SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549



                                   FORM 10-KSB


(Mark One)

[X]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999

                                       or

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

             For the transition period from ___________to _________


                         Commission file number 0-27179


                                BioSyntech, Inc.
                  --------------------------------------------
                 (Name of Small Business Issuer in its Charter)

             Nevada                                   88-0329399
-------------------------------                  -------------------
(State or Other Jurisdiction of                  (I.R.S. Employer
 Incorporation or Organization)                  Identification No.)

   475 Boulevard Armand-Frappier
       Laval, Quebec, Canada                              H7V 4B3
---------------------------------                         -------
          (Address of principal                          (Zip Code)
             executive office)

                                 (450) 686-2437
                 -----------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


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

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

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

         Check if the issuer (1) has filed all  reports  required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the issuer was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes [X] No [ ]


<PAGE>

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

         State issuer's revenues for its most recent fiscal year: $ 0.

         Based upon the last sale price of the  issuer's  Common  Stock on March
23, 2000,  the aggregate  market value of the 19,162,036  outstanding  shares of
Common Stock held by non-affiliates of the issuer was $114,972,216.

         As of March 23, 2000,  27,272,036  shares of the issuer's Common Stock,
$.001 par value (the "Common Stock") were issued and outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

         The information required by Items 9 through 12 of this Annual Report on
Form 10-KSB is  incorporated  by reference  from the issuer's  definitive  proxy
materials for its 2000 Annual Meeting of Stockholders, which proxy materials are
to be filed with the Securities and Exchange Commission not later than April 29,
2000.

         Transitional Small Business Disclosure Format (check one):

                 [ ]  Yes                            [X]   No




<PAGE>

                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS.

         The following Business section contains forward-looking statements that
involve  risks and  uncertainties.  The  Company's  actual  results could differ
materially  from those  anticipated  in these  forward-looking  statements  as a
result of certain factors.  See "Item 1. Description of Business/Risk  Factors--
Forward-  Looking  Statements."  The  functional  currency of the Company is the
Canadian dollar.  All amounts presented in this Form 10-KSB in Canadian currency
are identified as such. Other amounts are expressed in United States dollars. In
cases in which  Canadian  dollar  amounts have been converted into United States
dollar amounts or United States dollar amounts have been converted into Canadian
dollar  amounts,  the  exchange  rate  utilized  was that of March 1,  2000 (CDN
$1.4495 to US $1.00).

General

         Biosyntech,  Inc.  (together  with its  subsidiary,  Bio Syntech Canada
Inc.,  referred to as "we," "us" or the "Company"),  a Nevada  corporation,  was
incorporated on December 14, 1994. It is a development  stage company engaged in
the  development  of   biotherapeutic   delivery  systems  made  of  proprietary
biomaterials.  The  Company's  systems  are  intended  to enable or enhance  the
treatment  of  diseases  or  injuries  for  which  therapies  exist or are under
development,  but which must be transported  to the site of action.  The Company
has had limited  revenues to date.  Its future  operations  are  dependent  upon
financing  necessary to complete  research and development  projects ("R&D") and
market the Company's  products.  There can be no assurance that the Company will
be able to complete the development of its products, or if completed,  that they
can be successfully  marketed.  Furthermore,  there is no assurance that even if
the  products  are  completed  and  marketed,  the  revenues  therefrom  will be
sufficient  to fund  the  Company's  future  operations  or to  fund  additional
research, development and marketing.

Technology Overview

         The  Company  focuses  on the  creation  and  development  of  advanced
injectable vehicles for biotherapeutics, cells and genetic material, and intends
to commercialize  these products for the biomedical and pharmaceutical  markets.
Current development targets include all therapeutics that cannot be administered
orally,  either because they are inactivated in the digestive  tract, or because
their  therapeutic  activity is needed only at a specific site in the body.  The
Company's   research  and   development   efforts,   either   internally  or  in
collaboration  with corporate  partners,  are  concentrated on several  programs
exploiting the multiple  benefits of its  therapeutic  delivery  systems,  which
include the delivery of, among others,  therapeutic  proteins and drugs, genetic
material for  site-specific  gene  therapy,  and living  cells or  bioartificial
organs for tissue-engineering applications.

         In addition, the Company has established an instrumentation division in
which it has developed the  ARTHRO-BST(TM),  an  arthroscopic  device  providing
precise and non-destructive diagnosis of articular cartilage quality, and the


<PAGE>


Mach-1(TM)   Mechanical  Tester,  a  universal  mechanical  testing  system  for
specimens with dimensions between hundreds of microns and a few centimeters.

Therapeutic Delivery Systems

         The Company has developed three platform technologies, all aimed at the
generation of solutions to efficiently deliver biologically active therapeutics:

         o         BST-Gel(TM):   An  injectable  thermosensitive   self-forming
                   solvent  and   detergent-free   hydrogel  for  biotherapeutic
                   delivery.

         o         BST-Spheres: Microspheres for biotherapeutic delivery.

         o         BST-Cargel(TM):  Chondrocytes in an adhesive exogenous matrix
                   delivered  arthroscopically  for the  treatment  of cartilage
                   defects.

         BST-Gel(TM)  is a family  of  polymeric  gels  that are  liquid  at low
temperatures  and solid at the  temperature of the human body.  This  injectable
delivery  system is derived from natural sources and contains no toxic chemicals
such as chemical cross-linkers,  organic solvents, or detergents. One of its key
properties  is its in situ gelling  after its  injection  in liquid  form,  thus
forming a  reservoir  for the  sustained  release  of its  therapeutic  payload.
BST-Gel(TM) requires no surgery for its implantation, is biodegradable,  and has
an  adjustable  composition.  The  amounts  of  BST-Gel(TM)  injected  vary  for
different  requirements,  which result in  controllable  residence times ranging
from a few days to several weeks. The Company has developed specialized matrices
and an encapsulation technology that can be used in conjunction with BST-Gel(TM)
to provide a proprietary form of delivery of therapeutic agents and can have the
following applications:

         o         delivery  of  small   molecules,   peptides  and  recombinant
                   proteins;
         o         bioengineering   of  tissues  with  cells  or   growth-factor
                   therapeutics;
         o         delivery of bone-repair therapeutics;
         o         delivery of genetic material (DNA vaccines and gene therapy);
                   and
         o         development  of vaccines  based on the  sustained  release of
                   antigens.

         The Company has  developed  and  patented  BST-Spheres,  a  proprietary
process  to  generate  polymer-based   microspheres  used  in  the  delivery  of
biotherapeutics.  This  proprietary  process offers several  advantages over the
current approach of making microspheres:

         o         It does  not  require  the  use of  toxic  chemicals  such as
                   organic solvents or detergents;
         o         It can be adapted to a wide range of biomaterials, whether or
                   not biodegradable;
         o         It   is   injectable    for   the   sustained    release   of
                   biotherapeutics;
         o         It can be used with a broad  range of  biotherapeutic  types,
                   from  small  to large  compounds;  and o It may  enhance  the
                   biotherapeutic-loading capacity of the vehicle.

         BST-Cargel(TM)  is a  proprietary  generation of  bioengineered  living
articular  cartilage-tissue implants developed from cells encapsulated and grown
within a  BST-Gel(TM)-based  matrix  for  arthroscopic  delivery.  A  particular
formulation of the gel maintains the cell viability  during the delivery  period
while  assuring  the  adhesion  of  BST-Gel(TM)  to  the  underlying   bone  and
surrounding cartilage. Preclinical studies have shown that chondrocytes embedded
in BST-Gel(TM)  produce a matrix having the  characteristics of normal cartilage
tissue.


                                       -2-

<PAGE>

         Market for the Company's Therapeutic Delivery Systems

         Using  proprietary  technologies,  drug  delivery  companies aim at the
generation  of new  formulations  utilizing  drugs  developed  by others.  These
formulations  are  intended  to  provide  benefits,  including  control  of drug
concentration  in the blood,  improved  safety and  efficacy,  improved  patient
compliance and ease of use and expanded indications.  Drug delivery technologies
can provide pharmaceutical companies with a means of developing new products, as
well as expanding existing drug franchises.

         Drug delivery  technologies can be utilized to address certain needs of
both traditional  pharmaceutical  compounds and the new class of  macromolecules
developed by the biotechnology  industry. For example, small synthetic compounds
could  benefit  from the  local  high dose  delivery  of a drug to  enhance  the
therapeutic  effect on a target organ while  minimizing  systemic  side effects.
With the  advent of  biotechnology,  new  opportunities  in drug  delivery  have
arisen.  Advances in  biotechnology  have  facilitated  the development of a new
generation of biopharmaceutical products based on proteins, peptides and nucleic
acids.

         Drugs  developed  by  biotechnology  companies  can rarely be delivered
orally. This results from their instability in harsh conditions in the digestive
tract,  their limited  ability to be absorbed in an active form in the intestine
and their short half-life in the  bloodstream.  As a consequence,  many of these
drugs can only be  administered by the means of frequent  injections,  which may
limit their  clinical  applications.  These factors have all  contributed to the
development of new approaches to deliver these therapeutics to their needed site
of action in the body.

         Another  promising  field of research and development for the Company's
technological  systems is cell delivery.  The overall goal of tissue engineering
is the  promotion  of the repair of diseased or injured  tissue or organs  using
therapeutics to regenerate or heal with a functional  normal tissue.  This is in
contrast to the approach of replacing an organ with an artificial device. It has
been  recognized  that  artificial  organs,  although  sometimes  necessary  for
short-term relief, usually have an inadequate working life expectancy. The newer
approach of tissue  engineering  often  involves the  transplantation  of living
normal cells that have been expanded in the laboratory.  The procedure of normal
cell  transplantation  requires an accurate  positioning of the cell at the site
where it is to perform its therapeutic  benefit.  This is often  accomplished by
providing  to  existing  cells an  exogenous  matrix  containing  new  cells and
facilitating the correct placement of the new cells within the body. A number of
biomaterials  have been  developed  for this  purpose.  They  consist  of either
biodegradable or non-biodegradable  materials in a number of physical forms such
as films,  sponges,  beads and  hydrogels.  These  materials  must  sustain cell
viability  and promote  normal  cellular  activity.  Biomaterials,  which do not
require surgical implantation,  are believed to have a greater chance of success
because of the reduced chance of  complications  during the injection  procedure
and the potential for a faster  recovery and shorter  hospital stay.  Injectable
biomaterials  as carriers  for cell  delivery  are  therefore  an active area of
development for this field of application.

