $22.50         $12.00
September 30, 2005      $24.00         $24.00
June 30, 2005           $20.00         $ 3.00
March 31, 2005          $55.00         $13.00

Holders

As of December 31, 2007, there were approximately 400 holders of record of the
shares of our common stock including several European financial and portfolio
institutions.

Dividends

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

Recent Sales of Unregistered Securities

During 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 8 (D)).

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 8 (D)).

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 8 (B)).

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.

                                       12

<PAGE>

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,
----------------------------------------------------------------------------------------------------------------
                                   2007             2006            2005             2004             2003
----------------------------------------------------------------------------------------------------------------
<S>                           <C>              <C>             <C>              <C>              <C>
   Net sales                  $      464,225   $     408,205   $      316,200   $      351,600   $      361,900
   Operating loss                    438,209         269,741          723,874          562,199          449,297
   Net income (loss)                (630,685)     (1,473,425)        (997,758)         198,216         (319,176)
   Net income (loss) per
   common share               $        (0.06)  $       (0.13)  $        (0.09)  $         0.02   $        (0.03)
   Weighted average               11,353,787      11,353,817       11,353,816       11,299,267       11,297,573
   common shares                      shares          shares           shares           shares           shares
   outstanding

Balance Sheet Data:
   Total assets               $    1,411,565   $   1,324,618   $    1,075,810   $      950,308   $      812,676
   Total liabilities               5,358,318       4,686,785        3,345,364        2,230,290        2,929,724
   Stockholders' deficiency        3,946,753       3,362,167        2,269,554        1,279,982        2,117,048
</TABLE>

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.

            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 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.

                                       13

<PAGE>

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 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.

                                       14

<PAGE>

Fiscal 2006 vs. 2005

Net sales, which are solely attributable to our wholly owned European
subsidiaries, totalled approximately $408,200 for the year ended December 31,
2006, an increase of approximately $92,000 or approximately 29% from
approximately $316,200 for the year ended December 31, 2005. 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 $121,200 for the year ended December 31, 2006, a
decrease of approximately $101,200 or approximately 45% from approximately
$222,400 for the year ended December 31, 2005. The gross profit percentage for
the year ended December 30, 2007 and 2006 was approximately $287,000 or 70% and
$93,800 or 30%, respectively. The main factor contributing to this decrease was
due to the low cost of sale of old inventory at current selling prices.

Operating expenses were approximately $556,700 during the year ended December
31, 2006, a decrease of approximately $261,000 or approximately 32% from
approximately $817,700 for the year ended December 31, 2005. This decrease was
primarily due to a decrease in the company's research and development activities
and consulting and professional fee and in general and administrative expenses.

Consulting and professional fees during the year ended December 31, 2006 were
approximately $222,000, a decrease of $100,000 or approximately 31% compared
to approximately $322,000 during the year ended December 31, 2005. This decrease
is attributable to a decrease in the fees needed during 2005 for the development
of next generation of products. Finally there were additional professional fees
associated with the compliance for the Sarbanes-Oxley Act of 2002.

Other income (net of expenses) totalled approximately $(1,203,700) of expense
for the year ended December 31, 2006 as compared to approximately $(273,900) of
expense for the year ended December 31, 2005. 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 during December 2006
of approximately $582,400.

As a result of the above, our net loss for the year ended December 31, 2006
totalled approximately $1,473,400 or $.13 per share compared to a net loss of
approximately $997,800 or $.09 per share for the year ended December 31, 2005.

These losses per share were based on weighted average common shares outstanding
of 11,353,817 & 11,353,816 for the years ended December 31, 2006 and 2005
respectively.

Financial Condition, Liquidity and Capital Resources

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.
Management believes that it is likely that we will continue to incur net losses
through at least 2008. 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 $145,500
and $212,000 at December 31, 2007 and 2006 respectively. We also had cash
provided by financing activities of $200,000 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 to
7% non-convertible notes payable on December 31, 2006. In addition, during 2006,
we received proceeds of approximately $210,000 from the sale of marketable
securities. In addition, the company received the commitment from one of its
shareholders to supply the company during 2008 with funds up to $200,000.
Accordingly, management believes that we will have sufficient liquid resources
to operate through at least December 31, 2008.

Fiscal 2006 vs. 2005

As shown in the accompanying consolidated financial statements, we had net
losses of approximately $1,473,000 and $997,800 in 2006 and 2005, respectively.
Management believes that it is likely that we will continue to incur net losses

                                       15

<PAGE>

through at least 2007. We had a working capital deficiency of approximately
$495,200 and $418,000 at December 31, 2006 and 2005 respectively. We also had a
stockholders' deficiency of approximately $3,362,200 and $2,270,000 at December
31, 2006 and 2005, respectively.

We had a negative cash flow from operating activities of approximately $212,000
and $366,200 at December 31, 2006 and 2005 respectively. We also had cash
provided by financing activities of $400,000 and $500,000 at December 31, 2006
and 2005 respectively. Our net loss of approximately $1,473,000 and $997,800
increased our accumulated deficit to approximately $21,051,000 and $19,578,000
at December 31, 2006 and 2005 respectively.

During 2006, we received $400,000 of additional funds which were converted to 7%
non-convertible notes payable on December 31, 2006. In addition, during 2006,
the Company received proceeds of approximately $210,000 from the sale of
marketable securities.

During 2005, we sold $500,000 of 7% convertible promissory notes. We also owned
marketable securities which were classified as available-for-sale and consisted
of equity securities with an aggregate fair value of approximately $193,800 and
a cost totalling approximately $646,000 at December 31, 2005. The net unrealized
holding loss was approximately $54,000 for the year ended December 31, 2005
which increased accumulated other comprehensive loss, a component of total
stockholders' deficiency to approximately $603,400 as of December 31, 2005.

                           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.

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, 2007, a
hypothetical 10 percent change in foreign

                                       16

<PAGE>

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. We classify 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.

The cost and fair market value of marketable securities available-for-sale held
as of December 31:

                 December 31, 2007    December 31, 2006    December 31, 2005
                ------------------    -----------------    -----------------
   Cost         $               --    $              --    $         646,057
   Fair Value   $               --    $              --    $         193,783

During December, 2006 the company sold all available for sale securities and
recorded an actual loss of approximately $433,000.

                                       17

<PAGE>

Item 8. Financial Statements and Supplementary Data

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

Financial Statements:

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
Consolidated Balance Sheets as of December 31, 2007, 2006
(Restated) and 2005 (Restated)                                        F-5
Consolidated Statements of Operation for the years ended December
31, 2007, 2006 (Restated) and 2005 (Restated)                         F-6
Consolidated Statements of Changes in Stockholders' Deficiency and
Comprehensive loss for the years ended December 31, 2007, 2006
(Restated) and 2005 (Restated)                                        F-7
Consolidated Statements of Cash Flows for the years ended December
31, 2007, 2006 (Restated) and 2005 (Restated)                         F-8
Notes to Consolidated Financial Statements                            F-9 - F-25

                                       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, 2007. 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 maintain
effective internal control over financial reporting as of December 31, 2007,
based on criteria established in "Internal Control - Integrated Framework"
issued by the COSO.

      Moore & Associates Chartered., our independent registered public
accounting firm, has issued an audit report, on our assessment of 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

The Board of Directors and Stockholders of Biocoral, Inc

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting, that Biocoral,
Inc. maintained effective internal control over financial reporting as of
December 31, 2007, based on criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Biocoral, Inc.'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. Our
responsibility is to express an opinion on management's assessment and an
opinion on the effectiveness of the company's internal control over financial
reporting based on our audit.

      We conducted our audit 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
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.

      A company's internal control over financial reporting is a process
designed 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 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.

      In our opinion, management's assessment that Biocoral, Inc. maintained
effective internal control over financial reporting as of December 31, 2007, is
fairly stated, in all material respects, based on criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Also, in our opinion Biocoral,
Inc. maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2007, based on criteria established in
Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

      We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheets of Biocoral, Inc. and subsidiaries as of December 31, 2007, 2006
(restated) and 2005 (restated), and the related consolidated statements of
income, cash flows and shareholders' equity for each of the three years in the
period ended December 31, 2007, and our report dated March 28, 2008, expressed
an unqualified opinion thereon.

