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

                                   FORM 10-K/A
                                (AMENDMENT NO. 1)

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

                      For the Year Ended December 31, 2005

                           Commission File No. 0-23512

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

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

 38 rue Anatole France, 92594 Levallois       011-3314-757-9843           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)

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

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

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

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

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

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

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

The issuer's revenues for the year ended December 31, 2005 were $316,200.

<PAGE>

The aggregate market value of the registrant's voting and non-voting common
equity held by non-affiliates as of March 15, 2006 was approximately
$221,399,412.

The number of outstanding shares of the registrant's common stock as of March
15, 2006 was 11,353,816.

Documents Incorporated by Reference: None.


<PAGE>

                                EXPLANATORY NOTE

This Amendment on Form 10-K/A (Amendment No. 1) to our Annual Report on Form
10-K for the fiscal year ended December 31, 2005, as filed with the Securities
and Exchange Commission on March 31, 2006, is being filed in order to correct
three printer errors in the following two sections:

      -     One printer error in the section entitled "Item 7. Management's
            Discussion and Analysis of Financial Condition and Results of
            Operations" under the captions "Results of Operation" and "Fiscal
            2005 vs. 2004".

      -     Two printer errors in the section entitled "Item 14. Principal
            Accountant Fees and Services" under the caption "Audit Fees for
            2005".

We included as exhibits to this Amendment on Form 10-K/A: (1) the consent of
independent registered public accounting firm, as Exhibit 23, and (2) new
certifications of our President, CEO, Chairman of the Board and Principal
Accounting Officer, as Exhibits 31 and 32.

Except for the changes noted above, there are no other changes contained in this
amended report to our Annual Report on Form 10-K filed with the Commission on
March 31, 2006.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>

PART I                                                                                                         Page
<S>        <C>                                                                                             <C>
Item 1.    Description of Business.....................................................................    1
Item 2.    Description of Property.....................................................................    11
Item 3.    Legal Proceedings...........................................................................    11
Item 4.    Submission of Matters to a Vote of Security Holders.........................................    11

PART II
Item 5.    Market for Common Equity and Related Stockholder Matters....................................    11
Item 6.    Selected Financial Data.....................................................................    12
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.......    12
Item 8.    Financial Statements and Supplementary Data.................................................    F-1 - F-18
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........    17
Item 9A    Controls and Procedures.....................................................................    17
Item 9B    Other Information...........................................................................    17

PART III

Item 10    Directors, Executive Officers, Promoters and Control Persons................................    17
Item 11.   Executive Compensation......................................................................    19
Item 12.   Security Ownership of Certain Beneficial Owners and Management..............................    20
Item 13.   Certain Relationships and Related Transactions..............................................    21
Item 14    Principal Accountant Fees and Services......................................................    21
Item 15.   Exhibits and Reports on Form 8-K............................................................    22
</TABLE>

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

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

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

           PRELIMINARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

<PAGE>

PART I

Item 1. Description of Business

Background

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

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

Biocoral(R)

Biocoral(R) our primary product, is a natural coral "carbonate Calcium" derived
bone graft substitute and is used by surgeons and practitioners because of its
biocompatibility, resorbability, osseo conduction and safety. Certain chemical,
physical and structural characteristics of coral are very similar to that of
human bone tissue. Biocoral(R) is derived from three particular species of coral
naturally present in abundance. Biocoral(R) is primarily (more than 98%)
comprised of calcium carbonate. Porous and resorbable, Biocoral(R) is prepared
in microgranules as well as in engineered shapes according to specific
indication. Due to its similarity to bone tissue, Biocoral(R) is compatible,
resorbed by the body as new bone growth invades the Biocoral(R) and is replaced
by neoformed invasion. It is highly porous with numerous interconnected channels
which allow a total migration to the center of the implant free of contamination
risk. Because Biocoral(R) is resorbed, it can be combined with antimicrobials,
anticancer agents or other pharmaceuticals for slow release into bone tissue,
resulting in an advantage over autologous bone grafts. Since 2000 we have worked
with an accredited European university research group on purification of our raw
material, coral, in order to produce a natural 100% mineral product. After
long-term collaboration and efforts we have finally developed a method for
purification of our raw material coral which will allow us to offer Biocoral(R)
as a natural 100% mineral bone substitute. We have filed a patent with an
international extension for this method of purification and the final product
issued using this method. We are planning to put this purification method in
place at our manufacturing facilities which will allow to us to offer what we
believe will be the only natural 100% mineral bone substitute.

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
500,000 patients, principally in Western Europe and Korea. Biocoral(R) was
originally patented in France in 1979, in the United States in 1982, and in
Japan in 1989. Our French subsidiary acquired the patent rights to Biocoral(R)
from ANVAR/CNRS, (l'ANVAR)" National Agency for Valorization of Research" and
(CNRS) "French National Center for Scientific Research", both French
governmental agencies. Through our subsidiaries, we have developed twelve
additional patent titles for various applications and uses of our products,
including among others osteoporosis remediation, autologous glue and combination
with growth factor, among others. Through these twelve additional patent title
applications in various countries in Europe, Switzerland, Canada, Japan,
Australia, and the United States, we own more than 219 patent applications
around the world and approximately 166 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.

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

Using proprietary manufacturing processes, our chief product, Biocoral(R), is a
resorbable biomaterial derived from Natural Carbonate Calcium in the metastable
crystalline aragonite form in a natural condition ocean-generated coral used as
bone graft sustitutes has certain characteristics (including chemical
composition, porosity, mineral content and bioactive properties) that permit its
safe, contamination-free use. Its similarity to human bone facilitates its
replacement by newly-formed bone. Substantially all of our revenue has been
derived from sales of the first generation of our


                                       1
<PAGE>

products. The second generation of products and their application after long
years of research and development and success of several clinical applications
now are ready for marketing. Our product application in the treatment of bone
disease associated with natural bone demineralization, for example, such as in
cases of osteoporosis fractures and their prevention, is based on technology
that is protected by strong patents which have thus far been granted by various
countries by their official government patent office, including most European
Community countries, Canada, Australia, Japan and in the United States by the US
Department of Commerce Patent and Trademark office.

We have not yet begun to seek FDA approval for sale of our products in the
United States but are preparing the documentation required for our product
homologation application in the United States. We have identified the
requirements for this application and approached a US medical supply distributor
in order to access the US market. An accredited scientific team in the US has
conducted human clinical studies with a five-year follow up to confirm bone
reconstruction in oral application. This study confirmed the stability of the
successful result and management believes that this study will facilitate FDA
approval for our product used in this indication when we file for FDA approval.
We anticipate submitting this application during 2006. Canadian approval of
Biocoral(R) has been renewed in 2004 by the Canadian Health Care Authority
"Sante Canada," and our products are already commercialized in the European
Community and Asia. During 2005, we entered into a distribution agreement with a
Canadian medical supply company in order to access the Canadian market.

Clinical Applications

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

We are preparing new clinical human trials for autologous fibrin glue in
different indications which we expect to begin during 2007. We believe that the
results of these clinical trials may allow us to extend the market for our
innovative products for use in other indications. However, there can be no
assurance that we will be able to extend the market for our products.

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

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

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

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

Some statistics

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

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


                                       2
<PAGE>

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

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

The study was monitored by an independent organization in France called
Biomatech located in city of Lyon which has been chosen directly by the French
government agency " National Agency for Valorization of Research" (l'ANVAR). The
prospective report was presented for review and comments on March 11, 2006 at a
symposium organized by the company at the Concorde Lafayette Hotel in Paris,
which representatives from most hospitals which participated in our study
attended. The prospective report provided the final results and conclusions
produced by independent monitoring and an independently directed investigation.
This study has confirmed the therapeutic benefit of our product Biocoral(R) in
the treatment of fractures which will permit better patient recovery, allowing
patients faster mobility and return to a healthy state with a very low risk of
refracture. In addition, during this symposium, we presented our technology
under patented application for the prevention of low bone mass and Osteoporotic
fracture and our new technology of purification of our raw material coral which
will allow to us to offer what we believe will be the only natural 100% mineral
bone substitute.

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

We own, through our wholly-owned subsidiary, various patents in the application
of treatment of bone disease due to natural bone demineralization (such as
ostroprosis) and "Treatment and Prevention of Osteoporotic Fractures." Our
technology underlying this application is protected by strong patent
applications in many countries around the world where patent applications were
filed. Our patent applications in this application have thus far been filed and
granted by the official government patent offices of various countries,
including 17 European Community countries, Japan, Australia, and in the United
States by the US Department of Commerce Patent and Trademark Office. Our patent
application in Canada was granted during 2005. Our patent covering technologies
in this application in addition to protecting use of our Biocoral(R) product,
also covers any other product based on calcium salts. Most of the bone
substitutes in the market are based on calcium salts such as hydraoxapatite
(phosphate of calcium).

