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

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

                      For the Year Ended December 31, 2003

                          Commission File No. 333-71752

                                 Biocoral, Inc.

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

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

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

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

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

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

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

The issuer's revenues for the year ended December 31, 2003 were $361,900.

The aggregate market value of the registrant's voting common equity held by
non-affiliates as of March 31, 2004 was $454,727,313.

The number of outstanding shares of the registrant's common stock as of March
31, 2004 was 11,297,573.

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

Documents Incorporated by Reference: None.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                             <C>
                                                                                   Page
PART I
Item 1.  Description of Business..............................................      1
Item 2.  Description of Property..............................................      7
Item 3.  Legal Proceedings....................................................      8
Item 4.  Submission of Matters to a Vote of Security Holders..................      8

PART II
Item 5.  Market for Common Equity and Related Stockholder Matters.............      9
Item 6.  Management's Discussion and Analysis or Plan of Operations...........      10
Item 7.  Financial Statements.................................................  F-1 - F-19
Item 8.  Changes In and Disagreements With Accountants on Accounting
         and Financial Disclosure.............................................      14
Item 8A. Controls and Procedures .............................................      15

PART III
Item 9.  Directors, Executive Officers, Promoters and Control Persons.........      16
Item 10. Executive Compensation...............................................      17
Item 11. Security Ownership of Certain Beneficial Owners and Management.......      19
Item 12. Certain Relationships and Related Transactions.......................      20
Item 13  Exhibits and Reports on Form 8-K.....................................      20
Item 14. Principal Accountant Fees and Services...............................      21
</TABLE>


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

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

Biocoral(R)

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

According to our French subsidiary, Biocoral(R) has been used in more than
300,000 patients, principally in Western Europe and Korea. Biocoral(R) was
originally patented in France in 1979, in the United States in 1982, and in
Japan in 1989. Our French subsidiary acquired the patent rights to Biocoral(R)
from ANVAR/CNRS, {(l'ANVAR)"Agency National for Valorization of Research" and
(CNRS) "French National Center for Scientific Research", both French
governmental agency. Through our subsidiaries, we have developed ten additional
patent titles for various applications and uses of our products, including among
others osteoporosis remediation, autologous glue, combination with growth
factor, among others. Through these ten additional patent title applications in
various countries in Europe, Switzerland, Canada, Japan, Australia, and the
United States, we own more than 185 patent applications around the world and
approximately 140 of which have thus far been granted by various countries by
their official government patent office, including most European Community
countries, Switzerland, Canada, Japan, Australia, and in the United States by
the US Department of Commerce Patent and Trademark office.

Using proprietary manufacturing processes, our chief product, Biocoral(R), is
derived from natural ocean-generated coral (Natural Carbonate Calcium), has
certain characteristics (including chemical composition, porosity, mineral
content and bioactive properties) that permits its safe, contamination-free use.
Its similarity to human bone facilitates its replacement by newly-formed bone.
Substantially all of our revenue has been derived from sales of the first
generation of our products. The second generation of products and their
application after long years of research and development and success of several
clinical applications now are ready for marketing. Our product application in
the treatment of demineralized bone, for example, such as in cases of
osteoporosis fractures and their prevention, is based on technology that is
protected by strong patents which have thus far been granted by various
countries by their official government patent office, including most European
Community countries, Canada, Australia, Japan


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<PAGE>

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 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 anticipate submitting this application during 2004. Canadian approval of
certain products has been renewed for 2004 by Canadian Health Care Authority
"Sante Canada," and our products are already commercialized in the European
community and Asia. We recently entered into a distribution agreement with a
Canadian medical supply company in order to access the Canadian market.

Clinical Applications

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

We are preparing new clinical human trials for autologous fibrin glue in
different indications which is expected to be started during 2004. We believe
that the results of these clinical trials may allow us to extend the market of
innovative Company products for use in other indications. However, there can be
no assurance that we will be able to extend the market for our products.

Osteoporosis

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

Osteoporosis is a progressive bone disorder in which bone density decreases,
combined with increased bone brittleness and porosity, which primarily affects
post-menopausal women. The number of women suffering from osteoporosis has grown
significantly with the aging of western populations.

The clinical trials conducted by our subsidiaries over the past ten 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
osteoporosis treatment. 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 in Europe. In January 2002, the period for inclusion of patients in the
Phase III multi-center clinical trials ended. In the third quarter of 2002, the
preliminary report of the follow up study was completed. The preliminary report
confirmed the advantage of using our product in stabilization of fractures due
to Osteoporosis. We were following up on the patients included in the trials and
this follow-up continued through December 2003.

We initially were expecting the definitive report to be completed during the
first quarter 2003, but due to the disparate locations of the fourteen hospitals
participating in the trial, it was difficult for the monitors to visit the
hospitals. The study is monitored by an independent organization in France
called Biomatech located in city of Lyon which has been chosen directly by the
French government agency "Agency National for Valorization of Research"
(l'ANVAR). We expected the definitive report to be complete in the third quarter
of 2003. We were recently informed that the final report has been submitted by
Biomatech to l'ANVAR. We expect and believe that this study


                                       2
<PAGE>

will demonstrate that our product in this application will stabilize the
fracture and will permit better recovery for patients, allowing them faster
mobility and return to a healthy state with a very low risk of refracture.

We are also working on the prevention of osteoporosis and believe that for the
first time, patients who are susceptible to osteoporosis and have already had
fractures will be able to be treated. 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. 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
"Treatment of bone fractures due to osteoporosis and their prevention." Our
technology underlying this application is protected by strong patent
applications in many countries around the world where patent applications were
filed. Our patent applications in this application have thus far been filed and
granted by the official government patent offices of various countries,
including 17 European Community countries, Japan, Australia, and in the United
States by the US Department of Commerce Patent and Trademark Office. Our patent
application is still in examination and pending in Canada.

Autologous Fibrin Glue

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

Surgical glue represents a fast growing segment of the biotech industry.
Clinical trials have been done especially for skin replacement and skin grafts
eliminating the need for protein based skin grafts. Following the successful
result of the phase III human clinical trail for specific indications, the
product file has been approved by appropriate French authorities (AFSSAPS)
Agence Francaise de Securite Sanitaires des Produits de Sante "Health Care
Products French Sanitary Safety Agency", the French functional 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. The medical device which we developed for
preparation of autologous fibrin glue has also obtained the EC certification on
June 8, 2000, which is valid until June 7, 2005 and is renewable and allows us
to market the product in the European Community. 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 third
party pharmaceutical group.

We are continuing our investigation of this problem and anticipate replacing the
preparation materials used by the manufacturer, or replacing the manufacturer if
necessary, in order to restart the clinical trails required by AFSSAPS. We have
not resumed clinical trials as this investigation is ongoing. We cannot give any
specific date for resumption of clinical trails. We cannot assure that we will
be able to successfully complete our clinical trails. We


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<PAGE>

anticipate resuming the inclusion of patients and preparation before the end of
2004. However, we may be unable to resume the patient inclusion in 2004. Failure
to successfully complete these trails could prevent us from obtaining
authorization to market this product and could negatively affect our financial
condition.

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

Composite Biocoral and Growth Factor

For more than 14 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 five years have had positive
results confirming the acceleration of the bone repair process. Our technology
underlying this application is protected by strong patents owned by our
wholly-owned subsidiary in many countries around the world where patents
applications were filed. Our patent applications in this application have thus
far been granted in every country were filed by their official government patent
offices, including 17 European Community countries, Canada, Japan, Australia,
and in the United States by the US Department of Commerce Patent and Trademark
Office.

Raw Materials and Manufacturing

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

Manufacturing of Biocoral(R) is conducted by Inoteb (our French subsidiary) at
our facility in Saint Gonnery, France. This facility, which covers approximately
350 square meters (3150 square feet), has been ISO 9002 rated since August 1995.
On October 25, 1996, Inoteb was granted, in addition to the ISO 9002
certification, European Norms 46002 certification for the quality assurance
system set up in the manufacturing process of Biocoral(R) and, on December 30,
1996, Inoteb was granted the EC certification allowing sales of Biocoral(R)
throughout the European Community. This certification was valid for five (5)
years and expired in 2001. In the last quarter of 2001 Biocoral was audited for
renewal of this certification and the new certification was issued on December
20, 2001 and is valid through 2004. Additionally, we are audited once a year by
GMED to maintain our certifications. The manufacturing facility has recently
been audited in May 2003 and our certification has been maintained. The
manufacturing facility is classified as ISO 9002 (1994) and EN 46002 (1996) with
an extension of its certification to ISO 9001:94 and ISO 13485:01 certification.