         Strategy

         Through  the  development  of  advanced  biomaterials,  the  Company is
focusing  on  enabling  or  enhancing  the  activity  of  a  new  generation  of
therapeutics  that cannot be administered  orally.  There is a relatively  small
number of  biomaterials  that are  currently  approved  and used for  parenteral
biotherapeutic delivery. Until recently,  attempts to provide delivery solutions
for the  fast-growing

                                       -3-

<PAGE>

demands of the medical  industry  have focused on trying to adapt  commonly used
biomaterials  to the new  requirements of a given  therapeutic.  The Company has
gathered a multidisciplinary  team of scientists working together to provide new
delivery  solutions  through  innovations  in  advanced  biomaterials  that  are
tailored to a range of unmet medical needs. As part of our business strategy, we
form  collaborations  to explore  opportunities for applications of our delivery
systems  to  therapeutics  developed  by third  parties.  See  "Item 6.  Plan of
Operation."

         Therapeutics Delivery Applications

         The Company is currently conducting research to develop applications of
its core technology in the following areas.

         Cartilage Injuries and Diseases

         The current  standard of care for the  treatment of cartilage  injuries
consists of inducing bleeding into the cartilage defect by compromising the bone
margin  interfacing the damaged  cartilage  tissue.  The techniques used include
drilling,  microfracture and abrasion.  These techniques result in the formation
of a scarred  tissue  (fibro-cartilage)  with poor  mechanical  stability.  As a
result, a patient must undergo repeated  treatments and often the affected joint
degenerates into full blown osteoarthritis. Recently, a number of new approaches
have been  proposed  for the  treatment of  cartilage  injuries  that aim at the
regeneration of the cartilage tissue with transplanted cells. The cells used can
either be normal  cartilage  cells that have been  expanded in a  laboratory  or
cells selected for their ability to become normal cartilage tissue (stem cells).
The procedure of transplanting normal cartilage cells is already marketed in the
United  States and Europe.  It  necessitates  a complicated  surgical  procedure
involving an open arthrotomy.  Although the results are encouraging,  there is a
recovery  process  that can take more than a year.  If the same  cells  could be
delivered in a vehicle  introduced in an  arthroscopic  procedure,  in which the
cells are pushed  through a small  catheter,  the expected  recovery  period and
overall healthcare costs could be greatly reduced.

         The  Company  is  actively  pursuing  a cell  therapy  program  for the
treatment of  articular  cartilage  defect,  and has already  developed  several
formulations  of its  injectable  BST-Gel(TM),  which  were  used to grow  human
cartilage  cells for  several  weeks in the  laboratory.  This has  allowed  the
Company to  undertake  an in vivo  research  program  in which  laboratory-grown
cartilage  cells  delivered in  BST-Gel(TM)  were injected  subcutaneously  in a
surrogate model and formed new cartilage-like  tissue. Based on these results, a
preclinical  study for  cartilage  repair of injuries  using an animal  model is
currently   underway.   The   Company  is  also   developing   ways  to  deliver
anti-inflammatory  drugs  for  potential  delivery  into  articulations.  It  is
optimizing  formulations  of its BST-Spheres  microspheres  technology to obtain
slow and long-lasting vehicles for  anti-inflammatory  drug delivery to the knee
for prolonged relief of inflammatory symptoms.

         Vaccine Development

         The ability to deliver large amounts of molecules over a long period of
time  using the  injectable  BST-Gel(TM)  is being  explored  for the  sustained
release of antigens for vaccine  development.  The Company is currently  testing
the immune response of animal models to specific antigens  delivered by a single
injection  of  BST-Gel(TM).  Based on optimal  response,  the  Company  plans to
develop the in vivo testing of BST-Gel(TM) based vaccine in 2000.


                                       -4-

<PAGE>

         Bone Injuries and Diseases

         Two  approaches  are  conducted  simultaneously  and utilize  different
aspects of the  proprietary  properties  of the Company's  platform  technology.
These  developments  could provide a series of injectable bone biomaterials that
answer the needs of bone repair:  minimally-invasive,  low-cost  administration,
filling and stabilizing properties, resorption and biological activity.

         Injectable osteoconductive/osteoinductive bone grafting biomaterial

         BST-Gel(TM) is used for the development of new bone grafting  materials
that  enable  the  repair  of bone  defects  (osteoconductive)  such as  calcium
phosphates.  Patients with  osteoporosis who are losing bone mass,  patients who
have had bone tissues  harvested or bone tumors  removed,  leaving a weakened or
voided  structure,  or patients  with bone defects  requiring  prostheses  could
benefit from a material favoring bone ingrowth and providing a scaffold for bone
remodeling. Several formulations of BST-Gel(TM), combined with mineral additives
similar to natural bone, are scheduled to be tested in animal models in 2000.

         In some  indications  such as fracture  repair,  spinal  fusion or bone
osteonecrosis,  the incorporation of bone-inducing  agents  (osteoinductive)  is
required to reach a complete and  successful  bone  repair.  The Company is also
investigating the use of BST-Gel(TM) as a carrier for  bone-inducing  drugs. Two
approaches  are planned and  consist of the  delivery of either a  bone-inducing
gene or a bone-inducing  protein.  This work is currently being tested in animal
models in collaboration with a corporate partner.

                  Bone cements

         The  Company  is  developing  new  proprietary  bone  cements  based on
BST-Gel(TM)  in an effort to provide a strong  structural  support for  severely
weakened  bones.  The  injectability  of its  carrier  is  expected  to  greatly
facilitate the medical treatment and benefit both the patient and the healthcare
provider.  BST-Gel(TM)-  based  bone  cements  are being  optimized,  and animal
testing is expected to begin in 2000.

                  Fracture healing

         The Company is  investigating  the use of  BST-Gel(TM) as a carrier for
new  bone-inducing  drugs currently in pre clinical  trials  developed by Sulzer
Biologics,  one of the Company's  collaborators.  Two approaches are planned and
consist  of the  delivery  of  either a  bone-inducing  gene or a  bone-inducing
protein.

                  Wound Healing

         A  specific  formulation  of  BST-Gel(TM)  is being  optimized  for the
enhancement of skin-cell growth. This variation of BST-Gel(TM) could be used for
the  delivery of skin cells for the  treatment of burn victims or the healing of
skin ulcers. The Company expects to have an optimal BST-Gel(TM)  formulation for
skin-cell delivery ready by the end of 2000. In addition, the Company intends to
co- develop the  formulation  of its  technology  platform  with growth  factors
enhancing wound healing. Research and development is ongoing with animal models.


                                       -5-

<PAGE>

         Material Agreements

         Agreement with Polyvalor

         In October  1997,  the Company  entered  into a  technology  assignment
agreement,  as amended in September  1999 and as amended and restated  March 15,
2000  (the  "Assignment  Agreement"),  with  Polyvalor  Limited  Partnership,  a
Canadian limited partnership,  as represented by its General Partner,  Polyvalor
Inc.  ("Polyvalor").  Polyvalor is an entity created by Ecole  Polytechnique  de
Montreal   (the   University   of   Montreal's   engineering   faculty,   "Ecole
Polytechnique") for the purpose of commercializing the technology in which Ecole
Polytechnique  has an interest.  Through the Assignment  Agreement,  the Company
acquired from Polyvalor all rights related to certain  patents and know-how (the
"Technologies").  The  Technologies  were based upon the work of Dr. Selmani and
his team of  collaborators  at Ecole  Polytechnique.  In  consideration  of said
assignment,  the Company agreed to pay to Polyvalor a royalty of 5% on all gross
sales  of all  products  and  services  sold  by the  Company,  up to a  maximum
cumulative  amount of CDN  $3,000,000  (US$2,069,679).  In  connection  with the
Assignment  Agreement,  Bio Syntech Canada Inc. ("Bio Syntech Canada") issued to
Polyvalor  1,072,000  of its Class A Shares and granted  Polyvalor  the right to
nominate one director to its board of directors. As a result of the Transactions
described  below  under  "History  of the  Company,"  the  Class  A  Shares  are
exchangeable on a share for share basis for shares of Common Stock and Polyvalor
has the right to nominate one director to the Company's Board of Directors.

         As part of our business strategy,  we have formed  collaborations  with
third parties to explore  opportunities for applications of our delivery systems
to therapeutics developed by them.

         Sulzer Orthopedics Biologics Inc., Wheat Ridge, CO

         The Company signed a Non-disclosure and Confidentiality Agreement dated
February 23, 1999 with Sulzer  Orthopedics  Biologics,  Inc.  for a  feasibility
study of combining bone proteins developed by Sulzer with different formulations
of BST-Gel(TM) for the local  induction of bone formation.  Sulzer is developing
bone proteins for several  applications in orthopedics  including  spinal fusion
and  bone  fracture  repair.  Bone  proteins  were  formulated  successfully  at
different  concentration in BST-Gel(TM).  A first phase of pre-clinical  testing
revealed  cartilage and bone formation.  A second phase study is currently under
way to optimize the formulation.

         Sulzer Orthopedics Ltd., Switzerland

         The Company  signed a Material  Transfer  Agreement  on January 4, 2000
with Sulzer Orthopedics Ltd. for the study of BST-Gel(TM) as a carrier for human
articular  chondrocytes in the treatment of articular  cartilage  defects.  Cell
compatible BST-Gel(TM) formulations are being studied in vitro using cell loaded
gels.

         Reprogenesis, Inc., Cambridge MA

         The Company  signed a  Confidentiality  Agreement on May 31, 1999 and a
Material Transfer Agreement on July 27, 1999 with Reprogenesis,  Inc. related to
the transfer of human  auricular  chondrocytes  from  Reprogenesis,  Inc. to the
Company.  The  initial  study  aimed  at the  development  of a human  auricular
chondrocyte  compatible  formulation of BST-Gel(TM).  This work was performed at
the Company first in vitro where good cell  viability was obtained.  The project
has now evolved to look at specific  cellular  events  judged  important for the
behavior of these cells in vivo.  Reprogenesis,  Inc.  is  currently  developing
human auricular  chondrocytes for a variety of tissue augmentation  applications
such as incontinence and tissue reconstruction.