Autologous Fibrin Glue

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

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


                                       3
<PAGE>

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

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

We have concluded our investigation of this problem and have determined that we
must replace the manufacturer and the preparation materials used in order to
restart the clinical trails required by AFSSAPS. We have not resumed clinical
trials as we have not yet reached an agreement with a new manufacturer. We are
in negotiations with several accredited medical device manufacturers which
specialize in the type of blood bags needed for our medical device. We cannot
give any specific date for resumption of clinical trails. We cannot assure that
we will be able to complete our clinical trails successfully. We anticipate
resuming the inclusion of patients and preparation before the end of 2006.
However, we may be unable to resume the patient inclusion in 2006. 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.

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

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

In addition, at the same time, we entered into a letter of intent "letter of
Intent" with TERUMO EUROPE N.V., pursuant to which TERUMO intends to obtain the
right to manufacture and market medical devices covered by our patents and by
the results of the laboratory test (including any future improvement patents
covering this technology) of which Biocoral, Inc. is or will be the owner. By
the same letter of Intent, Biocoral, Inc. commits itself to negotiate a possible
cooperation agreement regarding the "Thrombin preparation from Therapeutic
Plasma and Biocoral(R) with TERUMO on an exclusive basis. These exclusive
negotiations took place for a period of three (3) months. The company declined
to extend the exclusivity period in order to be free to pursue any better
proposal for development of its technology relative to which we have received
indications of interest.

Composite Biocoral and Growth Factor

For more than 16 years, studies have been undertaken to demonstrate that it is
possible to accelerate the bone repair process by combining growth factors with
a support matrix such as Biocoral(R). Some scientific research has shown that
Biocoral(R), as a biomaterial, represents a useful support for growth factors.
European clinical trials conducted over the past six years have had positive
results confirming the acceleration of the bone repair process. Our technology
underlying this application is protected by strong patents owned by our
wholly-owned subsidiary in many countries around the world where patents
applications were filed. Our patent applications in this application have thus
far been granted in every country where filed by their official government
patent offices, including 17 European Community countries, Canada, Japan,
Australia, and in the United States by the US Department of Commerce Patent and
Trademark Office.


                                       4
<PAGE>

Raw Materials and Manufacturing

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

For the past five years, the Company has collaborated with accredited scientists
as well as with a special laboratory located at one of most prestigious European
universities to develop a method of purification of its raw material "coral," in
order to remove the trace amounts (between 0.016 to 0.026% depending upon the
type of coral used) of amino acids which were present, without any change in
chemical and crystalline structure of the coral. As a result of these efforts,
the small percentage of amino acid can now be removed from our raw material. Our
work on some final technical issues is now finished, and we expect to be able to
put the method in place in our manufacturing process before the end of 2006. The
purification of raw materials permits us to improve their performance and to
offer what we believe to be the only natural 100% mineral bone substitute
product in the world. We also filed a patent for this purification method
including the final product issued from it. The patent will protect our main
product for an additional 20 years. The patent was filed in France in 2003, with
PCT extension in December 2004.

The Company's manufacturing facility, located in Saint-Gonnery in France,
complied with ISO 9002 norms and has been ISO 9002 rated since August 1995. On
October 25, 1996, the manufacturing facility was granted, in addition to the ISO
9002 certification, European Norms 46002 certification for the quality assurance
system set up in the manufacturing process of Biocoral(R), and, on December 30,
1996, the manufacturing facility was granted the EC certification allowing sales
of Biocoral(R), throughout the European Community which was renewed in 2001. The
EC certificate is valid until December 2006. The company has already made the
arrangements for the renewal of its EC certificate for last quarter 2006. During
October 2004, the manufacturing facility was audited by TUV Rheinland France and
its certifications have been renewed for an additional five years until 2009 and
the facility was classified as ISO 13485:00 certification. The Company also
obtained the extension of its certification to ISO 13485 (1996) which allows the
Company to continue offering its products in CANADA. Additionally, we are
audited once a year by TUV Rheinland France to maintain our certifications. In
December 2005, the Company was audited by TUV Rheinland France for an annual
audit and extension of its certification from ISO 13485:00 and ISO 13485 (1996)
certification to ISO 13485: 2003 which we successfully obtained.

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- alcium 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 efrigeration, has a shorter
shelf life and raises the risks of adverse reaction in patients allergic to
bovine collagen, and poses risk of infection. In addition, many countries have
prohibited the commercialization of product utilizing bovine collagen as a base.

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

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


                                       5
<PAGE>

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 219 patent applications around the world and
approximately 166 of which have thus far been granted by various countries by
their official government patent office, including most European Community
countries, Canada, Australia, Japan and in the United States by the US
Department of Commerce Patent and Trademark office.

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

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

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

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

We have been able to compete in Europe against producers that also sell products
in the United States. Despite their significantly greater resources, management
believes that it will, once our products have been approved by the FDA, be able
to be competitive with such companies because of the quality of our products.
See "Business -- Government Regulation." Biocoral(R) has been used in European
dental applications for 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


                                       6
<PAGE>

biomaterials for filling bone cavities before rehabilitation of partially and
totally edentulous patients. These businesses compete primarily on the basis of
product performance and price, as well as customer loyalty and service.
Biocoral(R) also competes with bone grafts and bone graft substitutes. Companies
selling competitive products sometimes also sell dental implants, so bundling
these products is often a strategy. All of these businesses compete primarily on
the basis of product performance and price, as well as on customer loyalty and
service.

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

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

Governmental Regulation

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

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

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

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

The alternative method is to obtain premarket approval ("PMA") from the FDA.
Under the PMA procedure, the applicant must obtain an Investigational Device
Exemption (IDE) before beginning the substantial clinical testing required to
determine the safety, efficacy and potential hazards of the products. The review
period under the PMA


                                       7
<PAGE>

procedure may last for several years. The FDA also imposes requirements on
manufacturers and sellers of products under its jurisdiction, such as labeling,
manufacturing practices, record keeping and reporting. Obtaining such approvals
in the US could take some time and involve substantial expenditures. No clinical
testing on humans may be undertaken in the United States without first obtaining
an IDE from the FDA.

Employees

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

Subsidiaries

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

Bio Holdings International Limited

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

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

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

      -     looks after and maintains patents.

Item 1A. Risk Factors

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

      Until 2005, more than two-thirds of our business was in research and
development with an emphasis on developing our technology in order to produce
marketable products. We have completed most of our research program and are now
ready to begin commercialization and marketing of our products. However, to
date, we have generated only limited revenues and have had to raise capital from
investors through debt and equity offerings in order to sustain our research and
development efforts. For the fiscal year ended December 31, 2005, we had net
sales of approximately $316,200 an accumulated deficit of 20,159,946.

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

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

      We must comply with significant government regulations.

      The manufacture, pre-marketing and marketing of biotechnologies and
biomaterials for use in health care are subject to regulation, primarily by the
FDA in the United States and by comparable authorities in other countries. These
national agencies and other federal, state, local and foreign entities regulate,
among other things, research and


                                       8
<PAGE>

development activities (including testing in animals and in humans) and the
testing, manufacturing, handling, labeling, storage, record keeping, approval,
advertising and promotion of the products that we are developing. Noncompliance
with applicable requirements can result in various adverse consequences,
including, delay in approving or refusal to approve product licenses or other
applications, suspension or termination of clinical investigations, revocation
of approvals previously granted, fines, criminal prosecution, recall or seizure
of products, injunctions against shipping products and total or partial
suspension of production and/or refusal to allow a company to enter into
governmental supply contracts.

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

      Our ability to compete effectively will depend on our ability to maintain
the proprietary nature of our technologies, including Biocoral(R) and its use in
different applications. Through twelve patent title applications in various
countries in Europe, Switzerland, Canada, Japan, Australia, and the United
States, we own more than 219 patent applications around the world, approximately
166 of which have thus far been granted by various countries. We depend upon
confidentiality agreements with our officers, employees and contracting
counterparties to maintain the proprietary nature of the technology. These
measures may not afford us sufficient or complete protection, and others may
independently develop technology similar to ours, otherwise avoid the
confidentiality agreements, violate our patents or produce patents that would
materially and adversely affect our business, prospects, financial condition,
and results of operations. Such competitive events, technologies and patents may
limit our ability to raise funds, prevent other companies from collaborating
with us, and in certain cases prevent us from further developing our technology
due to third party patent blocking right.

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

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

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

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

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


                                       9
<PAGE>

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

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

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

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

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

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

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

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

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

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


                                       10
<PAGE>

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

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

      We do not intend to pay dividends.

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

Item 1B. Unresolved Staff Comments.

None.

Item 2. Description of Property.

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

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

Item 3. Legal Proceedings.

None.

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

None.

                                     PART II

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

At December 31, 2005 there were 11,353,816 shares of our common stock issued and
outstanding. Our common stock trades on the OTC Bulletin Board. The following
table sets forth information regarding the high and low closing price per share
for our common stock on the OTC Bulletin Board as reported by
SiliconInvestor.com(TM). Such prices do not necessarily reflect actual
transactions and do not include retail mark-ups, mark-downs or commissions.