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

Las Vegas, Nevada
March 28, 2008

                                       F-3

<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, 2006 (restated) and
2005 (restated), and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three 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 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
audits provide a reasonable basis for our opinion.

      In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Biocoral, Inc. and subsidiaries at December 31, 2007, 2006 (restated) and 2005
(restated), and the consolidated results of its operations and its cash flows
for each of the three years in the period ended December 31, 2007, in conformity
with accounting principles generally accepted in the United States of America.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

      We have also audited in accordance with standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Biocoral,
Inc.'s internal control over financial reporting as of December 31, 2007, based
on the criteria established in Internal Control -- Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
and our report dated March 28, 2008, expressed an unqualified opinion thereon.

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

Las Vegas, Nevada
March 28, 2008

                                       F-4

<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
   FOR THE YEAR ENDED DECEMBER 31, 2007, 2006 (RESTATED) AND 2005 (RESTATED)

<TABLE>
<CAPTION>
                                                         ASSETS

                                                                          December 31           December 31,          December 31,
                                                                              2007                  2006                   2005
                                                                          ------------          ------------          ------------
                                                                                                 (Restated)             (Restated)
<S>                                                                       <C>                   <C>                   <C>
Current Assets:
   Cash                                                                   $    147,681          $    287,773          $    127,211
   Investments in marketable securities                                             --                    --               193,783
   Accounts receivable, net of allowance for doubtful accounts                 138,144               175,900               136,076
   Inventories                                                                 335,775               244,675               125,100
   Prepaid expenses and other current assets                                    32,104                27,744                22,507
                                                                          ------------          ------------          ------------

     Total Current Assets                                                      653,704               736,092               604,677

Property and equipment, net                                                     26,748                25,279                31,300
Restricted cash held in escrow                                                  11,049                11,049                11,049
Investment in limited partnership                                                   --                 4,162                10,444
Intangible assets, net                                                         705,496               527,879               405,707
Other assets                                                                    14,568                20,157                12,633
                                                                          ------------          ------------          ------------

     Total Assets                                                         $  1,411,565          $  1,324,618          $  1,075,810
                                                                          ============          ============          ============

                                        LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current  Liabilities:
   Accounts payable                                                       $    943,231          $    726,555          $    713,123
   Current portion due to officer                                              187,192               190,937               158,935
   Accrued interest payable                                                    421,712               313,762               150,701
                                                                          ------------          ------------          ------------

     Total Current Liabilities                                               1,552,135             1,231,254             1,022,759

Due to officer, net of current portion                                         900,000               750,000               600,000
Fair value of embedded derivative                                                   --                    --               416,419
Long-term debt, net of current portion                                       2,900,000             2,700,000             1,301,186
Deferred employee benefits                                                       6,183                 5,531                 5,000
                                                                          ------------          ------------          ------------

       Total Liabilities                                                     5,358,318             4,686,785             3,345,364
                                                                          ------------          ------------          ------------

Commitments and contingencies

Stockholders' Deficiency:
   Preferred stock, par value $.001 per share; 1,000,000  shares
     authorized; none issued                                                        --                    --                    --
   Common Stock; $.001 par value;  100,000,000 shares authorized;
     11,353,787 shares issued and outstanding December 31, 2007
     11,353,817 shares issued and outstanding December 31, 2006
     11,353,816 shares issued and outstanding December 31, 2005                 11,354                11,354                11,354
   Additional paid-in capital                                               17,900,090            17,900,090            17,900,090
   Accumulated other comprehensive loss                                       (176,536)             (222,635)             (603,447)
   Accumulated deficiency                                                  (21,681,661)          (21,050,976)          (19,577,551)
                                                                          ------------          ------------          ------------

     Total Stockholders' Deficiency                                         (3,946,753)           (3,362,167)           (2,269,554)
                                                                          ------------          ------------          ------------

     Total Liabilities and Stockholders' Deficiency                       $  1,411,565          $  1,324,618          $  1,075,810
                                                                          ============          ============          ============
</TABLE>

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

                                       F-5

<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
   FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 (RESTATED) AND 2005 (RESTATED)

<TABLE>
<CAPTION>
                                                                           Years ended December 31,
                                                                2007                  2006                 2005
                                                           ------------          ------------          ------------
                                                                                  (Restated)            (Restated)
<S>                                                        <C>                   <C>                   <C>
Net sales                                                  $    464,225          $    408,205          $    316,200
Cost of sales                                                   245,832               121,244               222,400
                                                           ------------          ------------          ------------

   Gross Profit                                                 218,393               286,961                93,800
                                                           ------------          ------------          ------------

Operating Expenses:
   Research and development                                      59,695                49,892               114,200
   Consulting and professional fees                             210,556               222,075               321,995
   Depreciation and amortization                                 61,646                52,454                40,469
   Administrative expenses                                      324,705               232,281               341,010
                                                           ------------          ------------          ------------

     Total Operating Expenses                                   656,602               556,702               817,674
                                                           ------------          ------------          ------------

   Loss From Operations                                        (438,209)             (269,741)             (723,874)
                                                           ------------          ------------          ------------

Other Income (Expense):
   Interest, net                                               (191,705)             (186,645)             (152,826)
   Equity in loss on sale of marketable securities                   --                (6,282)               (9,765)
   Realized loss on sale of marketable securities                    --              (433,446)                   --
   Loss on embedded derivatives                                      --              (582,395)             (111,971)
   Dividend income                                                   --                 3,878                 1,728
   Litigation contingency loss                                       --                    --               (16,050)
   Other                                                           (771)                1,206                15,000

     Total Other Income (Expense)                              (192,476)           (1,203,684)             (273,884)
                                                           ------------          ------------          ------------

Net Loss                                                       (630,685)           (1,473,425)             (997,758)

Other Comprehensive Income (Loss):
   Foreign translation gain                                      46,099               (71,463)               62,214
   Unrealized gain (loss) on marketable securities                   --               452,275               (54,028)
                                                           ------------          ------------          ------------

Comprehensive Loss                                         $   (584,586)         $ (1,092,613)         $   (989,572)
                                                           ============          ============          ============

Basic and diluted net loss per common share                $      (0.06)         $      (0.13)         $      (0.09)
                                                           ============          ============          ============

Basic and diluted weighted average number
        of common shares outstanding                         11,353,787            11,353,817            11,353,816
                                                           ============          ============          ============
</TABLE>

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

                                       F-6

<PAGE>

                          BIOCORAL, INC. AND SUBSIDIARY
    STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY AND COMPREHENSIVE LOSS
   FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 (RESTATED) AND 2005 (RESTATED)

<TABLE>
<CAPTION>
                                                                            Accumulated
                                          Common Stock         Additional      Other                        Total
                                     ----------------------     Paid-in    Comprehensive   Accumulated   Stockholders' Comprehensive
                                        Shares      Amount      Capital        Loss        Deficiency     Deficiency        Loss
                                     -----------  ---------  ------------  -------------  -------------  ------------- -------------
<S>                                   <C>            <C>       <C>          <C>           <C>             <C>           <C>
Balance, January 1, 2005              11,353,819     11,354    17,900,090   $  (611,633)  $ (18,579,793)  $(1,279,982)  $   274,212

Other comprehensive gain -
  foreign currency translation
  gain                                                                           62,214                        62,214        62,214

Other comprehensive gain -
  increase in market value of
  marketable securities                                                         (54,028)                      (54,028)      (54,028)

Other                                         (3)

Net loss                                      --         --            --            --        (997,758)     (997,758)     (997,758)
                                     -----------  ---------  ------------   -----------   -------------   -----------   -----------

Balance, 12/31/05                     11,353,816     11,354    17,900,090      (603,447)    (19,577,551)   (2,269,554)     (989,572)
                                                                                                                        ===========

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

Other comprehensive gain -
  increase in market value of
  marketable securities                                                         452,275                       452,275       452,275

Other                                          1

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

Balance, 12/31/06                     11,353,817     11,354    17,900,090      (222,635)    (21,050,976)   (3,362,167)   (1,092,613)
                                                                                                                        ===========