                                       -6-

<PAGE>

         Ophidian Pharmaceutical Inc., Madison WI

         The Company signed a Confidential Disclosure Agreement and a Biological
Materials Transfer Agreement with Orphidian Pharmaceutical Inc. ("Orphidian") in
August 1999 to evaluate  the ability of  BST-Gel(TM)  to deliver an antigen in a
sustained fashion for chicken immunization.  Ophidian is developing therapeutics
based  on egg  yolk  antibodies  produced  after a series  of  intramuscular  or
subcutaneous   injections  of  a  specific  antigen.   The  process  of  chicken
immunization  presently  requires a labor intensive  process  involving  several
injections in several thousand chickens. The ability to formulate an antigen for
sustained  release  could  greatly  simplify  the  process.  As part of Ophidian
inflammatory bowel disease therapeutics  development,  it has sent rTNF-alpha to
the Company for initial formulation study. A longer and more extensive phase two
project was  initiated  and is ongoing.  Finally a phase three  project has been
agreed  upon  where the  antigen  will be  presented  as  genetic  material  for
potentially longer lasting immunization in the animal. This project is scheduled
for initial formulation study in the second quarter of 2000.

         Viragen, Incorporated, Plantation FL, and Viragen Ltd, Scotland

         The Company  signed a Mutual  Confidentiality  Agreement  with Viragen,
Incorporated  ("Viragen")  on  September  2,  1999 for the  study  of a  Viragen
proprietary   formulation   of   Interferon-alpha   (Omniferon)   formulated  in
BST-Gel(TM)   for   sustained   release.   Viragen   is   currently   developing
Interferon-alpha  as a  therapeutic  for the  modulation of the immune system to
fight viral diseases such as hepatitis. The project, initially carried on at the
Company,  aimed at the study of  stability  and release  kinetics  of  Omniferon
formulated in BST-Gel(TM).  After encouraging data, Viragen agreed to pursue the
program on formulation.

         Ontogeny, Inc., Cambridge MA

         The Company signed a Confidentiality  Agreement and a Material Transfer
Agreement with  Ontogeny,  Inc. on December 3, 1999 for the study of BST-Gel(TM)
as a potential carrier for Hedgehog, a morphogenetic family of proteins. Several
applications  are being  investigated  by  Ontogeny,  Inc.  and  include  neuro-
degenerative  and cartilage  diseases.  Formulations of BST-Gel(TM) were sent to
Ontogeny,  Inc.  where  an  initial  preliminary  study  on  inflammation  and a
functional study on an animal model are ongoing.

         Biomet Manufacturing Corporation, Warsaw IN

         The  Company   signed  a  Material   Transfer   Agreement  with  Biomet
Manufacturing   Corporation   ("Biomet")  on  February  8,  2000  regarding  the
possibility  of using  BST-Gel(TM)  as a  carrier  for a growth  factor in wound
healing and for plasmid DNA for site specific gene therapy.  These  projects are
expected  to  commence  in the next  quarter.  Biomet has global  operations  in
orthopedics  with a number of approved  devices for  therapeutic  and diagnostic
interventions.

Instrumentation

         The Company has  established  an  instrumentation  division in which it
developed the  ARTHRO-BST(TM),  an  arthroscopic  device  providing  precise and
nondestructive  diagnosis of articular  cartilage  quality,  and the  Mach-1(TM)
Mechanical  Tester,  a universal  mechanical  testing  system for specimens with
dimensions  between hundreds of microns and a few  centimeters.  The instruments
are closely related to the work carried on by the Company on cartilage.

                                      -7-
<PAGE>

         The ARTHRO-BST(TM)

         Description

         The  ARTHRO-BST(TM)  is an arthroscopic  device  providing  precise and
nondestructive  diagnosis  of  articular  cartilage  quality.   Degeneration  of
cartilage is a prominent  component of arthritis,  a disease affecting more than
10% of the  population.  Current  assessment  of  articular  cartilage is mostly
subjective with no functional evaluation.  Therefore, there is a growing need in
an aging population for  non-destructive and unbiased clinical evaluation of the
health and function of this connective tissue.

         The  ARTHRO-BST(TM)  is based on an  innovative  and robust design that
allows simple  application of small  indentation  compression  and collection of
resulting  electrical  signals  (streaming  potentials)  indicative of cartilage
function.

         The  ARTHRO-BST(TM) is composed of five distinct units: i) a disposable
sterilized tip consisting of microelectrode arrays (microelectronic  circuit) on
a thin aluminum substrate that is adhered to a stainless steel support providing
a connection with the handle,  ii) an  ergonomically  designed  handle,  iii) an
electrical  circuit  for the  acquisition  of  electrical  signals,  including a
preamplification  and digitalization  circuit inside the handle and an interface
circuit  exterior to the handle,  iv) software for the acquisition of electrical
signals and for the analysis and  interpretation  of data to quantify  cartilage
quality, and v) a computer system.

         A fully  functional  clinical  version  of the  ARTHRO-BST(TM)  will be
presented at the third meeting of the  International  Cartilage  Repair  Society
(ICRS) in Sweden at the end of April 2000.

         Market

         The target market has two sectors : research and clinical. The research
market is composed of pharmaceutical and biotechnology  companies in addition to
academic research groups working on therapeutic  products for joint disorders or
procedures  for cartilage  repair.  There are several  research  projects in the
areas of arthritis  and joint repair and it is regularly  publicly  acknowledged
that  a  major  impediment  to  the  understanding  of  joint  disease  and  the
development of therapeutic  products is the lack of an objective diagnostic test
to follow non-destructively the evolution of cartilage quality.

         The clinical  market is much  potentially  much larger.  It consists of
orthopaedists  practicing  arthroscopy  who also require a means of  objectively
evaluating  cartilage quality in patient knees.  Currently,  arthroscopists  use
subjective  and  relatively  uncertain  methods of visual  inspection and manual
probing (by feeling stiffness) to judge articular cartilage quality.


                                       -8-

<PAGE>
         Competition

         To the  knowledge  of the  Company,  there are  currently  no competing
technologies to respond to the demand for functional  non-destructive evaluation
of  articular   cartilage.   Most  instruments   currently  under  research  and
development  are based on mechanical  measurements  of the  cartilage  stiffness
instead of electrical measurements of streaming potentials.

         The  ARTHRO-BST(TM)  is based on a different  technology that overcomes
the major difficulties with the control of the compression  amplitude applied to
cartilage and the orientation of the indentor tip relative to cartilage surface.
Significantly  inaccurate  readings  are  given  if  the  indentor  tip  is  not
positioned by the orthopaedist  perpendicular to the  articulating  surface.  An
error  can also be  introduced  by the  force  applied  by the  orthopaedist  to
compress  the  tissue.   Instead  of  measuring   the  tissue   stiffness,   the
ARTHRO-BST(TM)  measures streaming potential generated during compression of the
tissue.  Two  dimensional  microelectrode  arrays placed on  non-planar  surface
permit a precise  determination of (i) the contact  distribution of the indentor
with the cartilage,  (ii) the compression  amplitude and velocity applied to the
cartilage,  and (iii) the  orientation  of the  indentor  relative to  cartilage
surface.  Furthermore, the sterilized indentor tip with microelectrode arrays is
disposable to minimize disease transmission.

         Regulatory Approval

         The   Company   currently   expects   that  the   arthroscopic   probe,
ARTHRO-BST(TM),   will  be  classified  by  the  United  States  Food  and  Drug
Administration  ("FDA")  as a Class II  medical  device  because of the low risk
associated with its use.  Moreover,  since the  ARTHRO-BST(TM) can be considered
substantially  equivalent  to  existing  devices  used  for  cardiovascular  and
neurological  diagnoses  with  electrodes,  we  expect  to  submit a  Pre-Market
Notification ("510(k)") to the FDA following clinical testing.  However, the FDA
may  reclassify  the device or request  additional  information if it determines
that the  application  does not satisfy its regulatory  approval  criteria.  See
"Item 1. Description of Business/Government  Regulation". The Company expects to
initiate  the  filing  process  once it has  completed  its  Good  Manufacturing
Practices ("GMP") compliant facilities. See "Item 2. Property."

         Manufacturing

         If and  when all  necessary  regulatory  approvals  are  obtained,  the
Company  plans to  manufacture  up to 200 units per year of the  ARTHRO-BST(TM),
using its current  facilities and certain  subcontractors  for some  specialized
components,   such  as  the  electronic  acquisition  card.  The  production  of
disposable  sterilized  tips with  microelectrode  arrays can be easily obtained
using commercial microelectronic laboratories. The fabrication uses conventional
methods and all the instrumentation  required is available.  Once a final design
for the electrode tip is completed, it should be possible to transfer production
to  one of  several  subcontractors  located  near  the  Company  with  approved
industrial and quality standards.



                                       -9-

<PAGE>

         New infrastructures will be required for large-scale production. Thus a
decision  will  eventually  be  made  to  acquire  additional  facilities  or to
establish  a  production  alliance  with a  large  manufacturer  of  orthopaedic
instruments.

         Distribution and Marketing Strategy

         The  introduction of the  ARTHRO-BST(TM)  has begun through  scientific
abstracts presented during international  conferences (Garon M et al., ORS 1997;
Legare A et al., ORS 1998;  Legare A et al.,  CCTC 1999;  Legare A et al.,  ICRS
2000),  trade shows (25TH Society for Biomaterials  Meeting,  Providence,  April
1999;  46TH  Orthopeadic  Research  Society  Meeting,  2000;  3rd  International
Cartilage Repair Society  Meeting,  Sweden,  April 2000; 6TH World  Biomaterials
Congress,  Hawaii, May 2000) and full length journal  articles  (Garon M et al.,
1999; Legare A et al., 2000).