Quarter Ended                             High                        Low
-------------                             ----                        ---
December 31, 2005                        $22.50                      $12.00
September 30, 2005                       $24.00                      $24.00
June 30, 2005                            $20.00                      $ 3.00
March 31, 2005                           $55.00                      $13.00

December 31, 2004                        $15.50                      $10.05
September 30, 2004                       $20.00                      $ 7.00
June 30, 2004                            $35.00                      $20.00
March 31, 2004                           $95.00                      $40.00


                                       11
<PAGE>

Holders

As of December 31, 2005, there were approximately 400 holders of record of the
shares of our common stock including several European financial and portfolio
institutions.

Dividends

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

Recent Sales of Unregistered Securities

During January 2005, the Company received $300,000 in connection with the
subscription of the 7% Notes sold on December 2004. During September 2005, the
Company sold to an accredited investor an additional $200,000 of the 7% Notes.
(See Note 8.)

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

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

Item 6.  Selected Financial Data

<TABLE>
<CAPTION>
============================================================================================================================

                                                                  Fiscal Year ended December 31,
                                                               ------------------------------------
----------------------------------------------------------------------------------------------------------------------------

                                           2005               2004               2003             2002              2001
                                           ----               ----               ----             ----              ----
----------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                  <C>               <C>             <C>                <C>
Income Statement Data:
----------------------------------------------------------------------------------------------------------------------------
        Net sales                     $  316,200           $351,600          $361,900        $  350,300         $  354,200
----------------------------------------------------------------------------------------------------------------------------
        Operating loss                   723,874            714,671           449,297           555,782            499,758
----------------------------------------------------------------------------------------------------------------------------
        Net loss                         885,787            496,150           319,176         1,137,740          1,702,016
----------------------------------------------------------------------------------------------------------------------------
        Net loss per common share          $0.08              $0.04             $0.03             $0.34              $0.12
----------------------------------------------------------------------------------------------------------------------------
        Weighted average common       11,353,816         11,299,267        11,297,573         3,324,813         13,736,304
        shares outstanding                shares             shares            shares            shares             shares
============================================================================================================================

Balance Sheet Data:
----------------------------------------------------------------------------------------------------------------------------
        Total assets                  $1,075,810         $  797,836        $  812,676        $1,565,023         $1,881,614
----------------------------------------------------------------------------------------------------------------------------
        Total liabilities              3,927,759          2,924,656         2,929,724         3,308,448          4,321,709
----------------------------------------------------------------------------------------------------------------------------
        Stockholders deficiency        2,851,949         (2,126,820)        2,117,048         1,743,425         (2,440,095)
============================================================================================================================
</TABLE>

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

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


                                       12
<PAGE>

            Summary of Significant Accounting Policies and Estimates

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

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

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

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

Results of Operations

Fiscal 2005 vs. 2004

Net sales, which are solely attributable to our wholly owned European
subsidiaries, totaled approximately $316,200 for the year ended December 31,
2005, a decrease of approximately $35,400 (or approximately 10%) from
approximately $351,600 for the year ended December 31, 2004. This decrease is
partially attributable in particular to a decrease in sales of products in the
maxillocraniofacial surgery area in France and decrease in orders from our
distributor during 2005 which was due to the internal reconstruction of their
organization.

Cost of sales was approximately $222,400 for the year ended December 31, 2005,
an increase of approximately $50,300 (or approximately 29.3%) from approximately
$172,100 for the year ended December 31, 2004. The main factor contributing to
this increase was an increase in some of the company's fixed charges that were
attributed to cost of sales.

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

Operating expenses were approximately $817,600 during the year ended December
31, 2005, a decrease of approximately $76,400 (approximately 8.5%) from
approximately $894,000 for the year ended December 31, 2004. This decrease was
primarily due to a decrease in the company's research and development activities
during in 2005.


                                       13
<PAGE>

Consulting and professional fees during the year ended December 31, 2005 were
approximately 321,900, an increase of $60,700 (or approximately 23.2%) compared
to approximately $261,200 during the year ended December 31, 2004. Most of these
fees are incurred in Europe, and as such, a portion of the increase resulted
from exchange rate fluctuations and part of increase was attributable to
consulting fees associated with the development of the next generation of
products. Finally there were additional professional fees associated with the
compliance for the Sarbanes-Oxley Act of 2002.

Other income (net of expenses) totaled approximately $(162,000) of expense for
the year ended December 31, 2005 as compared to approximately $66,000 of income
for the year ended December 31, 2004. This decrease was primarily due to the
fact that there was no forgiveness income in 2005 ($297,800 in 2004) and there
was no accrual of approximately $54,000 for estimated litigation.

As a result of the above, our net loss for the year ended December 31, 2005
totaled approximately $885,800 or $.08 per share compared to a net loss of
approximately $496,200 or $.04 per share for the year ended December 31, 2004.

These losses per share were based on weighted average common shares outstanding
of 11,353,816 & 11,299,267 for the years ended December 31, 2005 and 2004
respectively.

Fiscal 2004 vs. 2003

Net sales, which are solely attributable to Inoteb, SA ("Inoteb"), our
wholly-owned French subsidiary, totaled approximately $352,000 for the year
ended December 31, 2004, a decrease of approximately $10,000 (or approximately
2.8%) from approximately $362,000 for the year ended December 31, 2003. This
decrease is partially attributable to a decrease in sales of products in the
maxillocraniofacial surgery area in France and the orthopedic and neurosurgery
markets during 2004. This decrease also resulted from stock (storage) levels
accumulated at our distributors in particular in Greece where we had no orders
in 2004 compared to 2003 and to a greater overall reduction in sales activity
for the year ended December 31, 2004 versus the year ended December 31, 2003.

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

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

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

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

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

As a result of the above, our net loss for the year ended December 31, 2004
totaled approximately $496,200 or $.04 per share compared to a net loss of
approximately $319,000 or $.03 per share for the year ended December 31, 2003.


                                       14
<PAGE>

These losses per share were based on weighted average common shares outstanding
of 11,299,267 & 11,297,573 for the years ended December 31, 2004 and 2003
respectively.

Financial Condition, Liquidity and Capital Resources

Fiscal 2005 vs. 2004

As shown in the accompanying consolidated financial statements, we had net
losses of approximately $885,800 and $496,200 in 2005 and 2004, respectively.
The net loss in 2005 and 2004 included a nonrecurring income item relating to
forgiveness of debt of approximately $297,800 Management believes that it is
likely that we will continue to incur net losses through at least 2006. We had a
working capital deficiency and stockholders' deficiency of approximately
$418,000 and $2,852,000 at December 31, 2005, respectively.

During 2005, we sold $500,000 of 7% convertible promissory notes. We also own
marketable securities which are classified as available-for-sale and consisted
of equity securities with an aggregate fair value of approximately $193,800. In
addition, during February 2006, we received $150,000 additional funds for which
are yet to be documented as convertible notes payable. Accordingly, management
believes that we have sufficient liquid resources to operate through at least
December 31, 2006.

Our marketable securities are classified as available-for-sale and consisted of
equity securities with an aggregate fair value of approximately $193,800 and a
cost totaling approximately $646,000 at December 31, 2005. The net unrealized
holding loss was approximately $452,200 for the year ended December 31, 2005
which increased accumulated other comprehensive loss, a component of total
stockholders' deficiency to approximately $603,400 as of December 31, 2005.

For the year ended December 31, 2005, we had a negative cash flow from operating
activities of approximately $366,200. We had cash provided by financing
activities of $500,000. Our net loss of approximately $885,800 increased our
accumulated deficit to approximately $20,160,000 at December 31, 2005.

Fiscal 2004 vs. 2003

As shown in the accompanying consolidated financial statements, we had net
losses of approximately $496,000 and $319,000 in 2004 and 2003, respectively.
The net loss in 2004 and 2003 included a nonrecurring income item relating to
forgiveness of debt of approximately $297,800 and $259,800 respectively
Management believes that it is likely that we will continue to incur net losses
through at least 2004. We had a working capital deficiency and stockholders'
deficiency of approximately $38,000 and $2,126,800 at December 31, 2004,
respectively.

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

For the year ended December 31, 2004, we had negative cash flow from operating
activities of approximately $620,000. We had cash provided by financing
activities of approximately $929,000. Our net loss of approximately $496,000
increased our accumulated deficit to approximately $19,427,000 at December 31,
2004.

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

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


                                       15
<PAGE>

                           Forward-Looking Statements

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

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

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

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

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

      Market risk generally represents the risk that losses may occur in the
values of financial instruments as a result of movements in interest rates,
foreign currency exchange rates and commodity prices. We do not enter into
derivatives or other financial instruments for hedging or speculative purposes.
However, we do invest in Euro-denominated marketable securities which are
subject to market and exchange-rate risk, and we are generally subject to
fluctuations in the Euro/Dollar exchange rate for that portion of our operations
which are conducted in Euros.

Exchange Rate Exposure

      We conduct much of our business operations (and incur substantially all of
our operating costs other than professional and consulting fees) through our
European subsidiaries in Euros and, as such, are exposed to risk resulting from
the fluctuation of exchange rates between the Euro and the US Dollar. We do not
engage in any hedging or other transactions for the purpose of minimizing this
risk. However, we do invest in certain Euro-denominated marketable securities as
discussed below. (See "Item 7 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations" for a discussion of the effect of
Euro/Dollar fluctuations on our results of operations.)