Other comprehensive loss - foreign
  currency translation gain                                                      46,099                        46,099        46,099

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

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

Balance, 12/31/07                     11,353,787     11,354  $ 17,900,090   $  (176,536)  $ (21,681,661)  $(3,946,753)  $  (584,586)
                                     ===========  =========  ============   ===========   =============   ===========   ===========
</TABLE>

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

                                       F-7

<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
   FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 (RESTATED) AND 2005 (RESTATED)

<TABLE>
<CAPTION>
                                                                           Years ended December 31,
                                                                -----------------------------------------------
                                                                    2007              2006              2005
                                                                -----------       -----------       -----------
                                                                                   (Restated)        (Restated)
<S>                                                             <C>               <C>               <C>
Cash flows from operating activities:
   Net loss                                                     $  (630,685)      $(1,473,425)      $  (997,758)
   Adjustments to reconcile net loss to net cash (used in)
     provided by operating activities:
       Depreciation and amortization                                 61,646            52,454            40,469
       Equity loss of partnership                                     4,162             6,282             9,765
       Allowance for doubtful accounts                                   --            (2,300)             (400)
       Realized loss on sale of securities                               --           433,446                --
       Loss on embedded derivatives                                      --           582,395           111,971
   Change in operating assets and liabilities:
     Accounts receivable                                             37,756           (37,524)          (82,400)
     Inventories                                                    (91,100)         (119,575)           31,400
     Prepaid expenses and other current assets                       (4,360)           (5,237)           15,000
     Other assets                                                     2,350            (7,524)            2,687
     Accounts payable and accrued interest payable                  216,676           176,493           286,126
     Current portion due to officer                                  (3,745)           32,002            73,677
     Accrued interest payable                                       107,950                --                --
     Due to officer, net of current portion                         150,000           150,000           187,500
     Deferred employee benefits                                         652               531           (44,200)
                                                                -----------       -----------       -----------

Net cash (used in) provided by operating activities                (145,459)         (211,982)         (366,163)
                                                                -----------       -----------       -----------

Cash flows from investing activities:
   Purchase of property and equipment                                (8,888)          (15,312)               --
   Capitalization of intangible assets                             (231,844)         (153,292)         (176,848)
   Proceeds from sale of marketable securities                           --           212,611                --
                                                                -----------       -----------       -----------
Net cash provided by (used in) investing activities                (240,732)           44,007          (176,848)
                                                                -----------       -----------       -----------

Cash flows from financing activities:
   Proceeds from long-tem debt                                      200,000           400,000           500,000
                                                                -----------       -----------       -----------

Effects of changes in exchange rates on cash                         46,099           (71,463)           40,714
                                                                -----------       -----------       -----------

Increase (decrease) in cash                                        (140,092)          160,562            (2,297)

Cash, beginning of period                                           287,773           127,211           129,508
                                                                -----------       -----------       -----------

Cash, end of period                                             $   147,681       $   287,773       $   127,211
                                                                ===========       ===========       ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid during the year for:
     Interest                                                   $        --       $        --       $        --
                                                                ===========       ===========       ===========
     Income taxes                                               $        --       $        --       $        --
                                                                ===========       ===========       ===========
</TABLE>

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

                                       F-8

<PAGE>

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 are in several  business  segments which consist
      primarily  of research and  development,  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  $631,000,  $1,473,400  and
      $998,000 in 2007, 2006 and 2005, respectively. Management believes that it
      is likely that the Company  will  continue to incur net losses  through at
      least 2008. The Company had a working capital  deficiency of approximately
      $898,400, $495,200 and $418,100 for 2007, 2006 and 2005, respectively. The
      Company also had a stockholders'  deficiency of  approximately  $3,946,800
      $3,362,000   and   $2,269,600  at  December  31,  2007,   2006  and  2005,
      respectively.  During  January and September  2005,  the Company  received
      approximately  $500,000  relating to the  issuance  of the 7%  convertible
      promissory  notes  payable  (See Note  8(B)).  During  2006,  the  Company
      received  $400,000   additional  funds.  These  funds  together  with  the
      previously held 6% convertible notes payable and 7% convertible promissory
      notes  payable  were  exchanged  to 7%  non-convertible  notes  payable on
      December 31, 2006. (See Note 8(A), (B) and (D)). In addition, during 2006,
      the Company received  proceeds of approximately  $210,000 from the sale of
      marketable securities.  During 2007, the Company received $200,000 related
      to the additional  issuance of 7% non-convertible  notes payable (See Note
      8(D)).  In addition,  the company  received the commitment from one of its
      shareholders  to supply the company during 2008 with funds up to $250,000.
      Management  believes  that these  funds will  provide  sufficient  working
      capital to operate through 2008.

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 period ended  December 31, 2007,  2006 and 2005.  Cabestan,  Inc.,  3H
      "Healthcare   and   High   Biotechnology   Innovation,   Inc."   and  Immo
      Distribution,   Ltd.,  are  not  operating   subsidiaries.   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, 2007,  2006
      and 2005.

      (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-9

<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

      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 reviewed each marketable  security to determine  whether a decline
      in fair  market  value in other than  temporary.  If the decline is deemed
      other than temporary, the cost basis of the individual security is written
      down to the fair value as a new cost basis and the amount  written down is
      included in operations as a realized loss.

      (G) Inventories

      Inventories  are stated at the lower of cost or market,  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  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, 2007,  2006 and 2005 was  approximately  $7,400,  $6,300 and
      $9,800, respectively, and the book value of the investment at December 31,
      2007, 2006 and 2005 was $(3,239),  $4,162, and $10,444,  respectively.  We
      are not responsible for covering the losses in excess for our investment.

      (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 is 10
      years using the straight line method.

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

                  2008               $55,104

                  2009               $55,104

                  2010               $55,104

                  2011               $55,104

                  2012               $55,104

      There after                    $386,307

                                      F-10

<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (J) Intangible Assets - continued

      The components of intangible  assets and costs  capitalized in 2007,  2006
      and 2005 are as follows:

      -------------------------------------------------------------------------
                                           2007          2006            2005
      -------------------------------------------------------------------------
      Beginning Intangible Assets       $  617,297     $ 454,273     $  277,425
      -------------------------------------------------------------------------
      Add: Capitalized Costs               231,844       163,024        176,848
      -------------------------------------------------------------------------
      Less: Accumulated Amortization       143,645        89,418         48,566
      -------------------------------------------------------------------------
      Net Intangible Assets             $  705,496     $ 527,879     $  405,707
      -------------------------------------------------------------------------

      (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,
      2007, 2006 and 2005.

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

      (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 2007, 2006 and
      2005, 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, 2003 the Company  adopted SFAS No. 148,  "Accounting
      for Stock-Based Compensation-Transition and Disclosure" ("SFAS 148"). SFAS
      148 amends SFAS No. 123 "Accounting for Stock-Based  Compensation"  ("SFAS
      123"),  and provides  alternative  methods of  transition  for a Voluntary
      change to the fair  value  based  method  of  accounting  for  stock-based
      employee compensation.

                                      F-11

<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (P) Stock Based Compensation- continued

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

      (Q) Computation of Net Loss per Share

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

      Under SFAS 128 basic net loss per share is computed  by  dividing  the net
      loss for the year by the  weighted  average  number of shares  outstanding
      during the year.  Diluted net  earnings  per share is computed by dividing
      the net  earnings for the year by the  weighted  average  number of common
      share and common share  equivalents  outstanding  during the year.  Common
      stock equivalents would arise from the exercise of stock options.  For the
      year ended December 31, 2007, 2006 and 2005, none were issued. Diluted net
      loss has not been  disclosed for the years ended  December 31, 2007,  2006
      and 2005 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,  if material, are recorded as accumulated other comprehensive
      loss which is a separate component of stockholders' deficit.