         Upon validation of the technology, the Company intends to introduce the
ARTHRO-BST(TM)  to market  through  demonstration  of its efficacy for cartilage
evaluation through collaborations with leading clinical orthopaedic  researchers
and through the inclusion of the  ARTHRO-BST(TM) in clinical trials of arthritis
drugs. In September 2000, the Company plans to have several functioning clinical
devices  available for distribution to selected leading  researchers in clinical
orthopaedics.  Through collaborative efforts with these researchers, the ARTHRO-
BST(TM) will be publicized in  presentations  and  publications of these studies
and a demand  should be created in the research  programs of other  academic and
industrial research groups. The Company plans to support this strategy with data
from clinical trials to demonstrate  the objective  nature of the method and its
sensitivity and specificity for cartilage quality.  The recently formed Canadian
Arthritis  Network of Centres of Excellence  could assist by providing  clinical
trials to pharmaceutical companies with arthritis drugs and allowing the Company
to participate in these trials by providing  objective data for drug evaluation.
Our dual strategy  involving  collaboration  with leading  opinion makers and by
providing  statistically  sound scientific  studies should provide the basis for
market penetration.

         The Company expects to rely on the  distribution and sales network of a
major partner to generate sales.

         The MACH-1(TM)  Mechanical Tester

         Description

         The  Mach-1(TM)  Mechanical  Tester is a universal  mechanical  testing
system for  specimens  with  dimensions  between  hundreds  of microns and a few
centimeters.  Typical  applications for the Mach-1(TM)  Mechanical Tester are in
the mechanical  characterization of tissues,  pharmaceuticals,  polymers,  gels,
adhesives and food. The  instrument  allows the  characterization  of stiffness,
strength, modulus, viscoelasticity, plasticity, hardness, adhesion, swelling and
relaxation  and creep using load and  displacement  control  tests.  Some of the
features of the Mach-1(TM) Mechanical Tester are:



                                      -10-

<PAGE>

         o        Chambers for compression,  tension,  indentation,  bending and
                  other  test   configurations   are   mounted  on  a  universal
                  displacement  actuator  platform.  Displacement  control is to
                  within 25 nanometers.
         o        Load cells are  interchangeable to allow maximum loads between
                  0.15 kg to 10 kg with load precision being 1 part in 20,000 of
                  the maximum (10mg minimum).
         o        The test system can be placed in an  incubator  for testing or
                  mechanical  stimulation  in sterile  controlled  environments,
                  such as cell culture conditions.
         o        Sophisticated and flexible software allows execution of stress
                  relaxation,  ramp,  dynamic  sinusoidal  and  creep  tests  in
                  automated user-defined sequences.
         o        Sophisticated analysis software.
         o        Options include  visualization of specimen during testing with
                  cameras,   motorized  control  of  specimen  position  on  the
                  actuator,  and  electric  field  detection  (electromechanical
                  events) during testing.

         Market

         The Company has  identified  immediate  areas of interest  that offer a
sufficient market base to sustain the viability of this product:

         o        Biomaterials  and  biological  tissues   characterization  and
                  stimulation  in  controlled  environments.  Cells,  ligaments,
                  collagen, skin, bone, synthetics, transgenic animals.
         o        Polymers and gels stability, strength, adhesion,  brittleness,
                  cohesion,  flexibility,  friction,  peel strength,  viscosity,
                  elasticity. Adhesives, elastomers, hydrogels, glue, latex.
         o        Pharmaceuticals   mechanical   properties,   degradation   and
                  swelling,     simulation    of     physiological     condition
                  (gastrointestinal, etc.) Pills, drug delivery systems.
         o        Food,  pulp  and  paper,   electronic   packaging  and  others
                  mechanical   properties,   texture   analysis.   Food,  paper,
                  electronic components,  wires, fibers optics, films, packaging
                  material, spring, switches, tapes, cosmetics, foam, sponges.

         Market  potential of the  Mach-1(TM)  Mechanical  Tester also  includes
conventional  segments of  mechanical  testing.  Given the  specificity  of this
equipment,  the Company does not expect that a  significant  market will develop
for this product.

         To  date,  the  Company  has  initiated  production  of the  Mach-1(TM)
Mechanical  Tester on a small  scale at its  premises in Laval  Quebec.  A small
number of units have been sold, without any marketing efforts on the part of the
Company.

         Competition

         The price of other benchtop mechanical testers is around $20,000. While
the  Company  does offer  complete  systems at this  price,  it also offers more
enhanced versions that can be sold for up to $50,000. These high-end systems can
offer  sub-micron   resolution,   multi-axis   simultaneous   motion,  or  other
specialized


                                      -11-

<PAGE>

features.  With its  different  versions,  the  Company  covers a broad range of
applications and also offers custom system configurations for specific needs.

         Regulatory Approval

         The Mach-1(TM) Mechanical Tester is not a medical device and as such is
not subject to FDA or other regulatory approval.

         Manufacturing

         Given the small market for this product, the Company expects to be in a
position to fulfill existing demand (up to approximately 10 units per month) out
of its own facilities. The Company could eventually rely on the distribution and
sales  network of a major  partner to  generate  sales,  in which case  adequate
manufacturing capacity would have to be established.

         Distribution and Marketing Strategy

         The Company  intends to use direct sales and direct support as a way to
reach and serve its customers. Talking directly to its customers will enable the
Company  to know  them and  their  needs and to  establish  an  expert-to-expert
dialogue  that will enhance the trust they put in the  Company's  products.  The
Company could  eventually rely on the  distribution and sales network of a major
partner to generate additional sales.

Patents and Proprietary Rights

         The  Company's  success will be  dependent,  in part, on its ability to
obtain  patent   protection  for  its  product   candidates  and  those  of  its
collaborators,   maintaining  trade  secret  protection  and  operating  without
infringing upon the proprietary  rights of others.  See "Item 1.  Description of
Business/Risk Factors."

         Under the  Assignment  Agreement,  Polyvalor is  currently  entitled to
certain royalty  payments on future sales of products.  See "Item 1. Description
of Business/Agreement with Polyvalor."

         The Company has a  proprietary  portfolio  of patent  rights and patent
applications.  The Company has filed  several  United  States and  international
patent  applications  directed to  composition of matter as well as processes of
preparation  and methods of use.  The Company has been issued two  patents,  has
filed 21 applications and eight  provisional  applications.  In the future,  the
Company  plans to file  more  United  States  and  foreign  patent  applications
directed to new or improved products and processes.  The Company's United States
patents  will expire  between 2018 and 2020.  The Company  intends to defend its
patent position aggressively.

         The Company tries to protect its proprietary  position by filing United
States,  Canada and  foreign  patent  applications  related  to its  proprietary
technology, inventions and improvements that are important to the development of
its  business.  The patent  position  of  biopharmaceutical  companies  involves
complex legal and factual questions,  enforceability of patents therefore cannot
be


                                      -12-

<PAGE>

projected with certainty. Patents, if issued, may be challenged,  invalidated or
circumvented,  and may fail to provide any protection against  competitors.  The
Company's pending patent  applications,  those which the Company may file in the
future,  or those  which the Company may  license  from third  parties,  may not
result in patents being issued. If patents were issued, they may not provide the
Company  with   proprietary   protection  or  competitive   advantages   against
competitors  with  similar  technology.  Furthermore,  others may  independently
develop  similar  technologies  or duplicate any technology that the Company has
developed.  The laws of certain  foreign  countries do not protect the Company's
intellectual  property  rights to the same  extent as do the laws of the  United
States and Canada.

         The Company  also relies on trade  secrets,  know-how  and  technology,
which the Company tries to protect by entering into  confidentiality  agreements
with  parties  that  have  access  to  it,  such  as  its  corporate   partners,
collaborators,  employees and  consultants.  Any of these parties may breach the
agreement and disclose our confidential information or the Company's competitors
might learn of the information in some other way.

Government Regulation

         The  manufacture and marketing of  pharmaceutical  products and medical
devices in the United States and in Canada require the approval of the FDA under
the Federal Food,  Drug and Cosmetic Act and the Health  Protection  Branch (the
"HPB") of Canada,  respectively.  Similar  approvals by comparable  agencies are
required in most foreign countries.  The FDA and HPB have established  mandatory
procedures  and safety  standards  that  apply to the  preclinical  testing  and
clinical  trials,  manufacture  and  marketing  of  pharmaceutical  products and
medical devices.  Pharmaceutical  manufacturing facilities are also regulated by
state, local and other authorities.

         As an initial  step in the FDA  regulatory  approval  process for a new
drug  product  (whose  newness  may  arise  from  the  use of a new  excipient),
preclinical  studies are typically conducted in animal models to assess a drug's
efficacy and to identify potential safety problems. The results of these studies
must be submitted to the FDA as part of an Investigational  New Drug application
("IND"),  which must be reviewed by the FDA before proposed clinical testing can
begin.  Typically,  clinical  testing  involves a three-phase  process.  Phase I
trials are conducted with a small number of subjects and are designed to provide
information  about both product safety and the expected dose of the drug.  Phase
II  trials  are  designed  to  provide  additional  information  on  dosing  and
preliminary  evidence  of product  efficacy.  Phase III  trials are large  scale
studies  designed to provide  statistical  evidence  of  efficacy  and safety in
humans.  The  results  of the  preclinical  testing  and  clinical  trials  of a
pharmaceutical  product are then  submitted to the FDA in the form of a New Drug
Application  ("NDA"),  or for a  biological  product  in the  form of a  Product
License  Application   ("PLA"),  for  approval  to  commence  commercial  sales.
Preparing such applications involves considerable data collection, verification,
analysis  and  expense.  In  responding  to an NDA or PLA,  the  FDA  may  grant
marketing approval, request additional information or deny the application if it
determines  that  the  application  does not  satisfy  its  regulatory  approval
criteria.



                                      -13-

<PAGE>

         In the case of a  medical  device,  preclinical-study  results  must be
submitted to the FDA as part of an  Investigational  Device  Exemption  ("IDE"),
which must be reviewed by the FDA before  clinical  testing can begin.  Phase I,
II, and III trials  can then be  conducted  to  provide  safety,  efficacy,  and
method- of-use information.  The results of the preclinical testing and clinical
trials  of a  medical  device  are  then  submitted  to the FDA in the form of a
Pre-Market  Notification  a 510(k) for most Class I and Class II  devices,  or a
Pre-Market Approval ("PMA") request for most Class III devices.  Medical devices
are  classified  depending  upon the level of  regulatory  control  required  to
provide  reasonable  assurance  of their safety and  effectiveness.  In general,
non-critical devices or new devices substantially equivalent to existing devices
fall  into  Classes  I or II,  whereas  Class  III  devices  are those for which
insufficient   information   exists  to  determine  that  general  controls  are
sufficient to provide reasonable assurance of their safety and effectiveness.