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


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<PAGE>

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

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

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

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

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

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

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

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

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


                                       5
<PAGE>

Switzerland, Canada, Japan, Australia, and in the United States by the US Patent
and Trademark Office.

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

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

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

Governmental Regulation

Biocoral(R) has been approved for marketing European countries, Korea, South
Africa, Canada and Australia. Biocoral(R) has been approved for reimbursement in
France by French National Health Authority (Securite Sociale) and is listed on
the "Liste des Produits et Prestations Remboursables" (LPPR) reimbursement by
French National Health Authority.

During 2002, we were informed that the Canadian health authorities changed its
system and the authorization which had been previously been granted to us to
market our products in Canada was no longer valid. We initiated a new
application process for the marketing of our product in Canada in several
applications, including dental, CMF and orthopedic. We were informed, on March
11, 2003, that the Canadian health authorities had approved our new application.
In the first quarter of 2004, our authorization for marketing "Biocoral(R)" in
Canada was renewed. We recently entered into a distribution agreement with a
Canadian medical supply company in order to access the Canadian market.

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 the FDA approval may be obtained to
market regulated products in the


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<PAGE>

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

We recently 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) 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 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
Investigational Device Exemption ("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. Inoteb currently
has nine employees 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.

New Subsidiary

We founded a new subsidiary under the name of BioHoldings International Limited
("BioHoldings") in 1999. All of BioHoldings's outstanding shares are owned by
us, and all BioHoldings expenses are borne by us. BioHoldings was formed to hold
and manage the principal patents of the Biocoral, Inc. group. BioHoldings:

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

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

      -     looks after and maintains patents.

Item 2. Description of Property.

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

We previously leased our manufacturing facility in Saint Gonnery in west of
France until the year 2001. As of


                                       7
<PAGE>

December 31, 2003, we exercised our option to purchase the building and land for
the symbolic price of 0,15 cents (Euro). We legally own the property subject to
signature of "act of purchase" (purchase agreement) from the leasing company.

Item 3. Legal Proceedings.

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

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

None.


                                       8
<PAGE>

                                     PART II

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

At December 31, 2003 there were 11,297,573 shares of our common stock issued and
outstanding. Unless these securities are registered under the Securities Act of
1933, as amended, or exempt under another provision of the Securities Act, these
securities are ineligible for sale in the public market. Sales in the public
market of substantial amounts of our common stock that are presently restricted
could adversely affect prevailing market prices.

The following table sets forth information regarding the high and low closing
price per share for our common stock as reported on the over-the-counter
electronic bulletin board for each of the periods set forth below. 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, 2003                  $157.50              $34.05
September 30, 2003                 $171.90              $37.50
June 30, 2003                      $277.50              $70.31
March 31, 2003                     $140.62              $70.31

December 31, 2002                  $ 15.15              $ 5.00
September 30, 2002                 $ 28.50              $21.00
June 30, 2002                      $ 52.50              $30.00
March 31, 2002                     $150.00              $60.00

Holders

As of December 31, 2003 there were approximately more than 400 holders of record
of the shares of our common stock including several European financial and
portfolio institutions.

Dividends

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

Recent Sales of Unregistered Securities

During December 2003, we sold 7% convertible promissory notes in the aggregate
principal amount of $850,000 to "accredited investors" only in a private
placement intended to be exempt from registration pursuant to the provisions of
Regulation D of the Securities Act of 1933. At December 31, 2003, we had
received approximately $560,000, of which $128,000 had been received as
stockholder advances during 2002, and approximately $290,000 during February
2004. These notes are convertible at any time, at a conversion price based upon
the average closing price of our common stock for the 20 trading days
immediately preceding the conversion, at the holder's option, subject to our
approval. Interest on the 7% notes is payable annually, at our option, either in
cash or our common stock. We may, at any time, prepay in whole or in part the
principal and accrued interest of the 7% notes, either in cash or our common
stock.

During 2002, we were advanced approximately $128,000 from existing stockholders.
This advance was payable on demand with interest which ranged from 5.0% to 7.0%
per annum. In December 2003, these stockholders converted this advance into the
7% Notes.


                                       9
<PAGE>

During the year ended December 31, 2000, we completed a private offering (the
"Offering") of 6% convertible promissory notes payable (the "Notes") due
December 31, 2002. We sold the Notes in the aggregate principal amount of
$3,000,000 to "accredited investors" through a private placement intended to be
exempt from registration pursuant to the provisions of Regulation D of the Act.
We have received $2,000,000 of the proceeds and the remaining $1,000,000 was
restricted as of December 31, 2002 pending our issuance of all of the required
regulatory documents and the listing of our common stock for trading on the
NASDAQ Stock Market. As such, these proceeds are classified as cash held in
escrow, a non-current asset, in the consolidated balance sheets included herein.
On June 26, 2003 we used this money to repay $1,000,000 of the 6% Notes.

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

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

            Summary of Significant Accounting Policies and Estimates

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

Intangible Assets. Intangible assets consist of acquired patents, expenses
incurred on approved patents and on the successful defense of approved patents.
Amortization is computed using the straight-line method over the estimated
period of 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 developing, but could
affect, the estimates used.

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

Investment in Limited Partnership. We own an investment in a limited
partnership, which is accounted for under the equity method of accounting. Under
this method, the initial investment is recorded at cost. Subsequently, the
investment is increased or decreased for our pro-rata share of the partnership's
income and losses. No ready trading market exists for this partnership interest
by which we can determine with any certainty its value. Moreover, because it is
initially valued at cost, which in turn is based upon negotiations between us
and the limited partnership, this


                                       10
<PAGE>

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, the proceeds received may vary greatly
from the valuation reflected on our balance sheet.

Results of Operations for the Year Ended December 31, 2003 Compared to the Year
Ended December 31, 2002

Net sales, which are solely attributable to Inoteb, SA ("Inoteb"), our wholly
owned French subsidiary, totaled approximately $362,000 for the year ended
December 31, 2003, an increase of approximately $12,000 from approximately
$350,000 for the year ended December 31, 2002 or approximately 3.3%. This
increase resulted primarily from currency fluctuation between the US dollar and
the European euro.

During the period covered by this report, we did not have any sales in the U.S.
All of our sales occurred outside the United States. Net sales in euros for the
year ended December 31, 2003 actually decreased by approximately 49,859 euros
(or approximately 14%) compared to net sales during the year ended December 31,
2002 (approximately 367,300 euros). This decrease is partially attributable to a
decrease in sales related to sale of products in maxillocraniofacial surgery
area in France and orthopaedic and neurosurgery markets during 2003. This
decrease also resulted from stock (storage) levels accumulated at our
distributors and to a greater reduction in activity for the year ended December
31, 2003 versus the year ended December 31, 2002.

Cost of sales was approximately $57,200 for the year ended December 31, 2003, a
decrease of approximately $45,200 from approximately $102,400 for the year ended
December 31, 2002 or approximately 44.1%. However, the cost of sales in euros
for the year ended December 31, 2003 was approximately 43,000 euros, a decrease
of approximately 64,000euros (or approximately 59.8%) in comparison to the year
ended December 31, 2002 (approximately 107,000 euros). The main factor
contributing to this decrease was a variation of gross inventories and the
impact of booking at the year ended December 31, 2003 of gross inventories of
resterilizable goods. It is also partially due to the revision in the method of
calculation of cost of sales under GAAP in 2003.

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

Operating expenses decreased by approximately $49,700 to approximately $754,000
during the year ended December 31, 2003 from approximately $803,700 for the year
ended December 31, 2002 (approximately 6.2%). This decrease was primarily
attributable to increases of our gross profit mainly due to decrease of cost of
sale as described below.

Research and development expenses increased approximately $38,100 (or
approximately 27.2%) to approximately $178,100 during the year ended December
31, 2003 as compared to approximately $140,000 during the year ended December
31, 2002. This increase was primarily due to increased costs in our wholly-owned
subsidiary, Bio Holdings International LTD, related to additional title patent
applications in 2003 for a new generation of products.

Part of this increase resulted from increased cost related to our investigation
and coordination of the clinical trials program required by AFSSAPS related to
the autologous fibrin glue which was suspended in mid-2002 in order to resolve a
technical problem. We have not resumed clinical trials as this investigation is
ongoing.