Marketable Securities

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

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

       -------------------------------------------------------------------------
                    December 31, 2005    December 31, 2004    December 31, 2003
       -------------------------------------------------------------------------
       Cost            $  646,057          $   646,057            $   646,057
       -------------------------------------------------------------------------
       Fair Value         193,783              247,811                208,189
       -------------------------------------------------------------------------


                                       16
<PAGE>

Item 8. Financial Statements and Supplementary Data

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

Financial Statements:

<TABLE>
<S>                                                                                                            <C>
Management's Report on Internal Control over Financial Reporting                                               F-2
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting           F-3
Report of Independent Registered Public Accounting Firm                                                        F-4
Consolidated Balance Sheets as of December 31, 2005 and 2004                                                   F-5
Consolidated Statements of Operation for the years ended December 31, 2005, 2004 and 2003                      F-6
Consolidated Statements of Changes in Stockholders' Deficiency and Comprehensive Loss
   for the years ended December 31, 2005, 2004 and 2003                                                        F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003                     F-8
Note to Consolidated Financial Statements                                                                      F-9-F18
</TABLE>


                                      F-1
<PAGE>

Report on Internal Control over Financial Reporting

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

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

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

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

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

Management assessed the effectiveness of the Company's internal control over
financial reporting as of December 31, 2005. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in this Internal
Control-Integrated Framework.

Based on our assessment, we believe that, as of December 31, 2005, our internal
control over financial reporting was effective at a reasonable assurance level
based on these criteria.

Moore & Associates Chrtd., our independent registered public accounting firm,
has issued an audit report, included in page F-3 , on our assessment of our
internal control over financial reporting.


                                      F-2
<PAGE>

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

The Board of Directors and Stockholders of Biocoral, Inc

      We have audited management's assessment, included in the accompanying
Management's Report on Internal Control over Financial Reporting that Biocoral,
Inc. maintained effective internal control over financial reporting as of
December 31, 2005, based on criteria established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (the COSO criteria). Biocoral, Inc.'s management is responsible for
maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting.
Our responsibility is to express an opinion on management's assessment and an
opinion on the effectiveness of the company's internal control over financial
reporting based on our audit.

      We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.

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

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

      In our opinion, management's assessment that Biocoral,Inc. maintained
effective internal control over financial reporting as of December 31, 2005, is
fairly stated, in all material respects, based on the COSO criteria. Also, in
our opinion Biocoral, Inc. maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2005, based on the
COSO criteria.

      We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheets of Biocoral, Inc. as December 31, 2005, 2004, and the related
consolidated statements of income, cash flows and shareholders' equity for each
of the three years in the period ended December 31, 2005 and our report dated
March 27, 2006 expressed an unqualified opinion thereon.


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

March 27, 2006
Las Vegas


                                      F-3
<PAGE>

      Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Biocoral, Inc.:

We have audited the accompanying consolidated balance sheets of Biocoral, Inc.
and subsidiaries as of December 31, 2005 and 2004, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 2005. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Biocoral, Inc. and
subsidiaries at December 31, 2005 and 2004, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2005 in conformity with U.S. generally accepted accounting
principles.

We have also audited in accordance with standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Biocoral Inc.'s
internal control over financial reporting as of December 31, 2005, based on
criteria established in Internal Control -- Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report
dated March 27, 2005 expressed an unqualified opinion thereon.


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

March 27, 2006
Las Vegas


                                      F-4
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                       ASSETS
                                                                            December 31,       December 31,
                                                                                2005               2004
                                                                            ------------       ------------
<S>                                                                         <C>                <C>
Current Assets
   Cash                                                                     $    127,211       $    129,508
   Investments in marketable securities                                          193,783            247,811
   Accounts receivable, net of allowance for doubtful accounts
     $2,300 for 2005, of $2,700 for 2004 and $1,900 for 2003                     136,076             53,276
   Inventories                                                                   125,100            156,500
   Prepaid expenses and other current assets                                      22,507             37,507
                                                                            ------------       ------------

     Total Current Assets                                                        604,677            624,602

Property and equipment, net                                                       31,300             21,500
Restricted cash held in escrow                                                    11,049             11,049
Investment in limited partnership                                                 10,444             20,209
Patents, net                                                                     405,707            257,628
Other assets                                                                      12,633             15,320
                                                                            ------------       ------------

       Total Assets                                                         $  1,075,810       $    950,308
                                                                            ============       ============

                       LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current  Liabilities
   Accounts payable                                                         $    735,800       $    547,747
   Current portion of due to officer                                             136,258            106,258
   Accrued interest payable                                                      150,701              8,951
   Current portion of long-term debt                                                  --                 --
                                                                            ------------       ------------

     Total Current Liabilities                                                 1,022,759            662,956

Due to Officer, net of current portion                                           600,000            412,500
Long-term debt, net of current portion                                         2,300,000          1,800,000
Deferred employee benefits                                                         5,000             49,200
                                                                            ------------       ------------

     Total Liabilities                                                         3,927,759          2,924,656
                                                                            ------------       ------------

Commitments and contingencies

Stockholders' Deficiency
   Preferred stock; par value $.001 per share; 1,000,000  shares
     authorized; none issued                                                          --                 --
   Common Stock; $.001 par value;  100,000,000 shares authorized;
     11,353,816 shares issued and outstanding as of December 31, 2005,
     11,353,819 shares issued and outstanding as of December 31, 2004,            11,354             11,354
   Additional paid-in capital                                                 17,900,090         17,900,090
   Accumulated other comprehensive loss                                         (603,447)          (611,633)
   Accumulated deficiency                                                    (20,159,946)       (19,274,159)
                                                                            ------------       ------------

     Total Stockholders' Deficiency                                           (2,851,949)        (1,974,348)
                                                                            ------------       ------------

       Total Liabilities and Stockholders' Deficiency                       $  1,075,810       $    950,308
                                                                            ============       ============
</TABLE>

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


                                      F-5
<PAGE>

                         BIOCORAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                     Years ended December 31,
                                                            2005               2004                2003
                                                        ------------       ------------       ------------
<S>                                                     <C>                <C>                <C>
Net sales                                               $    316,200       $    351,600       $    361,900
Cost of sales                                                222,400            172,100             57,200
                                                        ------------       ------------       ------------

   Gross Profit                                               93,800            179,500            304,700
                                                        ------------       ------------       ------------

Operating Expenses
   Research and development                                  114,200            245,590            178,149
   Consulting and professional fees                          321,995            261,255            242,754
   Depreciation and amortization                              40,469             12,284             18,784
   General and administrative                                341,010            375,042            314,310
                                                        ------------       ------------       ------------

     Total Operating Expenses                                817,674            894,171            753,997
                                                        ------------       ------------       ------------

   Loss From Operations                                     (723,874)          (714,671)          (449,297)
                                                        ------------       ------------       ------------

Other Income (Expense)
   Interest, net                                            (152,826)          (162,175)           (88,536)
   Equity in loss of partnership                              (9,765)           (15,000)           (63,336)
   Realized loss on sale of marketable securities                 --                 --            (28,349)
   Dividend income                                             1,728                 --             18,311
   Foregivenss of debt                                            --            297,800            259,836
   Litigation contingency loss                               (16,050)           (54,576)                --
   Other                                                      15,000                 --             32,195
                                                        ------------       ------------       ------------

     Total Other Income (Expense)                           (161,913)            66,049            130,121
                                                        ------------       ------------       ------------

   Restated capitalization of intangible assets                   --            152,472                 --
                                                        ------------       ------------       ------------

Net (Loss) Income                                           (885,787)          (496,150)          (319,176)

Other Comprehensive Income (Loss)
   Foreign translation gain (loss)                            62,214             36,374           (193,715)
   Unrealized gain (loss) on marketable securities           (54,028)            39,622            139,268
                                                        ------------       ------------       ------------

Comprehensive (Loss) Income                             $   (877,601)      $   (420,154)      $   (373,623)
                                                        ============       ============       ============

 Net (loss) income per share

     Basic                                              $      (0.08)      $      (0.04)      $      (0.03)
                                                        ============       ============       ============

     Diluted

 Weighted average number of shares outstanding

     Basic                                                11,353,816         11,299,267         11,297,573
                                                        ============       ============       ============

    Diluted
</TABLE>

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


                                      F-6

<PAGE>

                          BIOCORAL, INC. AND SUBSIDIARY
               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
                        DEFICIENCY AND COMPREHENSIVE LOSS
                  YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

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

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

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

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

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

Net loss

Adjustment for capitalization of patent costs as of 01/01/04

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

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

Total comprehensive income                                                 --              --                 --          75,996

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

Balance, December 31, 2004                                         11,353,819          11,354         17,900,090        (611,633)

Foreign currency translation gain                                                                                         62,214

Unrealized loss on marketable securities                                                                                 (54,028)

Other                                                                      (3)

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

Balance, 12/31/05                                                  11,353,816       $      --       $ 17,900,090       $(603,447)
                                                                  ===========       =========       ============       =========