         The  possible  future  uses  of  BST-Gel(TM)-related  biomaterials  are
several  and  are  therefore  expected  to  fall  into  a  number  of  different
categories.  Depending  on a proposed  application,  the FDA might  designate  a
BST-Gel(TM)-related  biomaterial  as a new  drug,  new  medical  device,  or new
excipient.

         The  Company  currently  expects  that  the  ARTHRO-BST(TM),   will  be
classified as a Class II medical device because of the low risk  associated with
its use. Moreover,  because the  ARTHRO-BST(TM) can be considered  substantially
equivalent  to  existing  devices  used  for   cardiovascular  and  neurological
diagnoses  with  electrodes,  we expect to submit a 510(k) to the FDA  following
clinical  testing.  However,  the FDA  may  reclassify  the  device  or  request
additional  information,  if it determines that the application does not satisfy
its regulator approval criteria.

         This  regulatory  process can require many years and the expenditure of
substantial  resources.  Data  obtained  from  preclinical  testing and clinical
trials are subject to varying interpretations, which can delay, limit or prevent
FDA approval. In addition,  changes in FDA approval policies or requirements may
occur or new  regulations  may be  promulgated,  which  may  result  in delay or
failure to receive FDA approval.  Similar  delays or failures may be encountered
in Canada and in foreign countries.

         Among the conditions for NDA or PLA approval, or 510(k) approval or PMA
in the  case of a  medical  device,  is the  requirement  that  the  prospective
manufacturer's  quality  control  and  manufacturing  procedures  conform  on an
ongoing basis with Good  Manufacturing  Practices  (GMPs).  The development of a
GMP- compliant manufacturing establishment for BST-Gel(TM)-related  biomaterials
will be a multi-step  process consisting of designing and building the necessary
facilities,  purchasing and installing the ancillary  equipment,  and validating
the facilities and equipment.  Simultaneously,  process development and scale-up
as well as assay  development  will be done to  supply  test  material  and data
critical to the clinical  program.  Once the facilities are validated,  a Type I
Drug Master File (DMF) (describing the manufacturing site, facilities, operating
procedures, and personnel) will be submitted by us to the FDA, as is recommended
for non-U.S. manufacturing establishments. Other types of DMFs, including a Type
II DMF for drug products and Type IV DMF for excipients,  may be submitted by us
to the FDA.


                                      -14-

<PAGE>


Before  approval  of an NDA,  PLA,  510(k),  or PMA  request by us, the FDA will
perform a  prelicensing  inspection of the facility to determine its  compliance
with GMPs and other rules and regulations. In complying with GMPs, manufacturers
must  continue to expend time,  money and effort in the area of  production  and
quality  control  to ensure  full  technical  compliance.  After  the  Company's
facilities  are licensed,  they will be subject to periodic  inspections  by the
FDA.

         The Company is also subject to various laws and regulations relating to
safe working conditions,  laboratory and manufacturing  practices,  experimental
use of animals  and use and  disposal  of  hazardous  or  potentially  hazardous
substances,  including radioactive compounds and infectious disease agents, used
in connection  with our research.  Compliance with existing laws and regulations
relating to the protection of the environment is not expected to have a material
effect on the Company's operations.

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

         See "Item 6. Plan of Operation" for  information in respect of research
and development expenditures and employees of the Company.


History of the Company

         The predecessor of Bio Syntech Canada was founded in 1995 by Dr. Amine
Selmani.

         Pursuant  to an  Amalgamation  Agreement  and  related  agreements,  as
amended (the  "Exchange  Agreements"),  dated February 15, 2000 by and among the
Company,  its then  wholly-owned  subsidiary  9083-5661  Quebec  Inc.,  a Quebec
corporation  ("9083"),  Bio Syntech Ltd., a Quebec  corporation ("Bio Syntech"),
and the  shareholders  of Bio  Syntech  (the  "Bio  Syntech  Shareholders"),  on
February 29, 2000,  9083 and Bio Syntech were merged into one company  under the
name of Bio Syntech Canada. As a result of the Exchange Agreements,  the Company
became  the  record and  beneficial  owner of all of the issued and  outstanding
shares of Bio Syntech  Canada's  Common  Stock and the Bio Syntech  Shareholders
were issued  non-voting  exchangeable  shares of Bio Syntech Canada's  Preferred
Stock  (the  "Class  A  Shares").  The  Class A  Shares  are  exchangeable  on a
share-for-share  basis for an  aggregate  of  15,177,036  shares  (the  "Company
Shares")  of  Common  Stock.  The  Company  Shares  issued  under  the  Exchange
Agreements are held in trust under the terms of an Exchange and Voting Agreement
(the  "Trust  Agreement"),  by  and  among  the  Company,  Pierre  Barnard  (the
"Trustee"),  Bio Syntech and 9083. (The foregoing  transactions  are referred to
collectively hereinafter as the "Transactions").

         Prior to the Transactions, there were 11,625,000 shares of Common Stock
outstanding,  taking into account a 3.75 for 1 split effectuated on December 28,
1999 and the  repurchase  of  10,875,000  shares of Common  Stock on February 2,
2000. As part of the Transactions,  the Company completed two private placements
(the "Private  Placements")  yielding  gross  proceeds of $2,350,000 in which it
issued  an  aggregate  of  470,000  shares of Common  Stock  and  warrants  (the
"Warrants")  to purchase an  aggregate  of 470,000  additional  shares of Common
Stock at a price of US $7.00 on or  before  September  30,  2001.  After  giving
effect of the Transactions,


                                      -15-

<PAGE>

there are 27,272,036 shares of Common Stock outstanding. In addition,  1,500,000
shares of Common  Stock are  reserved  for  issuance  upon  exercise  of options
granted or to be granted  under the Bio Syntech  Canada Stock  Option  Incentive
Plan,  2,500,000  shares of Common Stock are reserved for issuance upon exercise
of options to be granted under the  Company's  Stock Option  Incentive  Plan and
470,000  shares of Common Stock are reserved for issuance  upon  exercise of the
Warrants.

         Each beneficial  holder of the Class A Shares has voting rights in that
number of  Company  Shares  equal in number to the  number of the Class A Shares
held by such holder. Consequently,  the Bio Syntech Shareholders hold securities
with voting rights equal to approximately 55.7% of the total voting power of the
outstanding  Common  Stock.  At such time as the  holders  of Class A Shares may
exchange such shares for the Company Shares,  they will have the right to direct
the disposition of such Company Shares.

         The sole  source  of  consideration  for  issuance  to the Bio  Syntech
Shareholders  of the Class A Shares was the  exchange of the Bio Syntech  shares
held by them. At such time as the Bio Syntech  Shareholders  may exchange  their
Class A Shares for  Company  Shares,  the sole source of  consideration  for the
transfer to them of the Company Shares will be such Class A Shares.

         The  Exchange  Agreements  were  structured  to provide the Bio Syntech
Shareholders  with a capital gain deferral under  applicable  Canadian tax laws,
rules and regulations. In anticipation of the Transactions,  the Company changed
its name to "BioSyntech, Inc." from Dream Team International Inc.

         On the effective date of the  Transactions,  the officers and directors
of the Company resigned and new officers and directors, who are designees of Bio
Syntech Canada, were appointed.

         Copies of the Exchange  Agreements and related  transactions  documents
are filed as exhibits to the  Company's  Current  Report on Form 8-K dated March
15, 2000 and are incorporated in their entirety  herein.  The description of the
Exchange Agreements contained in this report is modified by such reference.


Risk Factors

         An  investment  in our Common Stock  involves a great deal of risk.  An
investor should carefully consider the following risk factors in addition to the
other  information  presented  in  this  Annual  Report  on Form  10-KSB  before
purchasing any of our Common Stock.

         We expect that we will incur losses for the foreseeable future.

         We have had net operating losses since being founded and currently have
an accumulated deficit.  These losses consist of research and development costs,
the costs of acquiring  rights to research and  development  performed by others
and  general  and  administrative   expenses.  We  expect  to  have  substantial
additional  expenses over the next several years as our research and development
activities


                                      -16-

<PAGE>

and the  process of  seeking  regulatory  approval  of our  products,  including
clinical  trials,  accelerate.  Because  we do not  expect  to have  significant
revenues  from the sale of products for several  years,  if ever, we expect that
such expenses will result in additional losses.

         Our future profitability depends, in part, on:

         o         Obtaining regulatory approval for our products;
         o         Entering  into   agreements  to  develop  and   commercialize
                   products;
         o         Developing the capacity to manufacture and market products or
                   entering into agreements with others to do so;
         o         Market acceptance of our products;
         o         The ability to obtain  additional  research  and  development
                   funding from our collaborative partners; and
         o         The   ability  to   achieve   certain   product   development
                   milestones.

         We may not  achieve any or all of these  goals and,  thus,  cannot give
assurances that we will ever achieve significant revenues or profits. Even if we
do  receive  regulatory  approval  of one or  more of our  products,  we may not
achieve significant commercial success.

         We need to spend substantial funds to become profitable.

         We will need to spend  substantial  amounts  of money  before we can be
profitable,  if ever. The amount we will spend,  and when we will spend it, will
depend, in part, on:

         o         How our research and development programs, including clinical
                   trials, progress;
         o         How much time and  expense  will be  required  to receive FDA
                   approval for our product candidates;
         o         The cost of building, operating and maintaining manufacturing
                   facilities;
         o         How many product candidates we pursue;
         o         How much  time and  money we need to  prosecute  and  enforce
                   patent rights;
         o         How competing  technological and market  developments  affect
                   our product candidates;
         o         The  cost  of   possible   acquisitions   of  drug   delivery
                   technologies, products or companies; and
         o         The cost of  obtaining  licenses to use  technology  owned by
                   others.