As discussed above in reference to net sales, cost of sales and operation
expenses, most of our research and development are made outside the United
States and majority of our research and development are conducted in Europe and
as such we primarily account for Research and development in euros. In order to
comply with GAAP the following discussion is in terms of U.S. dollars. As a
result, the part of increase in research and development discussed below may
actually differ as a result of fluctuating exchange rates.

Consulting and professional fees during the year ended December 31, 2003
increased by approximately $65,100 to approximately $242,700 from $177,600
during the year ended December 31, 2002 or approximately 36.7%. Most of these
fees are incurred in Europe, and as such, we primarily account for them in
Euros. A portion of the increase


                                       11
<PAGE>

resulted from exchange rate fluctuations. This increase was attributable to
consulting fees associated with the development of the next generation of
products and professional fees associated with the Sarbanes-Oxley Act of 2002.

Other income (net of expenses) totaled approximately $130,100 of income for the
year ended December 31, 2003 as compared to approximately $582,000 of expense
for the year ended December 31, 2002. This increase is due primarily to two
factors: during 2003 we recorded as the forgiveness of debt approximately
$259,800 (which consisted of interest and accrued issuance costs associated with
our 6% Notes and proceeds therefrom which were held in escrow) for which there
is no corresponding 2002 amount, and during 2002 we incurred an interest charge
related to the beneficial conversion rights of the 6% convertible promissory
notes of $450,000 for which there was no corresponding 2003 amount.

As a result of the above, our net loss for the year ended December 31, 2003
totaled approximately $319,000 or $.03 per share compared to a net loss of
approximately $1,138,000 or $.34 per share for the year ended December 31, 2002.
These losses per share were based on weighted average common shares outstanding
of 11,297,572 for the year ended December 31, 2003 and 3,324,813 for the year
ended December 31, 2002, which reflect a 1-for-15 reverse split effective
December 23, 2002.

              Financial Condition, Liquidity and Capital Resources

As shown in the accompanying consolidated financial statements, we had net
losses of approximately $319,000 and $1,138,000 in 2003 and 2002, respectively.
The net loss in 2003 included a nonrecurring income item relating to forgiveness
of debt of approximately $259,800 and the net loss in 2002 included a
nonrecurring charge related to beneficial conversion rights of $450,000, and the
absence of this nonrecurring charge substantially reduced the loss for 2003.
Management believes that it is likely that we will continue to incur net losses
through at least 2004. We had a working capital deficiency and stockholders'
deficiency of approximately $711,000 and $2,117,000 at December 31, 2003,
respectively.

An accredited investor has committed to fund up to $300,000 to us to cover
operating shortfalls for the balance of 2004. In addition during February 2004,
we received approximately $290,000 from the issuance of our 7% convertible
promissory notes as well as additional funds of approximately $80,000, which are
yet to be documented as convertible notes payable. We also own marketable
securities which are classified as available-for-sale and consisted of equity
securities with an aggregate fair value of approximately $208,200 at December
31, 2003.

Management plans to seek additional equity and/or debt financing and/or, if
necessary, request that our lenders convert our existing obligations to common
stock. Accordingly, management believes, that we have sufficient liquid
resources to operate through at least December 31, 2004 and will have the
ability to make or defer the payment of our obligations as they come due. For
the year ended December 31, 2003, we had negative cash flow from operating
activities of approximately $268,600. We had cash provided by investing
activities of approximately $16,100 and cash provided by financing activities of
approximately $499,400. Our net loss of approximately $319,000 increased our
accumulated deficit to approximately $18,778,000 at December 31, 2003.

We have outstanding 6% convertible promissory notes which it sold during 2000
and which originally were due December 31, 2002. On March 25, 2002, the holders
of the notes agreed to extend the due date from December 31, 2002 to December
31, 2004, and on March 1, 2004 they agreed to extend the due date further to
December 31, 2006. The 6% notes are convertible at any time, at a rate of $.045,
at the holder's option, subject to Company approval. The notes were not affected
by either of the recent reverse stock splits.

We sold the 6% Notes in the aggregate principal amount of $3,000,000 to
"accredited investors" during 2000 through a private placement intended to be
exempt from registration pursuant to the provisions of Regulation D of the
Securities Act of 1933. A portion of the proceeds, $1,000,000, had been held in
an escrow account pending our issuance of all of the required regulatory
documents and the listing of our common stock for trading on The NASDAQ Stock
Market. On June 26, 2003, we used this money to repay $1,000,000 of the 6%
Notes.

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


                                       12
<PAGE>

Our marketable securities are classified as available-for-sale and consisted of
equity securities with an aggregate fair value of approximately $208,200 and a
cost totaling approximately $646,100 at December 31, 2003. The net unrealized
holding loss was approximately $437,900 for the year ended December 31, 2003
which increased accumulated other comprehensive loss, a component of total
stockholders' deficiency to approximately $687,600 as of December 31, 2003.

During the year ended December 31, 2002 we invested an additional $15,550 of
excess cash in marketable securities, which were classified as
available-for-sale and consisted of equity securities with an aggregate fair
value of approximately $112,900 and a cost totaling approximately $690,300 at
December 31, 2002. The net unrealized holding loss of approximately $577,400 for
the year ended December 31, 2002 increased accumulated other comprehensive loss,
a component of total stockholders' deficiency to approximately $633,200 as of
December 31, 2002.

On December 23, 2002, we affected a 1-for-15 reverse split of our outstanding
shares of common stock. The numbers of shares and prices per share in the
consolidated financial statements for that year and notes included herein have
been retroactively restated to give effect to the reverse split.

                           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.


                                       13
<PAGE>

Item 7. Financial Statements

                         BIOCORAL, INC. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES

                                    CONTENTS

PAGES   F-1-F-3  INDEPENDENT AUDITORS' REPORTS

PAGE        F-4  CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2003
                 AND 2002

PAGE        F-5  CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS
                 ENDED DECEMBER 31, 2003 AND 2002

PAGES       F-6  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
                 DEFICIENCY AND COMPREHENSIVE LOSS FOR THE YEARS ENDED
                 DECEMBER 31, 2003 AND 2002

PAGE        F-7  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS
                 ENDED DECEMBER 31, 2003 AND 2002

PAGES  F-8-F-19  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF
                 DECEMBER 31, 2003 AND 2002

<PAGE>

                          Independent Auditors' Report

Board of Directors
Biocoral, Inc. and Subsidiaries

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

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

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

WEINBERG & COMPANY, P.A.


Boca Raton, Florida
April 14, 2004


                                      F-1
<PAGE>

                          Independent Auditors' Report

To the Stockholders' and the Board of Directors
of Biocoral Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Biocoral, Inc.
and Subsidiaries (the "Company") at December 31, 2002, and the related
consolidated statements of operations, changes in stockholders' deficiency and
comprehensive loss and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. We did not audit the financial statements of Inoteb SA, a 100% wholly
owned subsidiary at December 31, 2002, which statements reflect total assets of
approximately $200,000 at December 31, 2002, and losses of approximately
$174,000 for the year ended December 31, 2002. Those statements were audited by
other auditors, whose report has been furnished to us, and in our opinion,
insofar as it relates to the amounts included for Inoteb SA, is based solely on
the report of the other auditors.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Biocoral, Inc.
and Subsidiaries at December 31, 2002, and the consolidated results of their
operations and their cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of America.


/s/ Rogoff & Company, PC

New York, New York
April 11, 2003


                                      F-2
<PAGE>

                    Report of Independent Public Accountants

To the Board of Directors and Stockholders
INOTEB S.A. (France)

We have audited the consolidated balance sheet of INOTEB SA (a French
corporation) and Subsidiary as of December 31, 2002 and the related consolidated
statements of operations, stockholders' deficiency and cash flows for the year
then ended. These financial statements, which are not presented separately
herein, are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of INOTEB S.A. and
Subsidiary as of December 31, 2002 and their results of operations and cash
flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.