      The change in cumulative  translation  adjustments  during the years ended
      December 31, 2007, 2006 and 2005 was as follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                                           2007             2006             2005
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>               <C>
Beginning accumulated translation adjustments         $   (222,635)    $    (151,172)    $   (213,386)
-----------------------------------------------------------------------------------------------------
Translation adjustments for the period then ended           36,013           (71,463)          62,214
-----------------------------------------------------------------------------------------------------

Ending accumulated translation adjustments            $   (186,622)    $    (222,635)    $   (151,172)
-----------------------------------------------------------------------------------------------------
</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  accumulated
      other comprehensive income (loss) in the consolidated statement of changes
      in stockholders' deficiency and comprehensive loss.

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

                                      F-12

<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (S) Comprehensive Loss - continued

      The change in  accumulated  unrealized  loss on  investments in marketable
      securities  during the year ended December 31, 2007,  2006 and 2005 was as
      follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                                       2007            2006           2005
--------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>            <C>
Beginning accumulated unrealized loss on
marketable securities                                $    --       $ (452,274)    $ (398,246)
--------------------------------------------------------------------------------------------
Unrealized gain (loss) arising during the year            --          452,274        (54,028)
--------------------------------------------------------------------------------------------
Reclassification adjustment gain                          --               --             --
--------------------------------------------------------------------------------------------
Ending accumulated unrealized loss on
marketable securities                                $    --       $       --     $ (452,274)
--------------------------------------------------------------------------------------------
</TABLE>

      (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, 2007, 2006
      and 2005, due to the relatively  short  maturity of the  instruments.  The
      investment in limited  partnership is recorded using the equity method and
      it is not practical to estimate the fair value of this investment  without
      incurring  excessive  cost,  as this  investment  is not publicly  traded.
      Long-term  debt  approximates  fair value based upon based upon debt terms
      available for entities under similar terms.

      In   September   2006,   the  FASB  issued  SFAS  No.  157,   "Fair  Value
      Measurements,"  ("FAS  157").  FAS 157 defines fair value,  establishes  a
      framework  for  measuring  fair value and expands  disclosures  about fair
      value measurements.  The adoption of FAS 157 is effective January 1, 2008.
      The  Company  has not yet  determined  what the effect will be, if any, on
      their financial statements.

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

      In May 2005,  FASB  issued  SFAS No.  154,  "Accounting  Changes and Error
      Corrections - a Replacement of APB Opinion No. 20 (Accounting Changes) and
      FASB  No.  3   (Reporting   Accounting   Changes  in   Interim   Financial
      Statements),"  that  changes  requirements  for  the  accounting  for  and
      reporting of a change in accounting  principle.  This  Statement  requires
      retrospective  application  to  prior  periods'  financial  statements  of
      changes in accounting  principle  unless it is  impracticable to determine
      either the period-specific effects or the cumulative effect of the change.

                                      F-13

<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (V) Recent Accounting Pronouncements - continued

      When it is  impracticable to determine the  period-specific  effects of an
      accounting change on one or more individual prior periods presented,  this
      Statement  requires  that the new  accounting  principle be applied to the
      balances of assets and  liabilities  as of the  beginning  of the earliest
      period  for which  retrospective  application  is  practicable  and that a
      corresponding  adjustment  is  made to the  opening  balance  of  retained
      earnings (or other  appropriate  components of equity or net assets in the
      statement  of  financial  position)  for that  period  rather  than  being
      reported in an income statement. When it is impracticable to determine the
      cumulative  effect of  applying a change in  accounting  principle  to all
      prior periods,  this Statement requires that the new accounting  principle
      be applied as if it were  adopted  prospectively  from the  earliest  date
      practicable.  Statement 154 is effective for accounting  changes and error
      corrections  made in  fiscal  years  beginning  after  December  15,  2005
      (calendar year 2006).

      In June  2006,  the FASB  issued  Interpretation  No. 48 ("FIN  No.  48"),
      Accounting for  Uncertainty  in Income  Taxes--an  interpretation  of FASB
      Statement No. 109,  which  clarifies the  accounting  for  uncertainty  in
      income  taxes  recognized  in  an  enterprise's  financial  statements  in
      accordance   with  SFAS  No.  109,   Accounting  for  Income  Taxes.   The
      Interpretation  provides a recognition threshold and measurement attribute
      for the financial statement  recognition and measurement of a tax position
      taken or  expected  to be taken in a tax  return.  Under FIN No.  48,  the
      Company may  recognize the tax benefit from an uncertain tax position only
      if it is more likely than not that the tax  position  will be sustained on
      examination by the taxing  authorities,  based on the technical  merits of
      the position. The tax benefits recognized in the financial statements from
      such a position should be measured based on the largest benefit that has a
      greater than 50%  likelihood of being  realized upon ultimate  settlement.
      FIN No.  48  also  provides  guidance  on  derecognition,  classification,
      interest and penalties,  accounting in interim  periods,  disclosure,  and
      transition.  FIN No. 48 is effective  for us beginning  July 1, 2007.  The
      Company  has  determined  that there will be no  material  effect on their
      financial statements.

      In June 2006,  the FASB ratified the Emerging  Issues Task Force  ("EITF")
      consensus on EITF Issue No. 06-2,  "Accounting  for  Sabbatical  Leave and
      Other Similar Benefits  Pursuant to FASB Statement No. 43." EITF Issue No.
      06-2 requires companies to accrue the costs of compensated  absences under
      a sabbatical or similar  benefit  arrangement  over the requisite  service
      period.  EITF Issue No. 06-2 is effective  for us beginning  July 1, 2007.
      The cumulative effect of the application of this consensus on prior period
      results  should be recognized  through a  cumulative-effect  adjustment to
      retained  earnings as of the  beginning of the year of adoption.  Elective
      retrospective  application  is  also  permitted.  We  do  not  expect  the
      application of this  consensus to have a material  impact on our financial
      statements.

      In September  2006,  the Financial  Accounting  Standards  Board  ("FASB")
      issued SFAS No. 158,  "Employers'  Accounting for Defined  Benefit Pension
      and Other  Postretirement  Plans,  an amendment of FASB Statements No. 87,
      88, 106 and 132(R),"  ("FAS 158").  Among other  things,  FAS 158 requires
      companies  to  prospectively  recognize  a net  liability  or asset and to
      report  the  funded  status of their  defined  benefit  pension  and other
      postretirement  benefit plans on their balance sheets,  with an offsetting
      adjustment to accumulated  other  comprehensive  income;  such recognition
      will not affect the Company's statement of income. The adoption of FAS 158
      is  effective  for the year  ending  December  31,  2006.  The Company has
      determined  that  there  will be no  material  effect  on their  financial
      statements.

      In February  2007, the FASB issued SFAS No. 159, The Fair Value Option for
      Financial  Assets  and  Financial  Liabilities.  SFAS No. 159 gives us the
      irrevocable  option to carry many financial assets and liabilities at fair
      values, with changes in fair value recognized in earnings. SFAS No. 159 is
      effective  for us  beginning  July 1, 2008,  although  early  adoption  is
      permitted.  We are currently  assessing the potential impact that adoption
      of SFAS No. 159 will have on our financial statements.

      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 their financial statements.

                                      F-14

<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (V) Recent Accounting Pronouncements - continued

      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 their financial
      statements.

      Management  believes that any other recently issued, but not yet effective
      accounting  pronouncements,  if adopted,  would have no material effect on
      the accompanying consolidated financial statements.

      (W) Reclassifications

      Certain  reclassifications  have been made to the 2005 restated  financial
      statements to conform to the 2006 restated presentation.

Note 4 - Investments in Marketable Securities

      During 2006 and 2005, the Company classified its investments in marketable
      securities as available  for sale,  and those that intend to hold for more
      than one year as  non-current.  In 2007 the Company had no  investments in
      marketable securities. Unrealized holding gains and losses are reported as
      a separate  component of  stockholders'  deficiency as part of accumulated
      other  comprehensive  income  (loss) until  realized.  The  following is a
      reconciliation  of original cost to fair market value for securities  held
      as of December 31:

<TABLE>
<CAPTION>
      ------------------------------------------------------------------------------------------
                                                            2007            2006          2005
      ------------------------------------------------------------------------------------------
<S>                                                      <C>            <C>            <C>
      Investments in marketable securities, at cost      $      --      $      --      $ 646,057
      ------------------------------------------------------------------------------------------
      Unrealized loss                                           --             --       (452,274)
      ------------------------------------------------------------------------------------------
      Investment in marketable securities at fair
      market value                                              --             --        193,783
      ------------------------------------------------------------------------------------------
      Less current portion                                      --             --       (193,783)
      ------------------------------------------------------------------------------------------
      Non-current portion                                $      --      $      --      $      --
      ------------------------------------------------------------------------------------------
</TABLE>

      In December,  2006 the company sold all available for sale  securities and
      recorded an actual loss of approximately $433,000.