         We will  need  additional  financing  to  continue  our  operations  as
         planned.

         We will seek funds by issuing  equity and debt  securities  and through
arrangements with our collaborative partners. If we issue equity securities, our
present stockholders will suffer dilution. If we issue debt securities,  we will
face the risks  associated  with debt,  including  rises in  interest  rates and
insufficient  cash  flow  to pay  the  principal  of and  interest  on our  debt
securities. We are unable to predict whether additional equity or debt financing
will be available to us, on favorable terms or at all. If sufficient financing


                                      -17-

<PAGE>

is not available on a timely basis,  we may be forced to cut back on one or more
development  programs or to give up rights in products that could later prove to
be of great value.

         Our delivery  technologies may not produce safe, useful or commercially
         viable products.

         We do not yet have a therapeutic  delivery  system  product that we can
sell  commercially and we cannot be certain that we will have one in the future.
To be profitable,  we must develop,  manufacture and market our products, either
alone or by collaborating with others.  This could take several years and we may
never be successful in bringing our product  candidates to the market. A product
may appear  promising at an early stage of development or after clinical  trials
and never  reach the  market,  or it may reach the  market  and not sell,  for a
variety of reasons. The product may:

         o         Be shown to be  ineffective  or to cause harmful side effects
                   during preclinical testing or clinical trials;
         o         Fail to receive  regulatory  approval on a timely basis or at
                   all;
         o         Be hard to manufacture on a large scale;
         o         Be uneconomical;
         o         Not be pursued by our collaborative partner;
         o         Not be prescribed by doctors or accepted by patients; or
         o         Infringe on proprietary rights of another party.

         The FDA may not approve our product candidates.

         Approval   from  the  FDA  is  required  to   manufacture   and  market
pharmaceutical  products  in the United  States.  The  process  to receive  this
approval is extensive and includes  preclinical  testing and clinical  trials to
demonstrate safety and usefulness,  and a review of the manufacturing process to
ensure compliance with good manufacturing practices.  This process can last many
years and be very costly and still be unsuccessful. FDA approval can be delayed,
limited or not granted at all for many reasons, including:

         o         A product candidate may not be safe or effective;
         o         Data from  preclinical  testing  and  clinical  trials can be
                   interpreted  by FDA  officials  in  different  ways  than  we
                   interpret it;
         o         The FDA might not  approve  our  manufacturing  processes  or
                   facilities;
         o         The FDA  may  change  its  approval  policies  or  adopt  new
                   regulations; and
         o         A product  candidate  may not be approved for all the uses we
                   requested.

         Countries other than the United States,  including Canada, have similar
requirements.  The process of getting  approvals in foreign countries is subject
to delay and failure for the same reasons.



                                      -18-

<PAGE>

         We rely heavily on collaborators.

         Our arrangements  with  collaborators and licensors are critical to our
success in bringing our product  candidates to the market. Our partners own many
of the drug,  cell and  genetic  material  products  for which we are  designing
delivery  systems.  In some  cases,  we  depend  on  these  parties  to  conduct
preclinical  testing  and  clinical  trials  and  to  provide  funding  for  our
development  programs.  Some of our collaborators can terminate their agreements
with us for no reason and on limited  notice.  We cannot be assured  that any of
these relationships will continue.

         We also  expect  to rely  upon our  collaborators  to  manufacture  our
therapeutic  delivery  products in commercial  quantities  and for marketing and
sales. Our present plans do not call for us to develop these capabilities on our
own. If we are unable to reach satisfactory agreements with our collaborators or
with  third  parties,  we would  incur  substantial  additional  costs and would
experience substantial delay in commercializing most of our products.

         We cannot control our collaborators'  performance or the resources they
devote to our  programs.  If a  collaborator  fails to  perform,  the  research,
development or commercialization program on which it is working will be delayed.
If this happens,  we may have to use funds,  personnel,  laboratories  and other
resources that we have not budgeted,  and may not have, to continue the program,
or we may have to stop the program entirely.

         Disputes may arise  between us and a  collaborator  and may involve the
issue  of  which  of  us  owns  the  technology  that  is  developed   during  a
collaboration.  Such a dispute  could delay the  program or result in  expensive
arbitration or litigation,  which we might not win. A collaborator may choose to
use its own or  other  technology  to  deliver  its  drug or cell  product.  Our
collaborators could merge with or be acquired by another company or financial or
operational difficulties that could adversely affect our programs.

         We are subject to extensive  government  regulations  and we may not be
         able to obtain regulatory approvals.

         Our product candidates are subject to broad government  regulation.  In
the United  States,  the FDA  regulates,  among other things,  the  development,
testing,  manufacture,  safety, usefulness,  record-keeping,  labeling, storage,
approval,  advertising,  promotion,  sale and distribution of  biopharmaceutical
products.  If our products are  marketed in other  countries,  they will also be
subject to extensive regulation by foreign governments. Certain material changes
to an approved  product,  such as manufacturing  changes or additional  labeling
claims, are subject to further FDA review and approval.  Any required approvals,
once  obtained,  may be  withdrawn.  Further,  if we fail to comply with FDA and
other regulatory requirements at any stage during the regulatory process, we may
be subject to sanctions, including:

         o         Delays, warning letters and fines;
         o         Product recalls or seizures and injunctions on sales;
         o         Refusal  of  the  FDA  to  review  pending  market   approval
                   applications or supplements to approval applications;
         o         Total or partial suspension of production;


                                      -19-

<PAGE>

         o         Withdrawals of previously  approved  marketing  applications;
                   and
         o         Civil penalties and criminal prosecutions.

         Rapid  technological  change  could  render  our  therapeutic  delivery
         systems obsolete or noncompetitive.

         Major technological  changes can occur quickly in the  biotechnological
and pharmaceutical industries. The development by competitors of technologically
improved  or  different  products  may make our product  candidates  obsolete or
noncompetitive.

         The competitive  nature of our industry could  adversely  affect market
         acceptance of our products.

         Our product candidates may not gain market acceptance among physicians,
patients,  healthcare  payors and the  medical  community.  The degree of market
acceptance of any product  candidates that we develop will depend on a number of
factors, including:

         o         Demonstration of their usefulness and safety;
         o         Their relative cost;
         o         Their  advantage  or  disadvantage  compared  to  alternative
                   methods;
         o         The marketing and distribution support they receive; and
         o         Reimbursement policies of government and third-party payors.

         Our products may compete with new products  currently under development
by others or with products that may cost less than our products.  Our actual and
potential    competitors   include   other   therapeutic   delivery   companies,
biotechnology and pharmaceutical  companies,  academic and research institutions
and  government  agencies.  Many  have  greater  name  recognition  and  greater
financial,  research and  development  and personnel  resources than we do. Many
have greater  experience  in testing and clinical  trials and in the  regulatory
process.

         Proprietary protection for our products is important and uncertain.

         The following factors are important to our success:

         o         Receiving  patent  protection for our product  candidates and
                   those of our collaborators;
         o         Maintaining our trade secrets;
         o         Not infringing on the proprietary rights of others; and
         o         Preventing others from infringing our proprietary rights.

         We will be able to protect our proprietary rights from unauthorized use
by third  parties  only if these  rights are  covered  by valid and  enforceable
patents or are effectively maintained as trade secrets.

         We try to protect our  proprietary  position by filing  United  States,
Canada, and foreign patent applications  related to our proprietary  technology,
inventions  and  improvements  that  are  important  to the  development  of our
business.  The patent position of  biopharmaceutical  companies involves complex
legal and factual


                                      -20-

<PAGE>

questions.  Therefore,  enforceability  of  patents  cannot  be  projected  with
certainty.  Patents, if issued, may be challenged,  invalidated or circumvented.
Thus,  any  patents  that we own or  license  from  others may not  provide  any
protection against competitors.  Our pending patent  applications,  those we may
file in the future,  or those we may license from third parties,  may not result
in patents  being  issued.  If patents  do issue,  they may not  provide us with
proprietary  protection  or  competitive  advantages  against  competitors  with
similar  technology.  Furthermore,  others  may  independently  develop  similar
technologies  or duplicate any technology  that we have  developed.  The laws of
certain foreign countries do not protect our intellectual property rights to the
same extent as do the laws of the United States.

         We also rely on trade secrets, know-how and technology, which we try to
protect by entering  into  confidentiality  agreements  with  parties  that have
access to it,  such as our  corporate  partners,  collaborators,  employees  and
consultants.  Any of these  parties may breach the  agreement  and  disclose our
confidential  information or our  competitors  might learn of the information in
some other way.

         Efforts  to  keep  down  the  cost  of  healthcare   may  threaten  our
         profitability.

         Third-party  payors,  which  include  governments  and  private  health
insurers,  are increasingly  challenging the prices charged for medical products
and services.  In their attempts to reduce healthcare costs, they have also been
limiting their coverage and  reimbursement  levels for new drugs. In some cases,
they are  refusing  to cover the  costs of drugs  that are not new but are being
used for newly approved purposes. Patients who use a product that we may develop
might not be  reimbursed  for its cost.  If  third-party  payors do not  provide
adequate coverage and reimbursement for our products, if and when they reach the
market, doctors may not prescribe them or patients may not use them.

         The federal  government and various state  governments  have considered
proposals to regulate the prices of  prescription  drugs,  as is done in certain
foreign  countries.  We expect that there will be more proposals like these.  If
any of these  proposals  are  enacted,  we may  receive  a lower  price  for our
products, if and when they reach the market, than we currently estimate. Lack of
adequate  reimbursement or the enactment of price controls would have a material
adverse effect on our business and financial condition.


         We may not be able  to  retain  our key  executives  and  research  and
         development personnel.

         Our success  depends on the services of key  employees in executive and
research and development  positions,  notably our Chief Executive  Officer,  Dr.
Selmani. The loss of the services of one or more of these employees could have a
material adverse effect on our operations.

         Our  insurance  coverage  may be  insufficient  for  product  liability
         claims.

         The testing and marketing of bio-therapeutic and medical products, even
after FDA approval, have an inherent risk of product liability. We anticipate


                                      -21-

<PAGE>

that we will obtain product liability  insurance coverage in a limited amount at
the time that our operations warrant it. Our profitability will be affected by a
successful  product  liability  claim in excess of our  insurance  coverage.  We
cannot  guarantee  that  product  liability  insurance  will be available in the
future on reasonable terms or at all.