/s/ Consultaudit

Paris, France
March 25, 2004


                                      F-3
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                     ASSETS

                                                                                                  December 31,
                                                                                         -------------------------------
                                                                                             2003               2002
                                                                                         ------------       ------------
<S>                                                                                      <C>                <C>
Current Assets:
   Cash                                                                                  $     88,489       $     42,770
   Investments in marketable securities                                                       208,189            112,892
   Accounts receivable, net of allowance for doubtful accounts of $1,900 and $1,000           137,200             74,200
   Inventories                                                                                183,600             86,100
   Prepaid expenses and other current assets                                                    1,200                 --
                                                                                         ------------       ------------

     Total current assets                                                                     618,678            315,962

Property and equipment, net                                                                    24,100             29,900

Restricted cash held in escrow                                                                 11,049          1,011,049
Investment in limited partnership                                                              35,209             98,545
Intangible assets, net                                                                        111,140             99,767
Other assets                                                                                   12,500              9,800
                                                                                         ------------       ------------

   Total Assets                                                                          $    812,676       $  1,565,023
                                                                                         ============       ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current  liabilities:
   Accounts payable                                                                      $    576,764       $    582,837
   Due to officer                                                                             390,000            182,500
   Accrued interest payable                                                                   317,707            413,911
   Current portion of long-term debt                                                           45,300            212,200
                                                                                         ------------       ------------

     Total current liabilities                                                              1,329,771          1,391,448

Long-term debt, net of current portion                                                      1,554,253          1,880,400
Other liabilities                                                                              45,700             35,600
                                                                                         ------------       ------------

       Total Liabilities                                                                    2,929,724          3,308,448
                                                                                         ------------       ------------

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;
     11,297,573 shares issued and outstanding                                                  11,298             11,298
   Additional paid-in capital                                                              17,337,292         17,337,292
   Accumulated other comprehensive loss                                                      (687,629)          (633,182)
   Accumulated deficit                                                                    (18,778,009)       (18,458,833)
                                                                                         ------------       ------------

     Total Stockholders' Deficiency                                                        (2,117,048)        (1,743,425)
                                                                                         ------------       ------------

     Total Liabilities and Stockholders' Deficiency                                      $    812,676       $  1,565,023
                                                                                         ============       ============
</TABLE>

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


                                      F-4
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                                2003              2002
                                                                            ------------       -----------
<S>                                                                         <C>                <C>
Net sales                                                                   $    361,900       $   350,300
Cost of sales                                                                     57,200           102,400
                                                                            ------------       -----------

    Gross profit                                                                 304,700           247,900
                                                                            ------------       -----------

Operating expenses:
    Research and development                                                     178,149           140,041
    Consulting and professional fees                                             242,754           177,599
    Depreciation and amortization                                                 18,784            96,858
    General and administrative                                                   314,310           389,184
                                                                            ------------       -----------

      Total operating expenses                                                   753,997           803,682
                                                                            ------------       -----------

    Loss from operations                                                        (449,297)         (555,782)
                                                                            ------------       -----------

Other income (expense)
    Interest, net                                                                (88,536)         (567,290)
    Equity in loss of partnership                                                (63,336)          (23,458)
    Loss on sale of marketable securities                                        (28,349)               --
    Dividend income                                                               18,311                --
    Foregiveness of debt                                                         259,836                --
    Other                                                                         32,195             8,790
                                                                            ------------       -----------

      Total other income (expense)                                               130,121          (581,958)
                                                                            ------------       -----------

Net loss                                                                    $   (319,176)      $(1,137,740)
                                                                            ============       ===========

Basic and diluted net loss per share                                        $      (0.03)      $     (0.34)
                                                                            ============       ===========

Basic and diluted weighted average number of common shares outstanding        11,297,573         3,324,813
                                                                            ============       ===========
</TABLE>

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


                                      F-5
<PAGE>

                         BIOCOLAR, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
                             AND COMPREHENSIVE LOSS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                              Accumu-
                                                                               lated
                                                                               Other
                                              Common Stock       Additional   Compre-
                                          --------------------    Paid-in     hensive    Subscription    Accumulated
                                           Shares       Amount    Capital       Loss       Receivable      Deficit         Total
                                          ----------   -------  -----------   ---------  ------------    ------------   -----------
<S>                                        <C>         <C>      <C>           <C>         <C>            <C>            <C>
Balance, January 1, 2002                   1,296,795   $ 1,297  $16,377,293   $(427,592)  $(1,070,000)   $(17,321,093)  $(2,440,095)

Conversion of interest payable to
common stock                                     778         1       69,999          --            --              --        70,000

Application of debt to subscription
receivable                                        --        --           --          --       800,000              --       800,000

Application of interest to subscription
receivable                                        --        --           --          --       210,667              --       210,667

Conversion of notes payable to common
stock                                     10,000,000    10,000      440,000          --            --              --       450,000

Charge for beneficial conversion
rights                                            --        --      450,000          --            --              --       450,000

Cash payment - subscription receivable            --        --           --          --        59,333              --        59,333

Comprehensive loss:

   Other comprehensive loss - decline
   in market value of available-for-sale
   securities                                     --        --           --    (198,999)           --              --

   Other comprehensive loss - foreign
   currency translation                           --        --           --      (6,591)           --              --

   Net loss                                       --        --           --          --            --      (1,137,740)

Total comprehensive loss                          --        --           --          --            --              --    (1,343,330)
                                          ----------   -------  -----------   ---------   -----------    ------------   -----------

Balance, December 31, 2002                11,297,573    11,298   17,337,292    (633,182)           --     (18,458,833)   (1,743,425)

Comprehensive loss:

   Unrealized gain on investments in
   marketable securities                          --        --           --     139,268            --              --

   Foreign currency translation loss              --        --           --    (193,715)           --              --

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

Total comprehensive loss                          --        --           --          --            --              --      (373,623)
                                          ----------   -------  -----------   ---------   -----------    ------------   -----------

Balance, December 31, 2003                11,297,573   $11,298  $17,337,292   $(687,629)  $        --    $(18,778,009)  $(2,117,048)
                                          ==========   =======  ===========   =========   ===========    ============   ===========
</TABLE>

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


                                      F-6
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>
                                                                                 2003              2002
                                                                             -----------       -----------
<S>                                                                          <C>               <C>
Cash flows from operating activities:
    Net loss                                                                 $  (319,176)      $(1,137,740)
    Adjustments to reconcile net loss to net cash used in
      operating activities:
        Depreciation and amortization                                             18,784            96,858
        Forgiveness of debt                                                     (259,836)               --
        Provision for doubtful accounts                                              900                --
        Equity in loss of partnership                                             63,336            23,458
        Realized loss on available-for-sale securities                            28,349                --
        Charge for beneficial conversion rights                                       --           450,000
    Change in operating assets and liabilities:
      Accounts receivable                                                        (63,900)          (22,200)
      Inventories                                                                (97,500)           (6,400)
      Prepaid expenses and other current assets                                   (1,200)           30,300
      Other assets                                                                (2,700)           (1,100)
      Accounts payable and accrued expenses                                      146,772           278,181
      Due to officer                                                             207,500           147,500
      Other liabilities                                                           10,100           (39,400)
                                                                             -----------       -----------

Net cash used in operating activities                                           (268,571)         (180,543)
                                                                             -----------       -----------

Cash flows from investing activities:
    Purchase of property and equipment                                            (7,000)             (800)
    Purchase of marketable securities                                                 --           (15,550)
    Proceeds from sale of marketable securities                                   23,102                --
                                                                             -----------       -----------

Net cash used in investing activities                                             16,102           (16,350)
                                                                             -----------       -----------

Cash flows from financing activities:
    Proceeds from long-tem debt                                                  499,383            63,100
    Principal payments on long-term debt                                      (1,000,000)          (40,300)
    Restricted cash held in escrow                                             1,000,000           (11,049)
    Payment on subscripton receivable                                                 --            59,333
                                                                             -----------       -----------

Net cash provided by financing activities                                        499,383            71,084
                                                                             -----------       -----------

Effects of exchange rates on cash                                               (201,195)           (6,591)
                                                                             -----------       -----------

Increase (decrease) in cash                                                       45,719          (132,400)

Cash, beginning of year                                                           42,770           175,170
                                                                             -----------       -----------

Cash, end of year                                                            $    88,489       $    42,770
                                                                             ===========       ===========


Supplemental disclosure of cash flow information:
    Cash paid during the period for interest                                 $        --       $     2,450
                                                                             ===========       ===========

Supplemental disclosures of noncash investing and financing activities:
    Conversion of debt to equity                                             $        --       $ 1,530,667
                                                                             ===========       ===========

 Purchase of intangible assets for accounts payable                          $        --       $   102,325
                                                                             ===========       ===========
</TABLE>