Note 5- Inventories

      Inventories consist of the following at December 31:

         -----------------------------------------------------------------------
                                              2007          2006          2005
         -----------------------------------------------------------------------
         Raw materials                      $ 50,417      $ 27,100      $ 18,300
         -----------------------------------------------------------------------
         Work in process                      58,749        54,700        36,000
         -----------------------------------------------------------------------
         Finished goods                      226,609       162,900        70,800
         -----------------------------------------------------------------------
                                            $335,775      $244,700      $125,100
         -----------------------------------------------------------------------

Note 6 - Property and Equipment

      Property and equipment consists of the following at December 31:

      --------------------------------------------------------------------------
                                              2007          2006          2005
      --------------------------------------------------------------------------
      Land                                  $ 12,160      $ 12,160      $ 12,160
      --------------------------------------------------------------------------
      Buildings and improvements             185,000       185,000       185,000
      --------------------------------------------------------------------------
      Equipment and furnishings              232,228       223,340       223,340
      --------------------------------------------------------------------------
                                             429,388       420,500       420,500
      --------------------------------------------------------------------------
      Less accumulated depreciation and
      amortization                           402,640       395,220       389,200
      --------------------------------------------------------------------------
                                            $ 26,748      $ 25,280      $ 31,300
      --------------------------------------------------------------------------

                                      F-15

<PAGE>

Note 6 - Property and Equipment - continued

In 2005, Inoteb (a wholly owned subsidiary of Biocoral, Inc.) sold machinery and
computer  hardware  to Biocoral  France,  another  wholly  owned  subsidiary  of
Biocoral,  Inc.  The  manufacturing  building  is owned by  Biocoral  UK Limited
another  wholly owned  subsidiary  of Biocoral,  Inc. All  transactions  between
Biocoral  UK  Limited,  Biocoral  France  and  Inoteb  have been  eliminated  in
consolidation.

Note 7 - Intangible Assets

      Intangible assets consist of the following at December 31:

         -----------------------------------------------------------------------
                                            2007           2006           2005
         -----------------------------------------------------------------------
         Intangible assets                $ 849,141     $ 617,297      $ 454,273
         -----------------------------------------------------------------------
         Less: Accumulated amortization     143,645        89,418         48,566
         -----------------------------------------------------------------------
         Intangible assets, net           $ 705,496     $ 527,879      $ 405,707
         -----------------------------------------------------------------------

Note 8 - Long-Term Debt

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

         ----------------------------------------------------------------------
                                     2007             2006              2005
         ----------------------------------------------------------------------
         6% convertible          $        --      $        --       $   700,000
         promissory notes
         payable
         (A)
         ----------------------------------------------------------------------
         7% convertible                   --               --         1,600,000
         promissory notes
         payable (B)
         ----------------------------------------------------------------------
         7% non-convertible        2,900,000        2,700,000                --
         promissory notes
         payable (D)
         ----------------------------------------------------------------------
                                          --               --         2,300,000
         ----------------------------------------------------------------------
         Less embedded                    --               --          (998,814)
         derivative
         ----------------------------------------------------------------------
                                 $ 2,900,000      $ 2,700,000       $ 1,301,186
         ----------------------------------------------------------------------

(A)   The  Company  sold the 6%  Notes  in the  aggregate  principal  amount  of
      $3,000,000 to  "accredited  investors"  during year 2000 through a private
      placement  intended  to  be  exempt  from  registration  pursuant  to  the
      provisions of Regulation D of the Securities Act of 1933. A portion of the
      proceeds,  $1,000,000,  had been held in an  escrow  account  pending  the
      Company's  issuance of all of the required  regulatory  documents  and the
      listing of the  Company's  common  stock for  trading on The NASDAQ  Stock
      Market.

      On March 25,  2002 the  holders  of the 6%  convertible  promissory  notes
      payable (the "6% Notes")  agreed to extend the due date from  December 31,
      2002 to  December  31,  2004 and on March 1, 2004 agreed to extend the due
      date to December 31, 2006. On January 23rd, 2006, the notes holders agreed
      to extend the due date from December 31, 2006 to December 31, 2008. The 6%
      Notes were  convertible  at any time, at a rate of $.045,  at the holder's
      option, subject to Company approval.

      The 6% Notes were not affected by the reverse  stock split on December 23,
      2002.  Interest  on the 6% Notes is  payable  annually,  at the  Company's
      option,  either in cash or common stock of the Company.  On June 26, 2003,
      the money held in the escrow  account was  returned to the notes  holders.
      Since the $1,000,000  proceeds were never used by the Company,  but always
      maintained in the escrow  account,  the Company wrote off the prior years'
      accrued  interest of $179,836  and the accrued  issuance  costs of $80,000
      associated with these 6% Notes  resulting in a benefit of $259,836,  which
      was recorded as  forgiveness  of debt in the  consolidated  statements  of
      operations.

                                      F-16

<PAGE>

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

Note 8 - Long-Term Debt - continued

      the rate of $10 per share using a conversion  rate  utilizing  the average
      closing  price of the  Company's  common  stock  for the 20  trading  days
      immediately preceding the conversion.

      Pursuant to an  agreement  dated  December 20, 2006 with each of the notes
      holders,  all of  these  6%  convertible  promissory  notes  payable  were
      converted to 7% non-convertible promissory notes payable. (See Note 8(D)).

(B)   During  December 2003 through  February 2004, the Company sold 7% Notes in
      the  aggregate  principal  amount of  $850,000 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.
      At December 31, 2003 the Company had received  approximately  $560,000, of
      which approximately  $135,000 was received as stockholder  advances during
      2002  and  approximately   $425,000  during  2003,  and  approximately  an
      additional $290,000 during February 2004.

      From February to July 2004, the Company sold an additional  $350,000 of 7%
      convertible promissory notes payable (the "7% notes"). In further,  during
      December 2004, the Company sold to an accredited investor an additional 7%
      notes in the aggregate principal amount of $300,000.  The Company will pay
      a 7% commission on $650,000, which was sold during 2004.

      The Company 7% Convertible  Promissory Notes Payable (the "7% Notes") were
      due  December  31,  2006.  The holder or holders of 7% notes  (subject  to
      Company  approval and consent)  could at any time,  convert the  principal
      amount of the 7% notes  into  shares  of the  Corporation's  common  stock
      ranking pari passu at the conversion  ratio shall be obtained by utilizing
      the  average  closing  sale price of such  shares in the  over-the-counter
      market for the 20 trading days immediately preceding.

      The Company could,  at any time,  prepay in whole or in part the principal
      amount,  plus  accrued  interest  to  the  date  of  prepayment,   of  all
      outstanding  7%  Notes,  upon 30 days'  written  notice  by  certified  or
      registered mail to the registered owners of all outstanding 7% notes. Such
      payment could be made either in cash or in shares of the Company's  common
      stock in the Company's sole discretion at the conversion ratio which could
      be obtained by utilizing the average  closing sale price of such shares in
      the over-the-counter market for the 20 trading days immediately preceding.

      A conversion  took place on December 2004 for $100,000 note at the rate of
      $10 per share using a conversion  rate utilizing the average closing price
      of the  Company's  common  stock  for  the  20  trading  days  immediately
      preceding the conversion.

      During January 2005 the Company  received  $300,000 in connection with the
      subscription of the 7% notes sold on December 2004. During September 2005,
      the Company sold to an accredited  investor an additional  $200,000 of the
      7% notes. The Company will pay a 7% commission on $200.000, which was sold
      in  September  2005.  At December 31, 2005 the Company had  outstanding  a
      total of $1,600,000 relating to the 7% notes.