         We will pay no dividends on our Common Stock.

         We have not paid cash  dividends  on our Common Stock and do not expect
to do so in the foreseeable future.

         Future issuance of shares may dilute present stockholders.

         Our Articles of  Incorporation  authorize  the issuance of a maximum of
50,000,000 shares of Common Stock. Our shareholders may experience a substantial
dilution in the percentage of the Common Stock they hold if we issue all or part
of the remaining authorized Common Stock in the future.  Moreover,  we may value
any Common Stock  issued in the future on a basis other than the current  market
price of the  Common  Stock.  Dilution  could  also occur if we issue our Common
Stock for future  services or acquisitions  or other  corporate  actions.  These
actions could depress the market price of our Common Stock.

         Our Common Stock may be regulated as a "penny stock."

         Under United States  securities  regulations,  "penny stocks" generally
are  equity  securities  with a price of less than  $5.00 per share  other  than
securities  registered on certain national securities exchanges or quoted on the
Nasdaq Stock Market. Our Common Stock may be subject to "penny stock rules" that
impose additional sales practice  requirements on  broker-dealers  who sell such
securities to persons other than established  customers and accredited investors
(generally  those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000  together with their spouse).  For transactions  covered by
these rules, the broker-dealer must make a special suitability determination for
the  purchase of such  securities  and have  received  the  purchaser's  written
consent  to  the  transaction  prior  to the  purchase.  Additionally,  for  any
transaction  involving a penny  stock,  unless  exempt,  the "penny stock rules"
require  the  delivery,  prior  to the  transaction,  of a  disclosure  schedule
prescribed by the Securities and Exchange Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered  representative  and current quotations for the
securities.  Finally,  monthly  statements must be sent disclosing  recent price
information  on the limited  market in penny  stocks.  Consequently,  the "penny
stock  rules" may  restrict  the  ability of  broker-dealers  to sell our Common
Stock.  The "penny stock rules" will not apply if the market price of our Common
Stock is $5.00 or  greater.  There  can be no  assurance  that the  price of our
Common Stock will maintain such a level.



                                      -22-

<PAGE>

         We can give no assurances that our forward  looking  statements will be
         correct.

         Certain forward-looking statements,  including statements regarding our
expected financial position,  business and financing plans are contained in this
Annual Report on Form 10-K. These  forward-looking  statements reflect our views
with respect to future events and financial performance.  The words,  "believe,"
"expect,"  "plans" and "anticipate" and similar  expressions  identify  forward-
looking statements.  Although we believe that the expectations reflected in such
forward-looking  statements are  reasonable,  we can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from such expectations are disclosed in this
Annual  Report on Form 10-K.  All  subsequent  written and oral  forward-looking
statements  attributable to us are expressly  qualified in their entirety by the
cautionary  statements.  Readers are  cautioned  not to place undue  reliance on
these  forward-looking  statements,  which  speak  only as of  their  dates.  We
undertake  no  obligation  to  publicly  update  or revise  any  forward-looking
statements, whether as a result of new information, future events or otherwise.


ITEM 2.  PROPERTY

         The Company has its  administrative  and commercial  offices as well as
research and development facilities at 475 Armand-Frappier  Boulevard,  in Laval
(Quebec),  in the Greater Montreal Area. A  90,000-square-foot  area of land was
acquired by Bio Syntech Canada on which a 20,000-square-foot  building was built
to specifications to house administrative, commercial, scientific, and technical
personnel.   This  complex  is  equipped  to  conduct  high-level  research  and
development and preliminary production of biomaterials.

         The Company's  facilities are designed to be upgradeable to comply with
Good Laboratory  Practices (GLPs), while additional space will be devoted in the
future to sites for  operations  compliant  with  Good  Manufacturing  Practices
(GMPs). The Company intends to initiate in the current fiscal year the necessary
work to comply with GMP at an estimated cost of CDN$3,000,000 (US$2,069,679).

         The Company  entered into a leaseback  transaction  in order to finance
the  cost of the  building.  The  lease is for a  period  of 10  years  starting
September 1999 at a net rental of CDN$14,000 per month  (US$9,658).  The Company
has an  option to  terminate  the lease and to  acquire  the  property  from the
landlord at a price of CDN$1,200,000 (US$827,872),  which option it exercised on
March 29,  2000.  Closing of the purchase is  anticipated  to occur during April
2000.


ITEM 3.  LEGAL PROCEEDINGS

         There is no action, suit,  proceeding,  or investigation pending or, to
the  Company's  knowledge,   threatened  against  the  Company,   including  any
investigation of any governmental authority or body, except as described below:

         Robert  Conyers (the  "Plaintiff"),  a former  employee of the Company,
commenced an action on November 16, 1999 in Superior Court,  Province of Quebec,
District of Montreal,  against the Company and its Chief Executive Officer,  Dr.
Amine Selmani. Plaintiff alleges that he was wrongfully terminated as an


                                      -23-

<PAGE>

employee and seeks CDN$96,581 in compensation allegedly due, the issuance to him
of 100,000  shares of Common Stock that were to be subject to an option that was
allegedly to have granted to him and CDN$25,000 in punitive damages. The Company
and Dr.  Selmani  deny  Plaintiff's  allegations  and  believe  that  they  have
meritorious defenses to this action.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company  held its annual  meeting of  shareholders  on December 28,
1999 where holders of 4,350,000  shares of the 6,000,000  shares of Common Stock
then  outstanding  entitled to vote were present or  represented  by proxy.  The
shareholders  represented at the meeting unanimously voted Mr. Douglas Ansell to
serve as a director of the Company and  Messrs.  R.K.  McBride and John  Michael
Eckert  to  continue  serving  as  directors  of the  Company.  (Such  directors
subsequently  resigned and were  replaced by  designees of Bio Syntech  Canada.)
Additionally,  the following  resolutions were voted on and unanimously approved
by the shareholders represented at the meeting:

         o         To allow the  Board of  Directors  to issue up to  25,000,000
                   shares of Common Stock to use for  acquisitions  as the Board
                   of Directors sees fit;

         o         To authorize the Board of Directors to change the name of the
                   Company  at a time and to a name as the  Board  of  Directors
                   sees fit; and

         o         To authorize  the Board of Directors to effectuate a 3.75 for
                   1 forward stock split.


                                     PART II


ITEM 5.  MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         The Common  Stock has been  eligible for trading on the Nasdaq Over The
Counter  Bulletin Board since the fourth  quarter of 1999.  The following  table
sets out the high and low bid prices of the  Common  Stock  during  the  periods
indicated.  Such prices reflect  inter-dealer  prices,  without retail  mark-up,
mark-down or commissions and may not necessarily represent actual transactions.

                                             High ($)         Low ($)
                                             --------         -------

1999     4th quarter                        $0.0000          $0.0000

2000     1st quarter (to March 27th)        $8.5625          $3.7500



                                      -24-

<PAGE>

         According to information furnished to the Company by the transfer agent
for the Common  Stock,  as of March 9, 2000,  there were 61 holders of record of
the Common Stock, including depositories.

         The Company has never declared or paid any cash dividends on its Common
Stock and presently  anticipates  that any future  earnings will be retained for
the development of its business.  The payment of future dividends will be at the
discretion of the Company's Board of Directors and will depend upon, among other
things, future earnings,  capital  requirements,  the financial condition of the
Company, and general business conditions.

         On December 28, 1999, the Company effectuated a 3.75-for-1 split of its
Common  Stock,  as a result of which an aggregate of 8,525,000  shares of Common
Stock was issued.  The Company relied upon the provisions of Section 2(3) of the
Securities  Act of 1933,  as amended (the  "Securities  Act"),  inasmuch as such
issuance did not constitute a sale. No consideration was given for such issuance
and no underwriter was involved in such transaction.

         On February 29, 2000, the Company completed  private  placements of its
securities  yielding aggregate  proceeds of US$2,350,000,  in which it issued an
aggregate  of  470,000  shares  of Common  Stock and  Warrants  to  purchase  an
additional  470,000  shares of Common  Stock at a price of  US$7.00 on or before
September 30, 2001. The Company relied upon the exemption provided in Regulation
S  under  the  Securities  Act.  No  underwriter  was  involved  in the  private
placements.

ITEM 6.  PLAN OF OPERATION

         The Company is a  development  stage  company that has had only minimal
product revenues to date and is thus subject to numerous risks,  including risks
associated with product development,  growth, manufacturing and competition. See
"Item 1. Description of Business/Risk Factors" generally.  The Company's plan of
operations for calendar year 2000 is focused on pursuing the  development of its
technologies   through  direct  research  and   development  and   collaborative
agreements.

         The  Company's  operations  are and  will  continue  to be  focused  on
research and development activities intended to develop biotherapeutic  delivery
systems made of proprietary biomaterials.  Its strategy is to form collaborative
partnerships  with producers of  therapeutics  seeking  delivery  solutions that
address the difficulties  encountered with presently available delivery methods.
At such time as an effective delivery solution were developed, the Company would
enter into an agreement with its  collaborative  partner for the  manufacture of
the product in limited  quantities  by the Company for the purpose of regulatory
approval and concomitant  testing.  At the conclusion of such phase, the product
would  be  manufactured  in  commercial  quantities,  marketed  and  sold by the
collaborative  partner.  The Company  anticipates  that the agreements  with its
collaborative  partners  would  provide for an initial  payment to the  Company,
progress   payments  as   milestones   are   achieved   during  the   regulatory
approval/testing phase and percentage royalty payments once the product is in


                                      -25-

<PAGE>

commercial production.  Given the early stage of the Company's operations, there
is no assurance that it will in fact enter into any such agreements.