<CAPTION>

                                                                                        Total
                                                                    Accumulated      Stockholders'    Comprehensive
                                                                    Deficiency        Deficiency          Loss
                                                                   ------------      -------------    -------------
<S>                                                                <C>                <C>
Balance, January 1, 2003                                           $(18,458,833)      $(1,743,425)

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

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

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

Balance, December 31, 2003                                          (18,778,009)       (2,117,048)      $(373,623)

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

Adjustment for capitalization of patent costs as of 01/01/04            152,472           152,472

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

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

Total comprehensive income                                             (496,150)       (2,537,202)       (572,626)

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

Balance, December 31, 2004                                          (19,274,159)       (1,974,348)       (572,626)

Foreign currency translation gain                                                          62,214          62,214

Unrealized loss on marketable securities                                                  (54,028)        (54,028)

Other

Net loss                                                               (885,787)         (885,787)       (885,787)
                                                                   ------------       -----------       ---------

Balance, 12/31/05                                                  $(20,159,946)      $(2,851,949)      $(877,601)
                                                                   ============       ===========       =========
</TABLE>

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


                                      F-7
<PAGE>

                   BIOCORAL, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                           Years Ended December 31,
                                                                -------------------------------------------
                                                                   2005           2004            2003
                                                                ---------       ---------       -----------
<S>                                                             <C>             <C>             <C>
Cash flows from operating activities
   Net loss                                                     $(885,787)      $(496,150)      $  (319,176)
   Adjustments to reconcile net loss to net cash used in
     operating activities
       Depreciation and amortization                               40,469          12,284            18,784
       Equity in loss of partnership                                9,765          15,000            63,336
       Forgiveness of debt                                             --        (297,800)         (259,836)
       Provision for doubtful accounts                               (400)            800               900
       Realized loss on sale of marketable securities                  --              --            28,349
   Change in operating assets and liabilities
     Accounts receivable                                          (82,400)         83,124           (63,900)
     Inventories                                                   31,400          27,100           (97,500)
     Prepaid expenses and other current assets                     15,000         (36,307)           (1,200)
     Other assets                                                   2,687          (2,820)           (2,700)
     Accounts payable and accrued interest payable                329,803          95,081           146,772
     Current portion of due to officer                             30,000        (283,742)          207,500
     Due to officer                                               187,500         412,500                --
     Deferred employee benefits                                   (44,200)          3,500            10,100
                                                                ---------       ---------       -----------

Net cash  provided by (used in) operating activities             (366,163)       (467,430)         (268,571)
                                                                ---------       ---------       -----------

Cash flows from investing activities
   Purchase of property and equipment                                  --              --            (7,000)
   Capitalization of patents                                     (176,848)       (152,472)               --
   Proceeds from sale of marketable securities                         --              --            23,102
                                                                ---------       ---------       -----------

Net cash provided by (used in) investing activities              (176,848)       (152,472)           16,102
                                                                ---------       ---------       -----------

Cash flows from financing activities
   Restricted cash held in Escrow                                      --              --         1,000,000
   Principal payments on long-term debt                                --         (41,000)       (1,000,000)
   Proceeds from long-tem debt                                    500,000         670,000           499,383
                                                                ---------       ---------       -----------

Net cash provided by (used in) financing activities               500,000         629,000           499,383

Effects of changes in exchange rates on cash                       40,714          31,921          (201,195)
                                                                ---------       ---------       -----------

Net increase (decrease) in cash                                    (2,297)         41,019            45,719
                                                                ---------       ---------       -----------

Cash, beginning of period                                         129,508          88,489            42,770
                                                                ---------       ---------       -----------

Cash, end of period                                             $ 127,211       $ 129,508       $    88,489
                                                                =========       =========       ===========

Supplemental Statements of Cash Flows Information

<CAPTION>
                                                                   2005            2004              2003
                                                                   ----            ----              ----
<S>                                                             <C>             <C>             <C>
       Conversion of Interest and advances to common stock      $      --       $ 462,854       $        --
                                                                =========       =========       ===========
       Conversion of 7% notes to common stock                   $      --       $ 100,000       $        --
                                                                =========       =========       ===========
</TABLE>

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


                                      F-8
<PAGE>

Note 1 - Description of Business

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

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

Note 2 - Liquidity

      The Company had net losses of approximately $885,800, $496,200 and
      $319,000 in 2005, 2004 and 2003, respectively. The net loss in 2004 and
      2003 includes a nonrecurring income item relating to forgiveness of debt
      of approximately $297,800 and $259,800 (See Note 8(A)). Management
      believes that it is likely that the Company will continue to incur net
      losses through at least 2006. The Company had a working capital deficiency
      of approximately $418,100, $38,400 and $711,000 for 2005, 2004 and 2003,
      respectively. The Company also had a stockholders' deficiency of
      approximately $2,852,000 $1,974,400 and $2,117,000 at December 31, 2005,
      2004 and 2003, respectively. During January and September 2005, the
      Company received approximately $500,000 relating to the issuance of the 7%
      convertible promissory notes payable (See Notes 8(C)). The Company also
      had as of December 31, 2005 approximately $193,800 of investments in
      available-for-sale securities. In addition, during February 2006, the
      Company received $150,000 additional funds for which are yet to be
      documented as convertible notes payable. Management believes that these
      funds will provide sufficient working capital to operate through 2006.

Note 3 - Summary of Significant Accounting Policies

      (A) Basis of Presentation

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

      (B) Principles of Consolidation

      The accompanying consolidated financial statements include all of the
      accounts of Biocoral, Inc. and its wholly-owned subsidiaries as of and for
      the period ended December 31, 2005, 2004 and 2003. Cabestan, Inc., 3H
      "Healthcare and High Biotechnology Innovation, Inc." and Immo
      Distribution, Ltd., are not operating subsidiaries. All material
      intercompany balances and transactions have been eliminated in
      consolidation.

      (C) Cash and Cash Equivalents

      The Company considers cash on hand, cash in banks, certificates of
      deposit, time deposits and other short term securities with maturities of
      three months or less when purchased as cash and cash equivalents. There
      were no cash equivalents held by the Company at December 31, 2005, 2004
      and 2003.


                                      F-9
<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (D) Concentration of Credit Risk

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

      (E) Allowance for Doubtful Accounts

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

      (F) Investments in Marketable Securities

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

      (G) Inventories

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

      (H) Property and Equipment

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

      (I) Investment in Limited Partnership

      The Company owns 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, 2005, 2004
      and 2003 was approximately $9,800, $15,000 and $63,336, respectively, and
      the book value of the investment at December 31, 2005, 2004 and 2003 was
      $10,444, $20,209 and $35,209, respectively.

      (J) Intangible Assets

      Intangible assets consist of expenses incurred on approved patents and on
      the successful defense of approved patents. Amortization is computed using
      the straight line method over the estimated period of the benefit. The
      Company retroactively capitalized $176,418 and $157,743 of costs in 2005
      and 2004 respectively. There were no costs capitalized in 2003. The
      components of intangible assets and costs capitalized in 2005, 2004 and
      2003 are as follows:


                                      F-10
<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

<TABLE>
<CAPTION>
              ------------------------------------------------------------------------
                                                  2005          2004         2003
              ------------------------------------------------------------------------
<S>                                           <C>             <C>          <C>
              Beginning Intangible Assets     $277,425        $119,682     $119,682
              ------------------------------------------------------------------------
              Add: Capitalized Costs           176,848         157,743           --
              ------------------------------------------------------------------------
              Less: Accumulated Amortization    48,566          19,797        8,542
              ------------------------------------------------------------------------

              Net Intangible Assets           $405,707        $257,628     $111,140
              --------------------------------========================================
</TABLE>

      (K) Impairment of Long-Lived Assets

      In accordance with Statement of Financial Accounting Standards ("SFAS")
      No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets",
      the Company reviews long-lived assets for impairment whenever
      circumstances and situations change such that there is an indication that
      the carrying amounts may not be recovered. In such circumstances, the
      Company will estimate the future cash flows expected to result from the
      use of the asset and its eventual disposition. Future cash flows are the
      future cash inflows expected to be generated by an asset less the future
      outflows expected to be necessary to obtain those inflows. If the sum of
      the expected future cash flows (undiscounted and without interest charges)
      is less than the carrying amount of the asset, the Company will recognize
      an impairment loss to adjust to the fair value of the asset. Management
      believes that there are no impaired long-lived assets at December 31,
      2005, 2004 and 2003.

      (L) Income Taxes

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

      (M) Revenue Recognition

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

      (N) Shipping and Handling Costs

      Shipping and handling costs are included in cost of sales in accordance
      with guidance established by the Emerging Issues Task Force, issue No.
      00-10, "Accounting for Shipping and Handling Costs." During 2005, 2004 and
      2003, there were no material shipping and handling costs.

      (O) Research and Development

      The Company expenses all research and development costs as incurred.