      On February  10, 2006 the holders of the 7% notes agreed to extend the due
      date from December 31, 2006 to December 31, 2008.

      Pursuant  to an  agreement  dated  December  20, 2006 with all of the note
      holders,  all of  these  7%  convertible  promissory  notes  payable  were
      exchanged to 7% non-convertible promissory notes payable. (See Note 8(D)).

(C)   The 7% notes  described  above  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 using the average of
      the twenty previous days stock price in the over-the counter (OTC) market.
      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.

                                      F-17

<PAGE>

      The Company  has valued the  embedded  derivative  portion of the 7% notes
      (which is not designated as a hedge) using a fair value  calculation  that
      takes into account the stock price at each  reporting  date;  the historic
      volatility of the stock price in the OTC market;  and the remaining  terms
      and interest rates of the notes (Black-Scholes method).

Note 8 - Long-Term Debt - continued

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

<TABLE>
<CAPTION>
                                                     2007             2006              2005
                                                 -----------      -----------       -----------
<S>                                              <C>              <C>               <C>
6% convertible promissory notes payable:         $        --      $   700,000       $   700,000
                                                 -----------      -----------       -----------

7% convertible promissory notes payable:

   Intrinsic value portion                                --          813,548           601,186

   Fair value portion                                     --        1,321,195           416,419
                                                 -----------      -----------       -----------

                                                          --        2,134,743         1,017,605
                                                 -----------      -----------       -----------

   Total                                                  --        2,834,743         1,717,605
                                                 -----------      -----------       -----------

   Conversion to non-convertible notes                    --       (2,834,743)               --

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

   Total                                         $ 2,900,000      $ 2,700,000       $ 1,717,605
                                                 ===========      ===========       ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                                     2007             2006              2005
                                                 -----------      -----------       -----------
<S>                    <C>                       <C>              <C>               <C>
   Quarter ended March 31                        $        --      $     3,897       $   (71,981)

   Quarter ended June 30                                  --         (245,542)            5,332

   Quarter ended September 30                             --         (436,519)         (106,639)

   Quarter ended December 31                              --          (38,975)           61,318
                                                 -----------      -----------       -----------

   Total annual unrealized gain (loss)                    --         (717,138)         (111,971)
                                                 -----------      -----------       -----------

   Cumulative unrealized gain (loss)                      --         (134,743)          582,395
                                                 -----------      -----------       -----------

Net unrealized and realized gain (loss)
   Included in earnings                          $        --      $  (582,395)      $  (111,971)
                                                 ===========      ===========       ===========
</TABLE>

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

                                      F-18

<PAGE>

(D)   The Company issue,  the new 7%  non-convertible  promissory  notes payable
      (the "7%  Non-Convertible  Promissory  Notes") in the aggregate  principal
      amount of $2,700,000 to "accredited  investors" in December 2006 through a
      private placement intended to be exempt from registration  pursuant to the
      provisions of Regulation D of the Securities Act of 1933.

Note 8 - Long-Term Debt - continued

      The Company's 7% Non-Convertible  Promissory Notes are due on December 31,
      2009. The Company may at any time at it sole option, prepay in whole or in
      part the principal  amount without  penalty,  plus accrued interest to the
      date of  prepayment,  of all  outstanding  7%  Non-Convertible  Promissory
      Notes, upon 30 days' written notice by certified or registered mail to the
      registered  holder  or  holders  of  all  outstanding  7%  Non-Convertible
      Promissory  Notes.  Such notice  shall be mailed to note  holders at their
      address last appearing on the Company's books. All payments related to the
      7% Non-Convertible  Promissory Notes shall be made to holder or holders in
      United States funds.

      During  December  2006,  the  Company  exchanged  all of the  existing  6%
      convertible  promissory notes payable and 7% convertible  promissory notes
      payable  together  with the  $400,000  received  during  2006 in the total
      aggregate principal amount of $2,700,000 to 7% Non-Convertible  Promissory
      Notes.

      During  2007  the  Company  issued  the   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.

      The total aggregate  maturities of long-term debt at December 31, 2007 are
      as follows:

                ---------------------------------------------------------
                 December 31,
                ---------------------------------------------------------
                     2008                                  $          --
                ---------------------------------------------------------
                     2009                                  $   2,900,000
                ---------------------------------------------------------

                ---------------------------------------------------------
                                                           $   2,900,000
                ---------------------------------------------------------

Note 9 - Income Taxes

      At December 31, 2007, the Company had net operating loss carry forwards of
      approximately  $12,884,000  available  to reduce  future  Federal  taxable
      income,  which, if not used, will expire at various dates through December
      31, 2026.  These net operating loss carry  forwards  create a deferred tax
      asset of approximately $4,509,000. 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.

      One  of  the  Company's  European  wholly  owned  subsidiaries  has  a net
      operating  loss of  approximately  $5,000,000  at December  31, 2004 under
      French tax  regulations.  Prior to  January  1, 2004  these net  operating
      losses could be carried forward five years to offset future taxable income
      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  losses  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:

<TABLE>
     -------------------------------------------------------------------------------------------------
                                                             2007            2006           2005
     -------------------------------------------------------------------------------------------------
<S>                                                      <C>               <C>            <C>
     Income tax benefit at 35%                           $    (115,000)    $   (311,000)  $   (310,000)
     -------------------------------------------------------------------------------------------------
     Utilization of net operating loss carry forward           115,000          311,000        310,000
     -------------------------------------------------------------------------------------------------
                                                         $          --     $         --   $         --
     -------------------------------------------------------------------------------------------------
</TABLE>

                                      F-19

<PAGE>

Note 10 - Stock Option Plan

      In December 21, 2004, the Company  decided to cancel all option  contracts
      and  reissue  new  contracts.  A summary  of the  Company's  stock  option
      activity is as follows for the years ended  December  31,  2007,  2006 and
      2005:

      --------------------------------------------------------------------------
                                                       Common Stock
      --------------------------------------------------------------------------
                                                               Weighted average
                                                    Shares       Exercise Price
      --------------------------------------------------------------------------
      Outstanding, December 31, 2003               34,270               $ 89.88
      --------------------------------------------------------------------------
      Cancelled                                   (34,270)
      --------------------------------------------------------------------------
      Granted                                     200,000               $  0.00
      --------------------------------------------------------------------------
      Exercised
      --------------------------------------------------------------------------
      Outstanding, December 31, 2004              200,000               $ 10.00
      --------------------------------------------------------------------------
      Granted                                          --
      --------------------------------------------------------------------------
      Exercised                                        --
      --------------------------------------------------------------------------
      Outstanding, December 31, 2005              200,000               $ 10.00
      --------------------------------------------------------------------------
      Granted                                          --
      --------------------------------------------------------------------------
      Exercised                                        --
      --------------------------------------------------------------------------
      Outstanding, December 31, 2006              200,000               $ 10.00
      --------------------------------------------------------------------------
      Granted                                          --
      --------------------------------------------------------------------------
      Exercised                                        --
      --------------------------------------------------------------------------
      Outstanding, December 31, 2007              200,000               $ 10.00
      --------------------------------------------------------------------------

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

<TABLE>
<CAPTION>
      ------------------------------------------------------------------------------------------
                                     Options Outstanding                   Options Exercisable
      ------------------------------------------------------------------------------------------
                                          Weighted-
                                           Average          Weighted-                  Weighted-
                                          Remaining          Average                    Average
                           Number        Contractual        Exercise       Number       Exercise
      Exercise Prices    Outstanding        Life              Price      Exercisable     Price
      ------------------------------------------------------------------------------------------
<S>                        <C>              <C>              <C>           <C>          <C>
          $ 10.00          200,000          2.00             $ 10.00       200,000      $ 10.00
      ------------------------------------------------------------------------------------------
</TABLE>

Note 11 - Segment and Geographic Information

      Information  about the  Company's  assets and its  operations in different
      geographic  locations at December  31, 2007,  2006 and 2005 is shown below
      pursuant to the provisions of SFAS No. 131, "Disclosures about Segments of
      an Enterprise and Related Information."