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


                                      F-7
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

NOTE 1 - DESCRIPTION OF BUSINESS

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

      The Company's operations are in one business segment which consists
      primarily of researching, developing, manufacturing and marketing patented
      high-technology biomaterials and bone substitute materials made from coral
      and other orthopedic, oral and maxillo-facial products, including products
      marketed under the trade name of Biocoral(R). All of the Company's
      operations are conducted from France. The Company has obtained regulatory
      approvals to market its products throughout Europe, Canada and certain
      other countries. The Company owns various patents for its products that
      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 $319,000 and $1,138,000 in
      2003 and 2002, respectively. The net loss in 2003 includes a nonrecurring
      income item relating to forgiveness of debt of approximately $260,000 (See
      Note 8(A)) and the net loss in 2002 included a nonrecurring charge related
      to beneficial conversion rights of $450,000, which is included in interest
      expense. Management believes that it is likely that the Company will
      continue to incur net losses through at least 2004. The Company also had a
      working capital deficiency of approximately $711,000 and approximately
      $1,050,000, and a stockholders' deficiency of approximately $2,117,000 and
      approximately $1,743,000, as of December 31, 2003 and 2002, respectively.
      An accredited investor has committed to fund approximately $300,000 to the
      Company to cover operating shortfalls for the balance of 2004. In
      addition, during February 2004, the Company received approximately
      $290,000 relating to the issuance of the 7% convertible promissory notes
      payable (See Notes 8 (C) and 15) and additional funds for approximately
      $80,000, which are yet to be documented as convertible notes payable.
      Management believes that these funds will provide sufficient working
      capital to operate through 2004.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Basis of Presentation

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

      Principles of Consolidation

      The accompanying consolidated financial statements include all of the
      accounts of Biocoral, Inc. and its wholly-owned subsidiaries, Bioholdings
      International, Ltd., Cabestan, Inc., Immo Distribution, Ltd., 3H and
      Inoteb, S.A., for the years ended December 31, 2003 and 2002. Cabestan,
      Inc., 3H and Immo Distribution are not operating subsidiaries. All
      material intercompany balances and transactions have been eliminated in
      consolidation.


                                      F-8
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

      Concentrations of Credit Risk

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

      Allowance for Doubtful Accounts

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

      Investments in Marketable Securities

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

      Inventories

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

      Property and Equipment

      Property and equipment are recorded at cost less accumulated depreciation.
      Depreciation is 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.

      Investment in Limited Partnership

      The Company owns a 9.3% interest in Bensenville Associates Ltd, a limited
      partnership, which is accounted for under the equity method of accounting.
      Under this method, the initial investment is recorded at cost.
      Subsequently, the investment is increased or decreased for the Company's
      pro-rata share of the partnership's income and losses. The Company's share
      of the loss in the partnership for the years ended December 31, 2003 and
      2002 was $63,336 and $23,458, and the book value of the investment was
      $35,209 and $98,545, respectively.


                                      F-9
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

      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. There has
      been no impairment loss recorded for the years ended December 31, 2003 and
      2002.

      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 as of December 31, 2003 and
      2002.

      Income Taxes

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

      Revenue Recognition

      Sales are recognized when the earnings process is complete and
      collectibility is reasonably assured, which is generally when the goods
      are shipped to customers.

      Shipping and Handling

      Shipping and handling revenues and costs are included in sales and cost of
      sales, respectively, in the accompanying consolidated statements of
      operations in accordance with guidance established by the Emerging Issues
      Task Force, issue No. 00-10, "Accounting for Shipping and Handling Costs."
      During 2003 and 2002, there were no material shipping and handling
      revenues or costs.

      Research and Development

      The Company expenses all research and development costs as incurred.


                                      F-10
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

      Stock-Based Compensation

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

      Computation of Net Loss per Share

      The Company presents basic loss per share and, if applicable, diluted
      earnings per share pursuant to the provisions of SFAS No. 128, "Earnings
      per Share" ("SFAS 128"). Under SFAS 128, basic net loss per share is
      computed by dividing the net loss for the year by the weighted average
      number of common 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 shares and common share equivalents
      outstanding during the year. Common stock equivalents would arise from the
      exercise of stock options. For the years ended December 31, 2003 and 2002,
      the Company has not issued any stock options. Diluted net loss has not
      been disclosed for the years ended December 31, 2003 and 2002, as the
      effect is anti-dilutive.

      Foreign Currency Translation and Transactions

      The accompanying consolidated financial statements are presented in United
      States dollars. The functional currency of Inoteb is the Euro. The
      financial statements of Inoteb are translated into United States dollars
      at year-end exchange rates as to assets and liabilities and average
      exchange rates as to revenues and expenses. Capital accounts are
      translated at their historical exchange rates when the capital
      transactions occurred.

      Foreign currency transaction gains or losses from transactions denominated
      in currencies other than the Euro are recognized in net income in the
      period the gain or loss occurs and is included in the accompanying
      consolidated statements of operations.

      Comprehensive Loss

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


                                      F-11
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

      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 the consolidated
      statement of changes in stockholders' deficiency and comprehensive loss.

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

<TABLE>
<CAPTION>
                                                                       2003            2002
                                                                    ---------       ---------
<S>                                                                 <C>             <C>
Beginning accumulated unrealized loss on marketable securities      $(577,391)      $(427,592)
Unrealized gain (loss) arising during the year                        105,574        (149,799)
Reclassification adjustment gain                                       33,949              --
                                                                    ---------       ---------
Ending accumulated unrealized loss on marketable securities         $(437,868)      $(577,391)
                                                                    =========       =========
</TABLE>

      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 as of December 31, 2003
      and 2002, 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 debt terms available to
      the Company under similar terms.

      Use of Estimates

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

      Intangible Assets

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

      Recent Accounting Pronouncements

      In January 2003, (as revised in December 2003) the Financial Accounting
      Standards Board ("FASB") issued Interpretation No. 46, "Consolidation of
      Variable Interest Entities", an interpretation of Accounting Research
      Bulletin ("ARB") No. 51, "Consolidated Financial Statements".
      Interpretation No. 46 addresses consolidation by business enterprises of
      variable interest entities, which have one or both of the following
      characteristics: (i) the equity investment at risk is not sufficient to
      permit the entity to finance its activities without additional
      subordinated support from other parties, which is


                                      F-12
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

      provided through other interest that will absorb some or all of the
      expected losses of the entity; (ii) the equity investors lack one or more
      of the following essential characteristics of a controlling financial
      interest: the direct or indirect ability to make decisions about the
      entities activities through voting rights or similar rights; or the
      obligation to absorb the expected losses of the entity if they occur,
      which makes it possible for the entity if they occur, which is the
      compensation for the risk of absorbing the expected losses.

      Interpretation No. 46, as revised, also requires expanded disclosures by
      the primary beneficiary (as defined) of a variable interest entity and by
      an enterprise that holds a significant variable interest in a variable
      interest entity but is not the primary beneficiary.

      Interpretation No. 46, as revised, applies to small business issuers no
      later than the end of the first reporting period that ends after December
      15, 2004. This effective date includes those entities to which
      Interpretation 46 had previously been applied. However, prior to the
      required application of Interpretation No. 46, a public entity that is a
      small business issuer shall apply Interpretation 46 or this Interpretation
      to those entities that are considered to be special-purpose entities no
      later than as of the end of the first reporting period that ends after
      December 15, 2003. Interpretation No. 46 may be applied prospectively with
      a cumulative-effect adjustment as of the date on which it is first applied
      or by restating previously issued financial statements for one or more
      years with a cumulative-effect adjustment as of the beginning of the first
      year restated.

      In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
      on Derivative Instruments and Hedging Activities". SFAS No. 149 amends and
      clarifies financial accounting and reporting for derivative instruments,
      including certain derivative instruments embedded in other contracts
      (collectively referred to as derivatives) and for hedging activities under
      SFAS No. 133, "Accounting for Derivative Instruments and Hedging
      Activities". The changes in SFAS No. 149 improve financial reporting by
      requiring that contracts with comparable characteristics be accounted for
      similarly. This statement is effective for contracts entered into or
      modified after June 30, 2003 and all of its provisions should be applied
      prospectively.

      In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
      Financial Instruments with Characteristics of both Liabilities and Equity"
      ("SFAS 150"). SFAS 150 establishes standards on the classification and
      measurement of financial instruments with characteristics of both
      liabilities and equity. SFAS 150 will become effective for financial
      instruments entered into or modified after May 31, 2003. The adoption of
      SFAS 150 has had no effect on the Company's financial position or results
      of operations.