      (P) Stock Based Compensation

      Effective January 1, 2003 the Company adopted SFAS No. 148, "Accounting
      for Stock-Based Compensation-Transition and Disclosure" ("SFAS 148"). SFAS
      148 amends SFAS No. 123 "Accounting for Stock-Based Compensation" ("SFAS
      123"), and provides alternative methods of transition for a voluntary
      change to the fair value based method of accounting for stock-based
      employee compensation. 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


                                      F-11
<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      related to employees and non-employee directors is recognized using the
      intrinsic value method in accordance with Accounting Principles Board
      Opinion No. 25, "Accounting for Stock Issued to Employees," and thus there
      is no compensation expense for options granted with exercise prices equal
      to the fair value of the Company's common stock on the date of the grant.
      With respect to stock based compensation granted to non employees, the
      Company records an expense equal to the fair value of the option on the
      measurement date, which is either the earlier of the date at which a
      commitment for performance is reached or the date at which the service is
      complete.

      (Q) Computation of Net Loss per Share

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

      Under SFAS 128 basic net loss per share is computed by dividing the net
      loss for the year by the weighted average number of shares outstanding
      during the year. Diluted net earnings per share is computed by dividing
      the net earnings for the year by the weighted average number of common
      share and common share equivalents outstanding during the year. Common
      stock equivalents would arise from the exercise of stock options. For the
      year ended December 31, 2005, none were issued. For the year ended
      December 31, 2004, the Company cancelled options granted June 30, 1999 for
      purchasing the total of 34,270 shares and granted the new options for
      purchasing the total of 200,000 shares. For the year ended December 31,
      2003, none were issued. Diluted net loss has not been disclosed for the
      years ended December 31, 2005, 2004 and 2003 as the effect is
      anti-dilutive.

      (R) Foreign Currency Translation and Transactions

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

      (S) Comprehensive Loss

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

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

      The change in accumulated unrealized loss on investments in marketable
      securities during the year ended December 31, 2005, 2004 and 2003 was as
      follows:

<TABLE>
<CAPTION>
    ----------------------------------------------------------------------------------------------------------------
                                                                         2005            2004            2003
    ----------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>             <C>             <C>
    Beginning accumulated unrealized loss on marketable securities      $(398,246)      $(437,868)      $(577,391)
    ----------------------------------------------------------------------------------------------------------------
    Unrealized gain (loss) arising during the year                        (54,028)         39,622         105,574
    ----------------------------------------------------------------------------------------------------------------
    Reclassification adjustment gain                                           --              --          33,949
    ----------------------------------------------------------------------------------------------------------------
    Ending accumulated unrealized loss on marketable securities         $(452,274)      $(398,246)      $(437,868)
    ---------------------------------------------------------------=================================================
</TABLE>


                                      F-12
<PAGE>

Note 3 - Summary of Significant Accounting Policies - continued

      (U) Faire Value of Financial Instruments

      The Financial Accounting Standards Board ("FASB") issued SFAS No. 107,
      "Disclosure about Fair Value of Financial Instruments", which requires
      disclosure of fair value information about financial instruments when it
      is practicable to estimate that value. The carrying amounts of financial
      instruments, including cash, accounts receivable, accounts payable and
      accrued interest payable approximate fair value at December 31, 2005, 2004
      and 2003, due to the relatively short maturity of the instruments. The
      investment in limited partnership is recorded using the equity method and
      it is not practical to estimate the fair value of this investment without
      incurring excessive cost, as this investment is not publicly traded.
      Long-term debt approximates fair value based upon based upon debt terms
      available for entities under similar terms.

      (V) Use of Estimates

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

      (W) Recent Accounting Pronouncements

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

      (X) Reclassifications

      Certain reclassifications have been made to the 2004 financial statements
      to conform to the 2005 presentation.

Note 4 - Investments in Marketable Securities

      During 2005, 2004 and 2003, the Company classified its investments in
      marketable securities as available for sale, and those that intend to hold
      for more than one year as non-current. Unrealized holding gains and losses
      are reported as a separate component of stockholders' deficiency as part
      of accumulated other comprehensive income (loss) until realized. The
      following is a reconciliation of original cost to fair market value for
      securities held as of December 31:
<TABLE>
<CAPTION>

      --------------------------------------------------------------------------------------------------------
                                                                       2005            2004            2003
      --------------------------------------------------------------------------------------------------------
<S>                                                                 <C>             <C>             <C>
      Investments in marketable securities, at cost                 $ 646,057       $ 646,057       $ 646,057
      --------------------------------------------------------------------------------------------------------
      Unrealized loss                                                (452,274)       (398,246)       (437,868)
      --------------------------------------------------------------------------------------------------------
      Investment in marketable securities at fair market value        193,783         247,811         208,189
      --------------------------------------------------------------------------------------------------------
      Less current portion                                           (193,783)       (247,811)       (208,189)
      --------------------------------------------------------------------------------------------------------
                                                                    $      --       $      --       $      --
      --------------------------------------------------------------==========================================
</TABLE>


                                      F-13
<PAGE>

Note 5- Inventories

      Inventories consist of the following at December 31:

<TABLE>
<CAPTION>
      ----------------------------------------------------------------------------------------------
                                                             2005            2004            2003
      ----------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>             <C>
      Raw materials                                       $   18,300      $   23,300      $   21,700
      ----------------------------------------------------------------------------------------------
      Work in process                                         36,000          48,300          51,700
      ----------------------------------------------------------------------------------------------
      Finished goods                                          70,800          85,000         110,200
      ----------------------------------------------------------------------------------------------
                                                          $  125,100      $  156,600      $  183,600
      ----------------------------------------------------==========================================
</TABLE>

Note 6 - Property and Equipment

      Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
      ----------------------------------------------------------------------------------------------
                                                             2005            2004            2003
      ----------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>             <C>
      Land                                                $   12,160      $   12,160      $   11,600
      ----------------------------------------------------------------------------------------------
      Buildings and improvements                             185,000         185,000         185,000
      ----------------------------------------------------------------------------------------------
      Equipment and furnishings                              223,340         202,400         183,600
      ----------------------------------------------------------------------------------------------
                                                             420,500         399,000         380,200
      ----------------------------------------------------------------------------------------------
      Less accumulated depreciation and amortization         389,200         377,500         356,100
      ----------------------------------------------------------------------------------------------
                                                          $   31,300      $   21,500      $   24,100
      ----------------------------------------------------==========================================
</TABLE>

Note 7 - Intangible Assets

       Intangible assets consist of the following at December 31:

<TABLE>
<CAPTION>
      ----------------------------------------------------------------------------------------------
                                                             2005            2004            2003
      ----------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>             <C>
      Patents                                             $  454,273      $  277,425      $  119,682
      ----------------------------------------------------------------------------------------------
      Less: Accumulated amortization                          48,566          19,797           8,542
      ----------------------------------------------------------------------------------------------
                                                          $  405,707      $  257,628      $  111,140
      ----------------------------------------------------==========================================
</TABLE>

Note 8 - Long-Term Debt

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

<TABLE>
<CAPTION>
      ----------------------------------------------------------------------------------------------
                                                              2005            2004            2003
      ----------------------------------------------------------------------------------------------
<S>                                                       <C>             <C>             <C>
      6% convertible promissory notes payable (A)         $  700,000      $  700,000      $  700,000
      ----------------------------------------------------------------------------------------------
      ANVAR advances (B)                                                                     338,800
      ----------------------------------------------------------------------------------------------
      7% convertible promissory notes payable (C)          1,600,000       1,100,000         560,753
      ----------------------------------------------------------------------------------------------
                                                           2,300,000       1,800,000       1,598,553
      ----------------------------------------------------------------------------------------------
      Less current portion                                                        --          45,300
      ----------------------------------------------------------------------------------------------
                                                          $2,300,000      $1,800,000      $1,554,253
      ----------------------------------------------------==========================================
</TABLE>


                                      F-14
<PAGE>

Note 8 - Long-Term Debt - continued

(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. On January 23rd, 2006, the note holders agreed
      to extend the due date from December 31, 2006 to December 31, 2008. The 6%
      Notes are convertible at any time, at a rate of $.045, at the holder's
      option, subject to Company approval. The 6% Notes were not affected by the
      reverse stock split on December 23, 2002. Interest on the 6% Notes is
      payable annually, at the Company's option, either in cash or common stock
      of the Company. The Company sold the 6% Notes in the aggregate principal
      amount of $3,000,000 to "accredited investors" during year 2000 through a
      private placement intended to be exempt from registration pursuant to the
      provisions of Regulation D of the Securities Act of 1933. A portion of the
      proceeds, $1,000,000, had been held in an escrow account pending the
      Company's issuance of all of the required regulatory documents and the
      listing of the Company's common stock for trading on The NASDAQ Stock
      Market. On June 26, 2003, the money held in the escrow account was
      returned to the note holders. Since the $1,000,000 proceeds were never
      used by the Company, but always maintained in the escrow account, the
      Company wrote off the prior years' accrued interest of $179,836 and the
      accrued issuance costs of $80,000 associated with these 6% Notes resulting
      in a benefit of $259,836, which was recorded as forgiveness of debt in the
      consolidated statements of operations.