      The following shows information about the Company's foreign  operations at
      December 31, 2007, 2006 and 2005:

      ------------------------------------------------------------------------
                                       2007             2006           2005
      ------------------------------------------------------------------------
      Net Sales:
      ------------------------------------------------------------------------
      France                        $  222,900      $  182,800      $  152,000
      ------------------------------------------------------------------------
      Other European countries         181,500         139,500         113,900
      ------------------------------------------------------------------------
      Others                            59,825          85,905          50,300
      ------------------------------------------------------------------------
                                    $  464,225      $  408,205      $  316,200
      ------------------------------------------------------------------------
      Total Assets:
      ------------------------------------------------------------------------
      United States                 $  759,467      $  905,418      $  714,610
      ------------------------------------------------------------------------
      France                           652,098         419,200         361,200
      ------------------------------------------------------------------------

      ------------------------------------------------------------------------
                                    $1,411,565      $1,324,618      $1,075,810
      ------------------------------------------------------------------------

                                      F-20

<PAGE>

Note 12 - Related Party

      The Company has a consulting  agreement with its Chairman and President in
      which he earns $150,000 annually. The agreement expired in August 2005 and
      was renewed for an additional  three years in September  2005. At December
      31, 2007,  2006 and 2005 the Company owed this  individual an aggregate of
      $1,087,192,  $940,937  and  $758,935,  respectively,  of  which  $900,000,
      $750,000 and $600,000,  respectively  relate to the consulting  agreement,
      the balance of $185,372,  $189,117 and  $157,115,  respectively  relate to
      un-reimbursed  travel expenses and $1,820 relate to start-up costs. During
      2007, the Company paid this individual $39,745 related to reimbursement of
      expenses for a previous year. In the year ended December 31, 2007, to help
      the Company's  cash  position,  the president has deferred  receipt of any
      cash compensation for 2007 pursuant to his consulting agreement.

Note 13 - Commitments and Contingencies

      The Company rents certain  office space under an operating  lease expiring
      on April 30, 2004, with an automatic renewal of three years. The lease has
      been renewed for the three years ending  April 30,  2007.  This  agreement
      transferable  and can be  cancelled  with six months  notice.  The company
      currently is renting on a quarter to quarter  basis while in  negotiations
      for an  extension  on their  lease.  Rent  expenses  for the  years  ended
      December  31,  2007 were  approximately  $63,000*  and for the year  ended
      December 31, 2006  approximately  $58,400* and for the year ended December
      31, 2005 approximately $58,000*.

      At December 31, 2007, total minimum rentals under noncancellable operating
      leases  with an initial or  remaining  term lease term of one year or more
      are as follows:

         -------------------------------------------------------------
            Year Ending
            December 31:
         -------------------------------------------------------------
                2008                                           --
         -------------------------------------------------------------
                                                          $    --
         -------------------------------------------------------------

      *The Euro to Dollar  conversions are based upon an average conversion rate
      of $1.38 to (euro)1.00  for 2007,  $1.27 to (euro)1.00 for 2006 and $ 1.26
      to  (euro)1.00  for 2005.  This is an average  estimated  over the periods
      indicated and is subject to fluctuation during such periods.

                                      F-21

<PAGE>

Note 14- Restated Financial Statements

      The Company  historically  categorized,  through  December 31,  2005,  its
      convertible  debt as  liabilities.  Upon further review of FAS 133, it was
      determined that the convertible debt contains an embedded  derivative that
      needs to be  separately  stated  and  adjusted  periodically  for its fair
      market value.  The restatements  related to the embedded  derivatives have
      changed the amounts  presented in the  Company's  statements of operations
      and balance  sheets for the periods ended  December 31, 2006 and 2005 (See
      Note 14 (A) and (B) for the  summary of the  effect of the  restatements).
      The Company has  restated  its  financial  statements  for the years ended
      December  31,  2006 and 2005 to  record  the  fair  value of the  embedded
      derivative attached to the convertible debt. The aforementioned changes do
      not  have any  effect  of the  financial  statements  for the  year  ended
      December 21, 2007.

(A)   A summary of the effects of the restatement are as follows:

                                           2006              2005
                                           ----              ----
      Balance Sheet:
      Long Term Debt                   $ 2,700,000       $ 2,300,000
      As restated                      $ 2,700,000       $ 1,301,186
      Difference                       $        --       $   998,814
      Fair Value of Embedded
      Derivatives                      $        --       $        --
      As Restated                      $        --       $   416,419
       Difference                      $        --       $   416,419
      Stockholders' Deficiency         $(3,362,167)      $(2,851,949)
      As restated                      $(3,362,167)      $(2,269,554)
      Difference                       $        --       $   582,395

      Statement of Operations:
      Consulting and Professional      $        --       $        --
      As Restated                      $        --       $        --
      Difference                       $        --       $        --
      Gain (Loss) on Embedded
      Derivatives                      $        --       $        --
      As Restated                      $  (582,395)      $  (111,971)
      Difference                       $  (582,395)      $  (111,971)
      Net (Loss) Income                $  (891,030)      $  (885,787)
      As restated                      $(1,473,425)      $  (997,758)
      Difference                       $  (582,395)      $  (111,971)
      Income (loss) per share          $      (.08)      $      (.08)
      As restated                      $      (.13)      $      (.09)
      Difference                       $      (.05)      $      (.01)

                                      F-22

<PAGE>

Note 14- Restated Financial Statements - continued

(B)   A  summary  of the  effects  of the  restatement  for  each of the  fiscal
      quarters are as follows:

<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
                           --------------    -------------    ------------------  -----------------
<S>                          <C>               <C>               <C>                 <C>
Statement Of Operations
Gain/Loss on Embedded
Derivatives                           --                --                --                --
As restated                  $     3,897       $  (245,542)      $  (436,519)        $    95,768
Difference                         3,897          (245,542)         (436,519)             95,768
Income (Loss) per
share                        $    (0.02)       $     (0.02)      $     (0.02)        $     (0.02)
As restated                  $    (0.02)       $     (0.04)      $     (0.05)        $     (0.02)
Difference                   $        --       $      0.02)      $     (0.03)        $        --

Balance Sheet
Long Term Debt - Net of
Embedded Derivatives         $ 2,450,000       $ 2,625,600       $ 2,630,700         $ 2,700,000
As Restated                  $ 1,838,399       $ 2,424,692       $ 2,765,443         $ 2,700,000
Difference                   $   611,601       $   200,908       $  (134,743)                 --
Fair Value of
Embedded Derivatives                  --                --                --                  --
As Restated                  $   831,276       $   244,983       $   (95,368)                 --
Difference                   $   831,276       $   244,983       $   (95,368)                 --
Stockholders'
Deficiency                   $(3,009,986)      $(3,217,624)      $(3,352,766)        $(3,362,167)
As Restated                  $(2,423,693)      $(2,876,873)      $(3,448,534)        $(3,362,167)
Difference                   $   586,293       $   340,751       $   (95,768)        $        --

<CAPTION>
                            Three Months      Three Months      Three Months       Three Months
                                Ended             Ended             Ended              Ended
                           March 31, 2005    June 30, 2005    September 30, 2005  December 31, 2005
<S>                        <C>               <C>               <C>               <C>
Statement Of
Operations
Gain/Loss on Embedded
Derivatives                         --                --                --                  --
As restated                $     (71,981)      $     5,332       $  (106,639)      $      61,318
Difference                 $     (71,981)      $     5,332       $  (106,639)      $      61,318
Income (Loss) per
share                      $       (0.02)      $     (0.02)      $     (0.02)      $       (0.02)
As restated                $       (0.02)      $     (0.02)      $     (0.03)      $       (0.02)
Difference                 $          --       $        --       $     (0.01)      $          --

Balance Sheet
Long Term Debt - Net
of Embedded
Derivatives                $   2,100,000       $ 2,100,000       $ 2,300,000       $   2,300,000
As Restated                $   1,188,040       $ 1,188,040       $ 1,301,186       $   1,301,186
Difference                 $     911,960       $   911,960       $   998,814       $     998,814
Fair Value of
Embedded Derivatives                  --                --                --                  --
As Restated                $     456,400       $   461,740       $   355,101       $     416,419
Difference                 $     456,400       $   461,740       $   355,101       $     416,419
Stockholders'
Deficiency                 $  (2,268,492)      $(2,436,883)      $(2,725,580)      $  (2,851,949)
As Restated                $  (1,646,107)      $(1,809,166)      $(2,204,502)      $  (2,269,553)
Difference                 $     622,385       $   627,717       $   521,078       $     582,396
</TABLE>