      The implementation of the provisions of these pronouncements is not
      expected to have a significant effect on the Company's consolidated
      financial statement presentation or disclosure.

      Reclassifications

      Certain reclassifications have been made to the 2002 financial statements
      to conform to the 2003 presentation.


                                      F-13
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

NOTE 4 - INVESTMENTS IN MARKETABLE SECURITIES

      During 2002 and 2003, the Company classified its investments in marketable
      securities as available for sale, and those that it intended to hold for
      more than one year as non-current. Unrealized holding gains and losses are
      reported as a separate component of stockholders' deficiency as part of
      accumulated other comprehensive income (loss), until realized. The
      following is a reconciliation of original cost to fair market value for
      securities held as of December 31, 2003:

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

                          Non-Current Portion                                                     $        --
                                                                                                  ===========
</TABLE>

NOTE 5 - INVENTORIES

      Inventories consisted of the following as of December 31:

<TABLE>
<CAPTION>
                                                                                    2003              2002
                                                                                -----------       -----------
<S>                                                                             <C>               <C>
                  Raw materials                                                 $    21,700       $    28,500
                  Work in process                                                    51,700            46,500
                  Finished goods                                                    110,200            11,100
                                                                                -----------       -----------

                                                                                $   183,600       $    86,100
                                                                                ===========       ===========
</TABLE>

NOTE 6 - PROPERTY AND EQUIPMENT

      Property and equipment consisted of the following as of December 31:

<TABLE>
<CAPTION>
                                                                                    2003              2002
                                                                                -----------       -----------
<S>                                                                             <C>               <C>
                  Land                                                          $    11,600       $    10,900
                  Buildings and improvements                                        185,000           169,030
                  Equipment and furnishings                                         183,600           218,600
                                                                                -----------       -----------

                                                                                    380,200           398,530
                  Less accumulated depreciation                                    (356,100)         (368,630)
                                                                                -----------       -----------

                                                                                $    24,100       $    29,900
                                                                                ===========       ===========
</TABLE>


                                      F-14
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

NOTE 7 - INTANGIBLE ASSETS

      Intangible assets consisted of the following as of December 31:

<TABLE>
<CAPTION>
                                                                                    2003              2002
                                                                                -----------       -----------
<S>                                                                             <C>               <C>
                  Patents                                                       $   119,682       $   102,325
                  Less: Accumulated amortization                                      8,542             2,558
                                                                                -----------       -----------

                                                                                $   111,140       $    99,767
                                                                                ===========       ===========
</TABLE>

NOTE 8 - LONG-TERM DEBT

      Long-term debt consisted of the following as of December 31:

<TABLE>
<CAPTION>
                                                                                    2003              2002
                                                                                -----------       -----------
<S>                                                                             <C>               <C>
                  6% convertible promissory notes payable (A)                   $   700,000       $ 1,700,000
                  ANVAR advances (B)                                                338,800           264,600
                  7% convertible promissory notes payable (C)                       560,753                --
                  Stockholder advances (D)                                               --           128,000
                                                                                -----------       -----------
                                                                                  1,599,553         2,092,600
                  Less current portion                                               45,300           212,200
                                                                                -----------       -----------

                                                                                $ 1,554,253       $ 1,880,400
                                                                                ===========       ===========
</TABLE>

      (A)   On March 25, 2002, the holders of the 6% convertible promissory
            notes payable (the "6% Notes") agreed to extend the due date from
            December 31, 2002 to December 31, 2004 and on March 1, 2004 agreed
            to extend the due date to December 31, 2006. The 6% Notes are
            convertible into shares of the Company's common stock at any time,
            at a rate of $.045 per share, 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. During 2003, there were no payments of accrued
            interest on these notes.

            The Company had sold the 6% Notes in the aggregate principal amount
            of $3,000,000 to "accredited investors" during 2000 through a
            private placement intended to be exempt from registration pursuant
            to the provisions of Regulation D of the Securities Act of 1933. A
            portion of the proceeds, $1,000,000, had been held in an escrow
            account pending the Company's issuance of all of the required
            regulatory documents and the listing of the Company's common stock
            for trading on The NASDAQ Stock Market. On June 26, 2003, the money
            held in the escrow account was returned to the note holders. Since
            the $1,000,000 proceeds were never used by the Company, but always
            maintained in the escrow account, the Company wrote off the prior
            years' accrued interest of $179,836 and the accrued issuance costs
            of $80,000 associated with these 6% Notes resulting in a benefit of
            $259,836, which was recorded as forgiveness of debt in the
            consolidated statements of operations.

            On December 26, 2002, the Company approved requests from certain
            note holders for the conversion of $450,000 of the 6% Notes into
            shares of the Company's common stock. As a


                                      F-15
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

            result of the conversion, the Company charged $450,000 to interest
            expense in the year ended December 31, 2002 based on the beneficial
            conversion feature of these notes.

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

      (C)   The Company sold 7% convertible promissory notes payable (the "7%
            Notes") in the aggregate principal amount of $850,000 to "accredited
            investors" in December 2003 through a private placement intended to
            be exempt from registration pursuant to the provisions of Regulation
            D of the Securities Act of 1933. As of December 31, 2003, the
            Company had received approximately $560,000 (of which approximately
            $128,000 was received as stockholder advances during 2002) and
            approximately $290,000 during February 2004 (See Note 15). The 7%
            Notes are convertible at any time, using a conversion rate utilizing
            the average closing price of the Company's common stock for the 20
            trading days immediately preceding the conversion, at the holder's
            option, subject to Company approval. Interest on the 7% Notes is
            payable annually, at the Company's option, either in cash or common
            stock of the Company. The Company may, at any time, prepay in whole
            or in part the principal and accrued interest of the 7% Notes,
            either in cash or common stock of the Company.

      (D)   During 2002, the Company was advanced approximately $100,000 and
            $28,000 from two stockholders of the Company and the advances were
            payable on demand and accrued interest at 5.0% and 7.0% per annum,
            respectively. In December 2003, the stockholders converted these
            advances into a 7% convertible note payable (See (C) above).

      The aggregate maturities of long-term debt as of December 31, 2003 were as
      follows:

                     December 31,
                     ------------
                         2004                                    $    45,300
                         2005                                        293,500
                         2006                                      1,260,753
                                                                 -----------

                                                                 $ 1,599,553
                                                                 ===========

NOTE 9 - INCOME TAXES

      As of December 31, 2003, the Company's United States entities had net
      operating loss carryforwards of approximately $10,130,000 that expire at
      various dates through 2023. These net operating loss carryforwards create
      a deferred tax asset of approximately $3,444,000. There are no other
      material differences between amounts used for financial reporting purposes
      and tax reporting purposes. Since it is more likely than not that the
      Company will not realize a benefit from these net operating loss
      carryforwards, a 100% valuation allowance has been recorded to reduce the
      deferred tax asset to its net realizable value.

      As of December 31, 2003, the Company's wholly-owned subsidiary, Inoteb,
      had net operating loss carryforwards of approximately $5,000,000 under
      French tax regulations. Prior to January 1, 2004, these net operating
      losses could be carried forward five years to offset future taxable
      income. After


                                      F-16
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

      January 1, 2004, these net operating loss carryforwards can be carried
      forward indefinitely to offset future taxable income. These net operating
      loss carryforwards create a deferred tax asset of approximately
      $1,700,000. There are no other material differences between amounts used
      for financial reporting purposes and tax reporting purposes. Since it is
      more likely than not that the subsidiary will not realize a benefit from
      these net operating loss carryforwards, a 100% valuation allowance has
      been recorded to reduce the deferred tax asset to its net realizable
      value.

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

                                                         2003          2002
                                                      -----------   ----------
                  Income tax benefit at 34%           $ (108,500)   $ (386,800)
                  Valuation allowance                    108,500       386,800
                                                      ----------    ----------

                                                      $       --    $       --
                                                      ==========    ==========

NOTE 10 - STOCKHOLDER'S DEFICIENCY

      Effective December 23, 2002, the Company authorized a 1-for-15 reverse
      stock split. The common share amounts and per share information in these
      consolidated financial statements have been adjusted to account for this
      reverse stock split.