      On December 20, 2004, the Company approved requests from certain holders
      of 6% Notes for the conversion of approximately $336,000 of interest into
      shares of the Company's common stock. As a result of the conversion, the
      Company charged approximately $336,000 to accrued interest for the year
      then ended December 31, 2004 based on the beneficial conversion feature of
      these 6% notes. The conversion took place at the rate of $10 per share
      using a conversion rate utilizing the average closing price of the
      Company's common stock for the 20 trading days immediately preceding the
      conversion.

(B)   These non interest bearing advances represent funds provided to one of
      Company's European Subsidiaries 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, the subsidiary will
      not have to pay some or all of the advances.

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

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

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

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


                                      F-15
<PAGE>

Note 8 - Long-Term Debt - continued

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

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

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

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

      The aggregate maturities of long-term debt at December 31, 2005 are as
      follows:

               ---------------------------------------------------------
                December 31,
               ---------------------------------------------------------
                    2006                                          0,00
               ---------------------------------------------------------
                    2007                                          0,00
               ---------------------------------------------------------
                    2008                                   $ 2,300,000
               ---------------------------------------------------------
                                                           $ 2,300,000
               -----------------------------------------================

Note 9 - Income Taxes

      At December 31, 2005, the Company had net operating loss carry forwards of
      approximately $11,677,800 available to reduce future Federal taxable
      income, which, if not used, will expire at various dates through December
      31, 2024. These net operating loss carry forwards create a deferred tax
      asset of approximately $3,975,000. There are no other material differences
      between amounts used for financial reporting purposes and tax reporting
      purposes. Since it is more likely than not that the Company will not
      realize a benefit from these net operating loss carry forwards a 100%
      valuation allowance has been recorded to reduce the deferred tax asset to
      its net realizable value.

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

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

<TABLE>
<CAPTION>
      -------------------------------------------------------------------------------------------------------------
                                                                           2005             2004           2003
      -------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>              <C>           <C>
      Income tax benefit at 35%                                         $ (310,000)      $ (221,000)   $  (108,500)
      -------------------------------------------------------------------------------------------------------------
      Utilization of net operating loss carry forward                      310,000          221,000        108,500
      -------------------------------------------------------------------------------------------------------------
                                                                        $       --       $       --    $        --
      -------------------------------------------------------------================================================
</TABLE>


                                      F-16
<PAGE>

Note 10 - Stock Option Plan

      In December 21, 2004, the Company decided to cancel all option contracts
      and reissue new contracts. A summary of the Company's stock option
      activity is as follows for the years ended December 31, 2005, 2004 and
      2003:

<TABLE>
<CAPTION>
      -----------------------------------------------------------------------------------------------
                                                                            Common Stock
      -----------------------------------------------------------------------------------------------
                                                                                    Weighted average
                                                                        Shares       Exercise Price
      -----------------------------------------------------------------------------------------------
<S>                                                                     <C>            <C>
      Outstanding, December 31, 2002                                    34,270         $       89.88
      -----------------------------------------------------------------------------------------------
      Granted                                                               --
      -----------------------------------------------------------------------------------------------
      Exercised                                                             --
      -----------------------------------------------------------------------------------------------
      Outstanding, December 31, 2003                                     34,270                89.88
      -----------------------------------------------------------------------------------------------
      Cancelled                                                         (34,270)
      -----------------------------------------------------------------------------------------------
      Granted                                                           200,000                10.00
      -----------------------------------------------------------------------------------------------
      Exercised
      -----------------------------------------------------------------------------------------------
      Outstanding, December 31, 2004                                    200,000        $       10.00
      -----------------------------------------------------------------------------------------------
      Granted                                                                --
      -----------------------------------------------------------------------------------------------
      Exercised                                                              --
      -----------------------------------------------------------------------------------------------
      Outstanding, December 31, 2005                                    200,000        $      10.00
      -----------------------------------------------------------------------------------------------
</TABLE>

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

<TABLE>
<CAPTION>
      ----------------------------------------------------------------------------------------------------
                                       Options Outstanding                        Options Exercisable
      ----------------------------------------------------------------------------------------------------
                                            Weighted-
                                             Average          Weighted-                        Weighted-
                                            Remaining          Average                          Average
                           Number          Contractual        Exercise          Number          Exercise
      Exercise Prices    Outstanding          Life              Price         Exercisable        Price
      ----------------------------------------------------------------------------------------------------
<S>                        <C>               <C>               <C>              <C>             <C>
           $10.00          200,000           (4.00)            $ 10.00          200,000         $ 10.00
      ----------------------------------------------------------------------------------------------------
</TABLE>

Note 11 - Segment and Geographic Information

      Information about the Company's assets and its operations in different
      geographic locations at December 31, 2005, 2004 and 2003 is shown below
      pursuant to the provisions of SFAS No. 131, "Disclosures about Segments of
      an Enterprise and Related Information."

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

<TABLE>
<CAPTION>
      -------------------------------------------------------------------------------------------------
                                                                2005            2004             2003
      -------------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>             <C>
      Net Sales:
      -------------------------------------------------------------------------------------------------
      France                                                 $  152,000      $  171,000      $  190,000
      -------------------------------------------------------------------------------------------------
      Other European countries                                  113,900         108,200          90,800
      -------------------------------------------------------------------------------------------------
      Others                                                     50,300          72,300          81,100
      -------------------------------------------------------------------------------------------------
                                                             $  316,200      $  351,500      $  361,900
      -------------------------------------------------------==========================================
      Total Assets:
      -------------------------------------------------------------------------------------------------
      United States                                          $  714,610      $  668,208      $  443,076
      -------------------------------------------------------------------------------------------------
      France                                                    361,200         282,100         369,600
      -------------------------------------------------------------------------------------------------
                                                             $1,075,810      $  950,308      $  812,676
      -------------------------------------------------------==========================================
</TABLE>


                                      F-17
<PAGE>

Note 12 - Related Party

      The Company has a consulting agreement with its Chairman and President in
      which he earns $150,000 annually. The agreement expired in August 2005 and
      was renewed for an additional three years in September 2005. At December
      31, 2005, 2004 and 2003 the Company owed this individual an aggregate of
      $736,258, $518,758 and $390,000, respectively, of which $600,000, $412,500
      and $300,000, respectively relate to the consulting agreement, the balance
      of $134,438, $104,438, and $90,000, respectively relate to un-reimbursed
      travel expenses and $1,820 relate to start-up costs. In the year ended
      December 31, 2005, to help the Company's cash position, the president has
      deferred receipt of any 2005 and 2004 cash compensation pursuant to his
      consulting agreement.

Note 13 - Commitments and Contingencies

      The Company rents certain office space under an operating lease expiring
      on April 30, 2004, with an automatic renewal of three years. The lease has
      been renewed for the three years ending April 30, 2007. This agreement is
      transferable and can be cancelled with six months notice. Rent expense for
      the years ended December 31, 2005, 2004 and 2003 were approximately
      $52,000 for each year.

      At December 31, 2005, total minimum rentals under noncancellable operating
      leases with an initial or remaining term lease term of one year or more
      are as follows:

                   ----------------------------------------
                    Year Ending
                    December 31:
                   ----------------------------------------
                        2006                      52,000
                   ----------------------------------------
                        2007                      17,333
                   ----------------------------------------
                                                $ 69,333
                   --------------------------==============


                                      F-18

<PAGE>

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

There were no disagreements with accountants on accounting and financial
disclosure. For discussion regarding recent changes of our independent
accountants, please see our Annual Report on Form 10-KSB for the year ended
December 31, 2003 and 2004 and our previously filed and subsequent Current
Reports on Form 8-K.

Item 9A. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. As of the end of the
period covered by this report, the Company carried out an evaluation, under the
supervision and with the participation of its management, including the
Company's Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based on
this evaluation, the Company's Chief Executive Officer and Chief Financial
Officer have concluded that the Company's disclosure controls and procedures are
effective in timely notifying them of information the Company is required to
disclose in its periodic SEC filings and in ensuring that this information is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and regulations.

(b) Changes in Internal Control. During the fourth quarter of fiscal year 2005,
there were no significant changes in our internal control over financial
reporting that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

(c) Management's Report on Internal Control over Financial Reporting. Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations
adopted pursuant thereto, the Company included a report of management's
assessment of the effectiveness of its internal control over financial reporting
as of December 31, 2005 as part of this report. The Company's independent
registered public accounting firm also attested to, and reported on,
management's assessment of the effectiveness of internal control over financial
reporting as of December 31, 2005. Management's report and the independent
registered public accounting firm's attestation report are included in Item 8
hereof, of this report and are incorporated herein by reference.

Item 9B. Other Information.

None.

                                    PART III

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

Directors and Executive Officers

The following persons are our executive officers and directors:

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

Nasser Nassiri         42           President, Chief Executive Officer and
                                    Chairman of the Board
----------------------------------------------------------------------------

Yuhko Grossman         41           Secretary, Treasurer and Director
----------------------------------------------------------------------------

Jean Darondel          63           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


                                       17
<PAGE>

working with the largest retail pharmaceutical chain in Canada, where her
responsibilities included the restructuring and implementation of new management
and information systems following corporate buy-outs. Ms. Grossman holds degrees
from Simon Fraser University in Modern European History, Political Science and
Physics.