                                      F-23

<PAGE>

Note 15 - Selected Quarterly Financial Data - (Unaudited)

      The results of  operations  by quarter for the years  ended  December  31,
      2007,  2006  (Restated) and 2005  (Restated) are presented below (See Note
      14) (unaudited):

<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)
                                                         ==========          ==========          ==========          ==========

<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
                                                     --------------        -------------    ------------------   -----------------
<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-24

<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, 2005      June 30, 2005     September 30, 2005    December 31, 2005
                                                       --------------      -------------     ------------------    -----------------
<S>                                                      <C>                 <C>                 <C>                 <C>
Net sales                                                $   77,000          $   85,400          $   75,100          $   78,700
Cost of sales                                                49,500              63,600              46,400              62,900

     Gross Profit                                            27,500              21,800              28,700              15,800
                                                         ----------          ----------          ----------          ----------

        Total Operating Expenses                            200,633             169,873             152,042             295,126
                                                         ----------          ----------          ----------          ----------

     Loss From Operations                                  (173,133)           (148,073)           (123,342)           (279,326)
                                                         ----------          ----------          ----------          ----------

        Total Other Income (Expense)                       (108,731)            (11,208)           (185,348)             31,404
                                                         ----------          ----------          ----------          ----------

Net (Loss) Income                                          (281,864)           (159,281)           (308,690)           (247,922)

Other Comprehensive Income (Loss):
     Foreign translation gain (loss)                        107,583               7,308            (102,496)             49,819
     Unrealized gain (loss) on marketable securities        (39,372)            (11,086)             15,850             (19,420)
                                                         ----------          ----------          ----------          ----------

Comprehensive (Loss) Income                              $ (213,653)         $ (163,059)         $ (395,336)         $ (217,523)
                                                         ==========          ==========          ==========          ==========
</TABLE>

                                      F-25

<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, 2007 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, 2007. 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, 2007 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            44          President, Chief Executive Officer and
                                      Chairman of the Board
Yuhko Grossman            43          Secretary, Treasurer and Director
Jean Darondel             65          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.

                                       18

<PAGE>

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

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

Board of Directors

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

Scientific Advisory Board

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

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

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

                                       19

<PAGE>

research in the field of materials for structural or biomaterial applications in
collaboration with several industrial (dental and orthopaedic) companies.

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.

Item 11. Executive Compensation

Presently, none of our executive officers receive any salary. However, on
September 1, 1997, we entered into a Consulting Agreement with Nasser Nassiri,
our Chairman, pursuant to which Mr. Nassiri serves as our Chairman. The
Agreement, which was for a three year term, provided for base compensation of
$150,000 per annum, reimbursement of certain expenses and for a payment of two
years' compensation thereunder in the event of a change in control of the
Company. The agreement was renewed, on the same terms, in 2000 for two years
until August 30, 2002 and has been renewed during 2002 for an additional three
years until August 2005 and has been renewed in August 2005 for an additional
three year until August 2008. In the year ended December 31, 2007, to help the
Company's cash position, the president has deferred receipt of any cash
compensation for 2007 pursuant to his consulting agreement.

Stock Option Plan

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

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

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

                                       20

<PAGE>

Aggregate Option Exercises and Fiscal Year-End Option Values

The following table lists the number of securities underlying unexercised
options at December 31, 2007.
                                                    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
         ----            -----------   --------   -------------   -------------
Nasser Nassiri .......        --          --       100,000/ --    7,000,000/ --
Jean Darondel ........        --          --        50,000/ --    3,500,000/ --
Yuhko Grossman .......        --          --        50,000/ --    3,500,000/ --

Director Compensation

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

Item 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 7, 2008 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 7, 2008 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 7,        SHARES IN
OUTSTANDING OWNER                             TITLE OF CLASS          2008          CLASS(5)
-------------------------------------------   --------------   -----------------   ----------
<S>                                           <C>              <C>                 <C>
Jean Darondel .............................    Common Stock         50,000(1)           *
   38 rue Anatole France,
   92594 Levallois Perret Cedex, France
Yuhko Grossman ............................    Common Stock         50,000(2)           *
   38 rue Anatole France,
   92594 Levallois Perret Cedex, France
Nasser Nassiri ............................    Common Stock        100,000(3)           *
   38 rue Anatole France,
   92594 Levallois Perret Cedex, France
All officers and directors
as a group ................................    Common Stock        200,000(4)           *
</TABLE>

*- Indicates less than 1%

                                       21

<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 100,000 shares of common
stock, which are exercisable at $10 per share.

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

(5) Based upon 11,353,787 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 2007

Our principal accountant for 2007 is Moore & Associates, Chartered., for
services rendered in connection with the audit of our 2007 consolidated
financial statements, we have not been billed for the fees for this audit.
However, as of the date of this report, we have paid them $6,250 as a retainer
fee.

We 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 of March 31, 2007, June 30,
2007 and September 30, 2007.

The auditor of our French subsidiaries for 2007 was Consultaudit. For services
rendered in connection with the audit of our French subsidiaries' 2007 financial
statements, we have not been billed for the fees for this audit.

For services rendered in connection with the review of our French subsidiaries
unaudited financial statements for period ended March 31, 2007, June 30, 2007
and September 30, 2007, Consultaudit has billed us 5,400 Euros (or approximately
$7,450*), which has not yet been paid.

Audit Fees for 2006

Our principal accountant for 2006 was Moore & Associates, Chartered., for
services rendered in connection with the audit of our 2006 consolidated
financial statements; we have paid them $12,500.

We 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 of March 31, 2006, June 30,
2006 and September 30, 2006.

The auditor of our French subsidiaries for 2006 was Consultaudit. For services
rendered in connection with the audit of our French subsidiaries' 2006 financial
statements including the services rendered in connection with the review of our
French subsidiaries unaudited financial statements for period ended March 31,
2006, June 30, 2006 and September 30, 2006, Consultaudit has billed us 10,100
Euros (or approximately $12,800*), which has not yet been paid.

                                       22

<PAGE>

For services rendered in connection with the review of our French subsidiaries
unaudited financial statements for period ended March 31, 2006, June 30, 2006
and September 30, 2006, Consultaudit has billed us 5,100 Euros (or approximately
$6,500*), which has not yet been paid.

Audit Fees for 2005

Our principal accountant for 2005 was Moore & Associates, Chartered. For
services rendered in connection with the audit of our 2005 consolidated
financial statements, we have paid them $12,500.

The auditor of our French subsidiaries for 2005 was Consultaudit. For services
rendered in connection with the audit of our French subsidiaries' 2005 financial
statements including the services rendered in connection with the review of our
French subsidiaries unaudited financial statements for period ended March 31,
2005, June 30, 2005 and September 30, 2005, we have paid them approximately
11,100 euros (or approximately $14,013*).

* The Euro to Dollar conversions are based upon an average conversion rate of
$1.38 to (euro)1.00 for 2007, $1.27 to (euro)1.00 for 2006 and $1.26 to
(euro)1.00 for 2005. This is an average estimated over the periods indicated and
is subject to fluctuation during such periods.

                                     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)
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)
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.

During the fourth quarter of 2007, we filed no current reports on Form 8-K.

                                       23

<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 28, 2008.

                                          BIOCORAL, INC

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

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

Signature               Title                                    Date
--------------------------------------------------------------------------------
/s/ Nasser Nassiri      President, Chief Executive Officer       March 28, 2008.
------------------      and Chairman of the Board of Directors
    Nasser Nassiri      (Principal Executive Officer and
                        Principal Accounting Officer)

/s/ Yuhko Grossman      Secretary, Treasurer and Director        March 28, 2008.
------------------
    Yuhko Grossman

/s/ Jean Darondel       Director                                 March 28, 2008.
-----------------
    Jean Darondel

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