NOTE 11 - STOCK OPTION PLAN

      In May 1992, the Company adopted a stock option plan (the "Plan"). The
      Plan expired on May 4, 2002. A summary of the Company's stock option
      activity is as follows for the years ended December 31, 2003 and 2002:

         -----------------------------------------------------------------------
                                                       Common Stock
         -----------------------------------------------------------------------
                                                                Weighted average
                                               Shares            Exercise Price
         -----------------------------------------------------------------------
         Outstanding, December 31, 2001         34,270            $     89.88
         -----------------------------------------------------------------------

         -----------------------------------------------------------------------
         Grants                                     --
         -----------------------------------------------------------------------
         Exercised                                  --
         -----------------------------------------------------------------------

         -----------------------------------------------------------------------
         Outstanding, December 31, 2002         34,270            $     89.88
         -----------------------------------------------------------------------

         -----------------------------------------------------------------------
         Grants                                     --
         -----------------------------------------------------------------------
         Exercised                                  --
         -----------------------------------------------------------------------

         -----------------------------------------------------------------------
         Outstanding, December 31, 2003         34,270            $     89.88
         -----------------------------------------------------------------------


                                      F-17
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

      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>
                 $ 60.00                  668           5.50       $ 60.00            668         $  60.00
           -------------------------------------------------------------------------------------------------
                 $ 90.00               33,334           5.50       $ 90.00         33,334         $  90.00
           -------------------------------------------------------------------------------------------------
                 $150.00                  268           7.34       $150.00            268         $ 150.00
           -------------------------------------------------------------------------------------------------

           -------------------------------------------------------------------------------------------------
                                       34,270           7.29       $ 89.88         34,270         $  89.88
           -------------------------------------------------------------------------------------------------
</TABLE>

NOTE 12 - SEGMENT AND GEOGRAPHIC INFORMATION

      The Company's operations are in one segment and all of the Company's
      operations are conducted from France. Information about the Company's
      operations and assets in different geographic locations as of December 31,
      2003 and 2002 is shown below pursuant to the provisions of SFAS No. 131,
      "Disclosures about Segments of an Enterprise and Related Information."

<TABLE>
<CAPTION>
                                                                                       2003            2002
                                                                                    ----------      ----------
<S>                                                                                 <C>             <C>
     Total Assets:
       United States                                                                $  443,076      $1,147,042
       France                                                                          369,600         417,981
                                                                                    ----------      ----------

                                                                                    $  812,676      $1,565,023
                                                                                    ==========      ==========
</TABLE>

      The following shows information about the Company's sales by county as of
      December 31, 2003 and 2002:

<TABLE>
<CAPTION>
                                                                                       2003            2002
                                                                                    ----------      ----------
<S>                                                                                 <C>             <C>
     Net Sales:
       France                                                                       $  190,000      $  179,100
       Italy                                                                            46,500          70,900
       Gibraltar                                                                        22,900          21,000
       Greece                                                                           21,400              --
       Others                                                                           81,100          79,300
                                                                                    ----------      ----------

                                                                                    $  361,900      $  350,300
                                                                                    ==========      ==========
</TABLE>

NOTE 13 - RELATED PARTY

      The Company has a consulting agreement with its Chairman and President in
      which he earns $150,000 annually. This agreement expires in August 2005.
      As of December 31, 2003, the


                                      F-18
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002

      Company owed the president under the consulting agreement $300,000 for
      accrued compensation for years 2002 and 2003. The Company also owed
      approximately $90,000 of expenses mainly related to travel expense. These
      amounts have been included in due to officer in the consolidated balance
      sheet as of December 31, 2003.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

      The Company rents certain office space under an operating lease expiring
      April 30, 2004, with an automatic renewal of three years. This agreement
      is transferable and can be cancelled with six months notice. Rent expense
      was approximately $52,000 and $43,500 for the years ended December 31,
      2003 and 2002, respectively. This lease was renewed for three years in
      April 2004 and expires on April 30, 2007.

      As of December 31, 2003, total minimum rentals under this operating lease
      agreement was as follows:

                Year Ending
                December 31:
                ------------
                    2004                                           $    52,000
                    2005                                                52,000
                    2006                                                52,000
                    2007                                                17,333
                                                                   -----------
                                                                   $   173,333
                                                                   ===========

NOTE 15 - SUBSEQUENT EVENT

      In February 2004, the Company received approximately $290,000 in
      connection with the subscription for $850,000 of convertible promissory
      notes payable sold in December 2003 (See Note 8(C)). The Company also
      received additional funds of approximately $80,000, which are yet to be
      documented as convertible notes payable.


                                      F-19
<PAGE>

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

On February 13, 2004, our Board of Directors were notified by Rogoff & Company,
PC (Rogoff & Co.) that they had resigned as our independent auditors as part of
Rogoff & Co.'s discontinuation of its SEC audit practice. Rogoff & Co. had
served as our independent accountants since April 17, 2002 and as our
independent auditors for the year ended December 31, 2002.

The report of Rogoff & Co. on our financial statements for the year ended
December 31, 2002 did not contain any adverse opinion or disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope or accounting
principles.

In connection with the audit of our financial statements as of and for the year
ended December 31, 2002 and during the subsequent interim period from January 1,
2003 through the date of resignation, there was no disagreement with Rogoff &
Co. on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement, if not resolved
to the satisfaction of Rogoff & Co., would have caused Rogoff & Co. to make
reference to the subject of that disagreement in its reports on our financial
statements for those fiscal periods.

We requested that Rogoff & Co. furnish it with a letter addressed to the
Securities and Exchange Commission stating whether or not it agrees with the
statements in this Item 4. A copy of any response received by us to that request
is filed as an exhibit to our Current Report on Form 8-K as filed on February
19, 2004.

On February 16, 2004, Marcum & Kliegman LLP ("MKLLP") was engaged as our new
independent accountants. During the two most recent years and the interim period
preceding the engagement of MKLLP, we had not consulted with MKLLP regarding
either: (1) the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on our financial statements, and either a written report or oral advice
was provided to us by MKLLP that MKLLP concluded was an important factor
considered by us in reaching a decision as to the accounting, auditing, or
financial reporting issue; or (ii) any matter that was either the subject of a
"disagreement" or a reportable event, as those terms are used in Item
304(a)(1)(iv) of Regulation S-B and the related instructions to Item 304 of
Regulation S-B.

Marcum & Kliegman LLP ("Marcum") subsequently advised us that it had resigned as
our independent auditors. We engaged Marcum on February 16, 2004. As provided in
the Engagement Letter, Marcum's Engagement Acceptance Committee declined the
engagement because it determined that the engagement failed to meet certain of
Marcum's internal acceptance criteria. Marcum's decision was not based upon any
perceived weakness in internal controls, any anticipated need to expand the
scope of the audit or the discovery of information specified in Item
304(a)(1)(v) of Regulation S-K.

Marcum never issued a report on our financial statements nor did it perform any
auditing or other services for us. There was no disagreement with Marcum on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement, if not resolved to the
satisfaction of Marcum, would have caused Marcum to make reference to the
subject of that disagreement in any reports on our financial statements had it
issued such reports, and none of the events described in Item 304(a)(1)(v) of
Regulation S-K occurred during such period with respect to Biocoral and Marcum.

We requested that Marcum furnish us with a letter addressed to the Securities
and Exchange Commission stating whether or not it agrees with the statements in
this Item 4. A copy of the response to that request is filed as an exhibit to
our Current Report on Form 8-K as filed on March 22, 2004.

On March 19, 2004, we engaged Weinberg & Company, P.A. ("Weinberg") as our new
independent accountants. During the two most recent fiscal years and the interim
period preceding the engagement of Weinberg, we had not consulted with Weinberg
regarding any of the matters set forth in Item 304(a)(2)(i) or (ii) of
Regulation S-B.

The change of accountants was approved by our board of directors by unanimous
written consent dated as of March 19, 2004 pursuant to Item 304(a)(1)(iii) of
Regulation S-B.


                                       14
<PAGE>

Item 8A. Controls and Procedures

(a) Disclosure controls and procedures. Based upon an evaluation, supervised by
Nasser Nassiri, our Chief Executive Officer and Principal Accounting Officer, of
the effectiveness of the design and operation of our disclosure controls and
procedures concluded that our disclosure controls and procedures were effective
as of December 31, 2003.

(b) Internal controls. During the year ended December 31, 2003, there were no
significant changes in our internal accounting controls or in other factors that
materially affected our internal controls over financial reporting.