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

Board of Directors

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

Scientific Advisory Board

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

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

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

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

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

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

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

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

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


                                       18
<PAGE>

Limitation on Liability of Directors

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

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

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors and executive officers, and persons who own more than ten percent of a
registered class of our Common Stock, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
our Common Stock. Officers, directors and ten-percent stockholders are required
by SEC regulations to furnish us with copies of all Section 16(a) forms they
file. During the fiscal year ended December 31, 2005, no such reports were
submitted to us for review and, based upon this, to our knowledge, all Section
16(a) filing requirements applicable to our officers and directors have been
complied with except that our directors have not yet filed Forms 5 relating to
the issuance of options in the first quarter of 2005.

Code of Ethics

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

Item 11. Executive Compensation

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

Stock Option Plan

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

As of December 21, 2005, we cancelled all of the outstanding options and
replaced them with options having substantially similar terms and conditions,
but with an exercise price of $10.00 per share, in the following amounts:

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

Aggregate Option Exercises and Fiscal Year-End Option Values

The following table lists the number of securities underlying unexercised
options at December 31, 2005.


                                       19
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                           NUMBER
                                                                             OF
                                                                         SECURITIES
                                                                         UNDERLYING             VALUE OF
                                                                        UNEXERCISED           UNEXERCISED
                                                                          OPTIONS              IN-THE-MONEY
                                      SHARES                             AT FY-END             OPTIONS AT
                                     ACQUIRED             VALUE         EXERCISABLE/      FY-END EXERCISABLE/
                NAME                ON EXERCISE         REALIZED       UNEXERCISABLE          UNEXERCISABLE
                ----                -----------         --------       -------------          -------------
---------------------------------------------------------------------------------------------------------------
<S>                                     <C>                <C>              <C>                <C>
Nasser Nassiri............              --                 --               100,000/ --        225,000 /--
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Jean Darondel.............              --                 --                50,000/ --       112,500/--
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Yuhko Grossman............              --                 --                50,000/ --       112,500/--
---------------------------------------------------------------------------------------------------------------
</TABLE>

Director Compensation

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

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information known to us with respect to
the beneficial ownership of our common stock as of March 15, 2006 by:

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

      o     each of our directors;

      o     each of our named executive officers; and

      o     all current directors and executive officers as a group.

Except as otherwise indicated, and subject to applicable community property
laws, the persons named in the table below have sole voting and investment power
with respect to all shares of common stock held by them. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission. In computing the number of shares beneficially owned by a person and
the percentage ownership of that person, shares of common stock subject to
options held by that person that are currently exercisable or exercisable within
60 days of March 15, 2006 are deemed outstanding. Such shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of any
other person.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                         AMOUNT AND NATURE
                                                                           OF BENEFICIAL
                                                                          OWNERSHIP AS OF           PERCENT OF
NAME AND ADDRESS OF BENEFICIAL                                                MAY 15,               SHARES IN
OUTSTANDING OWNER                                TITLE OF CLASS                2005                  CLASS(5)
-----------------------------------------        --------------      ------------------------    ------------
-------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                        <C>                        <C>
Jean Darondel.............................        Common Stock               50,000(1)                  *
   38 rue Anatole France,
   92594 Levallois Perret Cedex,
   France
-------------------------------------------------------------------------------------------------------------------
Yuhko Grossman............................        Common Stock               50,000(2)                  *
   38 rue Anatole France,
   92594 Levallois Perret Cedex,
   France
-------------------------------------------------------------------------------------------------------------------
Nasser Nassiri............................        Common Stock              100,000(3)                  *
   38 rue Anatole France,
   92594 Levallois Perret Cedex,
   France
-------------------------------------------------------------------------------------------------------------------
All officers and directors                        Common Stock              200,000(4)                  *
as a group
-------------------------------------------------------------------------------------------------------------------
</TABLE>

*- Indicates less than 1%


                                       20
<PAGE>

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

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

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

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

(5)   Based upon 11,353,816 shares of common stock outstanding.

       Securities Authorized for Issuance Under Equity Compensation Plans

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

Item 13. Certain Relationships and Related Transactions

None.

Item 14. Principal Accountant Fees and Services.

Audit Fees for 2005

Ourprincipal accountant for 2005 is Moore & Associates, Chartered. For services
rendered in connection with the audit of our 2005 consolidated financial
statements, we have paid them $6,250 to date, but we have not been billed for
the balance of the fees for this audit.

The auditor of our French subsidiaries for 2005 was Consultaudit. For services
rendered in connection with the audit of our French subsidiaries's 2005
financial statements, Consultaudit has billed us 11,678 Euros (or approximately
$14,013*), 6578.00 Euros (or approximately $7,894*) of which has not yet been
paid.

Audit Fees for 2004

Our principal accountant for 2004 was Shelley International CPA. For services
rendered in connection with the audit of our 2004 consolidated financial
statements and review of the first, second and third quarters of 2005, we paid
Shelley International CPA $23,000. However, our current auditor, Moore &
Associates, chartered, whose report covers our consolidated financial statements
for the fiscal years ended December 31, 2005 and 2003, has reaudited these
consolidated financial statements for 2004 which are included in its report for
2005, which is filed herewith.

The auditor of our French subsidiary for 2004 was Consultaudit. For services
rendered in connection with the audit of our French subsidiary's 2004 financial
statements, we paid Consultaudit 10,839.80 Euros (or approximately $13,000*).

Audit Fees for 2003

Our principal accountant for 2003 was Weinberg & Company. For services rendered
in connection with the audit of our 2003 consolidated financial statements and
review of first quarter of 2004, including reissuance of their opinion for
filing with the consolidated financial statements in the Annual Report on Form
10-KSB for the year ended December 31, 2004, we paid them $33,000. In connection
with the reissuance of Weinberg's report, we signed a settlement agreement with
Weinberg which settled all amounts which we may have owed them including the
reissuance fee.


                                       21
<PAGE>

We requested that Weinberg reissue its 2003 report for inclusion in this Annual
Report on Form 10-K. However, Weinberg requested that we pay an additional
considerable amount for such reissuance. Because we consider this amount to be
far in excess of the company should reasonably be charged for this reissuance,
we instead had the audit of the 2003 consolidated financial statements redone by
our auditor Moore & Associates, Chartered whose report covering these
consolidated financial statements as well as those for 2005 is filed herewith.

We paid Most & Company LLP approximately $12,000 for services in connection with
the review of our unaudited consolidated financial statements for filing with
our Quarterly Reports on Form 10-QSB of June 30, 2004 and September 30, 2004. We
paid Most & Company LLP $9,000 for the audit of our consolidated financial
statements for the year ended December 31, 2004. However, this audit was not
completed by Most & Company, and we are currently in litigation with Most to
recover a portion of these fees.

The auditor of our French subsidiary for 2003 was Consultaudit. For services
rendered in connection with the audit of our French subsidiary's 2003 financial
statements, we paid Consultaudit 10,481 Euros (or approximately $12,577*).

*The Euro to Dollar conversions are based upon an average conversion rate of
approximately $1.20 to (euro)1.00. This is an average estimated over the periods
indicated and is subject to fluctuation during such periods.

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

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

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Exhibit Number      Description of Document
------------------------------------------------------------------------------------------------------------------
<S>                 <C>
3.1                 Certificate of Incorporation, as amended(1)(2)
------------------------------------------------------------------------------------------------------------------
3.2                 By-laws (1)
------------------------------------------------------------------------------------------------------------------
3.3                 Certificate of Amendment to Certificate of Incorporation(4)
------------------------------------------------------------------------------------------------------------------
3.4                 Certificate of Amendment to Certificate of Incorporation(4)
------------------------------------------------------------------------------------------------------------------
4.1                 Form of Company's 3 year 7% Convertible Redeemable Debenture due December 31, 2006
------------------------------------------------------------------------------------------------------------------
4.2                 Form of Option Agreement(4)
------------------------------------------------------------------------------------------------------------------
23                  Consent of Independent Registered Public Accounting Firm
------------------------------------------------------------------------------------------------------------------
31                  Certification of Nasser Nassiri pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
------------------------------------------------------------------------------------------------------------------
32                  Certification of Nasser Nassiri pursuant to Rule 13(a)
------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

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

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


                                       22
<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this amended report to be signed on our behalf by
the undersigned, thereunto duly authorized, on April 19, 2006.

                                        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 amended report has
been signed below by the following persons on behalf of the Registrant and in
the capacities indicated.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Signature                               Title                                     Date
-------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                                       <C>
/s/ Nasser Nassiri                      President, Chief Executive Officer        April 19, 2006
-------------------------               and Chairman of the Board of Directors
      Nasser Nassiri                    (Principal Executive Officer and
                                        Principal Accounting Officer)

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

/s/ Yuhko Grossman                      Secretary, Treasurer and Director         April 19, 2006
----------------------
     Yuhko Grossman

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

/s/ Jean Darondel                       Director                                  April 19, 2006
------------------
     Jean Darondel
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       23