                                       15
<PAGE>

                                    PART III

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

Directors and Executive Officers

The following persons are our executive officers and directors:

Name                      Age          Positions with our Company
----                      ---          --------------------------
Nasser Nassiri            40           President, Chief Executive Officer and
                                       Chairman of the Board
Yuhko Grossman            38           Secretary, Treasurer and Director
Jean Darondel             61           Director

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

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

Dr. Jean Dardonel is a member of our board of directors. Dr. Jean Darondel was
co-founder of Inoteb and was our 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 list of people 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


                                       16
<PAGE>

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

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

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

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

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

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

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 greater than 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, 2003, no such reports
were submitted to us for review and, based upon this, to our knowledge, all
Section 16(a) filing requirements applicable to our officers and directors have
been complied with.

Item 10. Executive Compensation

Presently, none of our executive officers receive any salary. However, on
September 1, 1997, we entered into a Consulting Agreement with Nasser Nassiri,
our Chairman, pursuant to which Mr. Nassiri serves as our Chairman. The
Agreement, which was for a three year term, provided for base compensation of
$150,000 per annum, reimbursement of certain expenses and for a payment of two
years' compensation thereunder in the event of a change in control of Biocoral.
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
2005. To help with our financial


                                       17
<PAGE>

condition, Mr. Nassiri has deferred receipt of his cash compensation for
services performed during 2003 pursuant to his Consulting Agreement and has
agreed to continue this deferral in 2004.

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.

On November 15, 1999, we granted to each of Nasser Nassiri, our Chairman and a
director, and Ramine Almassi and Jean Darondel, each then a director of Biocoral
(although Mr. Almassi is no longer a director) options to purchase up to 134
shares of our common stock at an exercise price of $150.00 per share. The
consideration for the grant of such options was nominal. The option was
exercisable at any time during the five year period following its grant. The
option exercise price was in excess of the market price of the shares of our
common stock on the date of grant.

On December 30, 1999, we granted to each of Nasser Nassiri, our Chairman and a
director, and Yuhko Grossmann, Secretary/Treasurer and a director options to
purchase up to 334 shares of the our common stock at an exercise price of $60.00
per share. The consideration for the grant of such options was nominal. The
option was exercisable at any time during the five year period following its
grant. The option exercise price was in excess of the market price of the shares
of our common stock on the date of grant.

On May 1, 2001, we granted options to members of the Board of Directors to
purchase 33,334 (13,334 to Mr. Nassiri and 10,000 each to Mr. Darondel and Ms.
Grossman) shares of common stock at an exercise price of $90.00 per share which
exceeded the fair market value per share as of that date. No other options were
granted and no options were cancelled or exercised during the fiscal year ended
December 31, 2002 and, accordingly, options to purchase 34,270 shares of common
stock remained outstanding and options for the purchase of 19,965,730 shares
were available for grant at December 31, 2002.

All of the above share numbers have been adjusted to reflect the 1-for-50
reverse stock split effected on April 16, 2001 for the stock option granted on
November 15, 1999 and December 30, 1999 and the 1-for-15 reverse stock split
effected on December 24, 2002 for the stock option granted on May 1, 2001.

Aggregated Option Exercises and Fiscal Year-End Option Values

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

                                                   NUMBER OF
                                                   SECURITIES         VALUE OF
                                                   UNDERLYING       UNEXERCISED
                                                  UNEXERCISED       IN-THE-MONEY
                                                    OPTIONS           OPTIONS
                         SHARES                    AT FY-END         AT FY-END
                        ACQUIRED      VALUE       EXERCISABLE/      EXERCISABLE/
         NAME          ON EXERCISE   REALIZED   UNEXERCISABLE(1)   UNEXERCISABLE
         ----          -----------   --------   ----------------   -------------
Nasser Nassiri.......       --          --         13,802/ --          --/--
Jean Darondel........       --          --         10,134/ --          --/--
Yuhko Grossman.......       --          --         10,334/ --          --/--

(1)   Per share information has been retroactively adjusted for the 1-for-50
      reverse stock split effectuated on April 16, 2001 and the 1-for-15 reverse
      stock split approved on December 24, 2002

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


                                       18
<PAGE>

services.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information known to us with respect to
the beneficial ownership of our common stock as of April 13, 2004 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 April 13, 2003 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                           APRIL 15,       SHARES IN
OUTSTANDING OWNER                   TITLE OF CLASS         2003           CLASS(5)
-----------------                   --------------   -----------------   ----------
<S>                                  <C>                   <C>                <C>
Jean Darondel ..................     Common Stock          10,134(1)          *
  38 rue Anatole France,
  92594 Levallois Perret Cedex,
  France

Yuhko Grossman .................     Common Stock          10,334(2)          *
  38 rue Anatole France,
  92594 Levallois Perret Cedex,
  France

Nasser Nassiri .................     Common Stock          13,802(3)          *
  38 rue Anatole France,
  92594 Levallois Perret Cedex,
  France

All officers and directors
as a group                           Common Stock          34,270(4)          *
</TABLE>

*-    Indicates less than 1%

(1)   Includes for Mr. Darondel options to purchase 10,134 shares of common
      stock, 134 of which are exercisable at $150 per share and $10,000 of which
      are exercisable at $90 per share.

(2)   Includes for Mr. Grossman, options to purchase 10,334 shares of common
      stock, 334 of which are exercisable at


                                       19
<PAGE>

      $60 per share and $10,000 of which are exercisable at $90 per share.

(3)   Includes for Mr. Nassiri, options to purchase 13,802 shares of common
      stock, 134 of which are exercisable at $150 per share, 334 of which are
      exercisable at $60 per share and $13,334 of which are exercisable at $90
      per share.

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

(5)   Based upon 11,297,573 shares of common stock outstanding.

       Securities Authorized for Issuance Under Equity Compensation Plans

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

Item 12. Certain Relationships and Related Transactions

None.

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

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

--------------------------------------------------------------------------------
Exhibit Number    Description of Document
--------------------------------------------------------------------------------
3.1               Certificate of Incorporation (1)
--------------------------------------------------------------------------------
3.2               By-laws (1)
--------------------------------------------------------------------------------
3.3               Amendment No. 1 to the Certificate of Incorporation (2)
--------------------------------------------------------------------------------
3.4               Amendment No. 2 to the Certificate of Incorporation (3)
--------------------------------------------------------------------------------
4.1               Form of Company's 3 year 8% Convertible Redeemable Debenture
                  due December 31, 2001(4)
--------------------------------------------------------------------------------
21.1              Subsidiaries (5)
--------------------------------------------------------------------------------
31 & 32           Certification of Nasser Nassiri pursuant to Section 302 and
                  906 of the Sarbanes-Oxley Act of 2002.
--------------------------------------------------------------------------------

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

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

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

(4)   Incorporated by reference from the Company's Annual Report on Form 10-KSB
      filed April 16, 2001.

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


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<PAGE>

During the fourth quarter of 2003, we filed no current reports on Form 8-K.

Item 14. Principal Accountant Fees and Services.

Audit and Tax Fees for 2003

Our principal accountant for the audit of our financial statements for the year
ended December 31, 2003 is Weinberg & Company. Weinberg & Company has not yet
billed us for services rendered in connection with the fiscal 2003 audit of our
financial statements contained in this report. We have paid them $18,000 to date
for such services. We contracted with Weinberg & Company to pay them a flat fee
of $33,000 for services rendered in connection with the fiscal 2003 audit of our
financial statements in this report, and further professional services for
10-QSB 3/31/04, 10-QSB 6/30/04, 10-QSB 9/30/04, including the preparation of our
2003 and 2004 corporate tax returns.

Audit, Tax and Review Fees for 2002

Our principal accountant for the audit of our financial statements for the year
ended December 31, 2002 was Rogoff & Company. For services rendered in
connection with the audit of our 2002 financial statements contained in this
report, we paid them approximately $16,000. This is to include the preparation
and filing of our tax return for fiscal year 2003 as well. In addition, we paid
them approximately $12,000 for each of 2002 and 2003 for services in connection
with the preparation of our unaudited financial statements for filing with our
Quarterly Reports on Form 10-QSB during those years.


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<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on our behalf by the
undersigned, thereunto duly authorized, on May 19, 2004.

                                     BIOCORAL, INC

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

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

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


/s/ Nasser Nassiri          President, Chief Executive Officer      May 19, 2004
------------------          and Chairman of the Board of
    Nasser Nassiri          Directors (Principal Executive
                            Officer and Principal Accounting
                            Officer)


/s/ Yuhko Grossman          Secretary, Treasurer and Director       May 19, 2004
------------------
  Yuhko Grossman


/s/ Jean Darondel           Director                                May 19, 2004
-----------------
  Jean Darondel


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