Cash Requirements and Necessity to Raise Additional Funds During the next 12
Months

         As of March 15,  2000,  the  Company  had cash on hand and  short  term
investments of approximately US$4,000,000 (CDN $5,798,000).  It anticipates that
it  will  conduct  one  or  more  private  placements  of its  securities  under
Regulation  S  during  the  remainder  of 2000  and  expects  to  raise  over US
$5,000,000 (CDN  $7,247,500).  As described below, it will be required to expend
the sum of CDN  $1,200,000  (US  $827,872)  to acquire the  facility in which it
conducts its  operations.  It also expects to expend  between CDN $1,000,000 and
CDN  $1,500,000  (US  $689,893  and US  $1,034,839)  during  2000 to  equip  its
facility.  The Company believes that the capital resources presently on hand and
that it reasonably  anticipates  to available  will be sufficient  for projected
capital expenditures and operating expenses for the next 12 months. See "Item 1.
Description of  Business/Risk  Factors" for those risks associated with the need
to finance the activities of the Company.

Research and Development

         For the fiscal  years ended  December  31,  1999 and 1998,  Bio Syntech
Canada spent CDN  $1,244,337  (US  $858,459)  and CDN $332,606 (US $229,463) for
R&D,  respectively.  Research and development  activities for calendar year 2000
will be centered on improving the Company's proprietary position in the field of
advanced   biomaterials   and   development   activities   with  its   corporate
collaborators and its own in house programs. In order to provide a streamline of
new  technologies,  it will  dedicate  a third of its  research  efforts  to the
discovery or enhancement of new  biomaterial  formulations.  This will include a
second  generation  of  BST-Gel(TM)   products  and  the  creation  of  platform
technologies  capable of delivery of additional  therapeutics.  Another third of
R&D efforts will be dedicated to collaborative  programs of co-development  with
its corporate partners. These efforts will focus on establishing the performance
of its drug delivery  technologies with a number of therapeutics.  Finally,  the
remainder  of its R&D effort will focus on  internal  development  programs  for
cartilage and bone repair.  See "Item 1. Description of  Business/Risk  Factors"
for those risks associated with the development of the Company's products.

Purchase of Plant and Significant Equipment

         See "Item 2.  Property"  for  information  in respect of the  Company's
exercise  of its  option  to  acquire  the  facility  in which it  conducts  its
operations.

         The Company's  facilities are equipped to conduct  high-level  research
and  development  and  preliminary  production  of  biomaterials.  The Company's
laboratories  in Laval  are  designed  to be  upgradeable  to  comply  with Good
Laboratory  Practices  (GLPs).  In  addition,  space on the second  floor of the
Company's  premises has already been  reserved  for the  construction  of a Good
Manufacturing Practices (GMP)-compliant facility for the production of clinical-
grade biomaterials, BST-Gel(TM) and BST-Gel(TM)-related biomaterials. This will


                                      -26-

<PAGE>

involve  designing  and  building  the  necessary  facilities,   purchasing  and
installing the ancillary equipment, validating the facilities and equipment, and
applying for FDA approval of the  facilities.  This  undertaking is estimated to
cost  about CDN  $3,000,000  (US  $2,069,679),  of which CDN  $1,000,000  to CDN
$1,500,000 (US $689,893 to US $1,034,839) is expected to be expended  during the
remainder of 2000.

Employee Growth

         As of March 15,  2000,  the Company had 25  employees,  of whom 20 were
engaged on R&D and five were engaged in corporate and administrative activities.
Over the next 12 months, it intends to increase its corporate and administrative
personnel to eight.  The existing R&D team will be expanded by 10 to 15 persons.
The total  employee  count is  anticipated to be in the range of 40 employees by
2001. See "Item 1. Business/Risk  Factors - Possible Inability to Manage Growth"
and  "--Dependence  upon  Key  Personnel;  Need  to  Hire  Additional  Qualified
Personnel"  for risks the  Company may face in hiring and  retaining  additional
personnel.


ITEM 7.            FINANCIAL STATEMENTS

See Table of Contents to Financial Statements below.


ITEM 8.            CHANGES IN AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING
                   AND FINANCIAL DISCLOSURE

         Ernst & Young has served as the independent  accountant for Bio Syntech
Canada  and for its  predecessors  since  such  corporations'  inception.  Under
applicable accounting rules and policies, Bio Syntech Canada is deemed to be the
acquirer of the Company as a result of the Transactions. Since the Transactions,
Ernst & Young has served as the independent accountant of the Company.

         Barry L. Friedman of Las Vegas, Nevada, was the independent  accountant
of the Company prior to the Transactions.


                                    PART III


ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
                  ACT

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than  April  29,  2000  pursuant  to  Regulation  14A of the  General  Rules and
Regulations under the Securities Exchange Act of 1934 ("Regulation 14A").



                                      -27-

<PAGE>

ITEM 10.          EXECUTIVE COMPENSATION.

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.


ITEM 11.          SECURITY OWNERSHIP OF CERTAIN
                  BENEFICIAL OWNERS AND MANAGEMENT.

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.


ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  The  information  required  by this  item is  incorporated  by
reference from the Company's  definitive  proxy  statement to be filed not later
than April 29, 2000 pursuant to Regulation 14A.

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

 Exhibit 3.1              Articles of  Incorporation - Incorporated by reference
                          to Exhibit 3.1 to Registration  Statement on Form 10SB
                          filed August 30, 1999.

 Exhibit 3.2              By-laws - Incorporated by reference to Exhibit 3.2 to
                          Registration Statement on  Form 10SB filed August 30,
                          1999.

 Exhibit 2.1              Amalgamation  Agreement  made  December  2,  1999,  as
                          amended  and  restated  on February  15,  2000,  among
                          BioSyntech Inc., Bio Syntech Ltd. and 9083-5661 Quebec
                          Inc. -  Incorporated  by  reference  to Exhibit 2.1 to
                          Current Report on Form 8-K dated March 15, 2000.

 Exhibit 4.1              Exchange and Voting  Agreement  made February 16, 2000
                          among BioSyntech Inc.,  9083-5661 Quebec Inc.,  Pierre
                          Barnard  and  Bio  Syntech  Ltd.  -  Incorporated   by
                          reference to Exhibit 4.1 to Current Report on Form 8-K
                          dated March 15, 2000.

 Exhibit 4.2              Support   Agreement   made  February  15,  2000  among
                          BioSyntech,   Inc.,  9083-5661  Quebec  Inc.  and  Bio
                          Syntech  Ltd. -  Incorporated  by reference to Exhibit
                          4.2 to  Current  Report  on Form 8-K  dated  March 15,
                          2000.

*Exhibit 10.1             Amended and Restated Technology  Assignment  Agreement
                          among  Polyvalor  Limited  Partnership,   Bio  Syntech
                          Canada Inc., and BioSyntech Inc. dated March 15, 2000.


                                      -28-

<PAGE>



*Exhibit 10.2             BioSyntech, Inc. Stock Option Incentive Plan.

*Exhibit 10.3             Bio Syntech Canada Inc. Stock Option Incentive Plan.

*Exhibit 10.4             Non-Disclosure and  Confidentiality  Agreement between
                          Bio Syntech Ltd. and Sulzer Orthopedics Biologics Inc.
                          dated February 23, 1999.

*Exhibit 10.5             Material  Transfer  Agreement between Bio Syntech Ltd.
                          and Sulzer Orthopedics Ltd. dated January 4, 2000.

*Exhibit 10.6             Confidentiality Agreement between Bio Syntech Ltd. and
                          Reprogenesis, Inc. dated  May 31, 1999.

*Exhibit 10.7             Material  Transfer  Agreement between Bio Syntech Ltd.
                          and Reprogenesis, Inc. dated July 27, 1999.

*Exhibit 10.8             Confidential  Disclosure Agreement between Bio Syntech
                          Ltd. and Ophidian  Pharmaceuticals,  Inc. dated August
                          16, 1999.

*Exhibit 10.9             Biological  Material  Transfer  Agreement  between Bio
                          Syntech Ltd. and Ophidian Pharmaceuticals,  Inc. dated
                          August 16, 1999.

*Exhibit 10.10            Mutual  Confidentiality  and Non-Disclosure  Agreement
                          between Bio  Syntech  Ltd.  and  Viragen  Incorporated
                          dated September 2, 1999.

*Exhibit 10.11            Confidential  Disclosure Agreement between Bio Syntech
                          Ltd. and Ontogeny, Inc. dated October 26, 1999.

*Exhibit 10.12            Material  Transfer  Agreement between Bio Syntech Ltd.
                          and Ontogeny, Inc. dated December 3, 1999.

*Exhibit 10.13            Material  Transfer  Agreement between Bio Syntech Ltd.
                          and Biomet Manufacturing Corporation dated February 8,
                          2000.

*Exhibit 21               List of Subsidiaries of Company.

*Exhibit 23               Cosnent of Barry L. Friedman, CPA

*Exhibit 27               Financial Data Schedule.
----------------------------------
* Filed herewith.


(b) Reports on Form 8-K:

         The  Company  did not file any  Current  Report on Form 8-K  during the
quarter ended  December 31, 1999. The Company filed a Current Report on Form 8-K
dated March 15, 2000,  reporting  under Item 1. Change in Control of  Registrant
and Item 2. Acquisition or Disposition of Assets - the Transactions.


                                      -29-

<PAGE>

                                   SIGNATURES

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


                                                    BIOSYNTECH,  INC.



March 29, 2000                              By:     /s/ Amine Selmani
                                                  ------------------------------
                                                  Amine Selmani
                                                  President


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

Signature                                           Title             Date


/s/ Amine Selmani                  President;                    March 28, 2000
----------------------------       Chief Executive Officer;      ---------------
    Amine Selmani                  Chief Financial Officer;
                                   Chief Accounting Officer


/s/ Denis N. Beaudry               Director                      March 28, 2000
---------------------------                                      ---------------
    Denis N. Beaudry


/s/ Pierre Alary                   Director                      March 28, 2000
---------------------------                                      ---------------
    Pierre Alary


/s/ Jean-Yves Bourgeois            Director                      March 28, 2000
---------------------------                                      ---------------
    Jean-Yves Bourgeois


/s/ Pierre Ranger                  Director                     March 28, 2000
---------------------------                                     ----------------
    Pierre Ranger



                                      -31-
<PAGE>




                                BIOSYNTECH, INC.
     (Formerly Dream Team International, Inc.) (A Development Stage Company)


                              FINANCIAL STATEMENTS

                                December 31, 1999
                                December 31, 1998
                                December 31, 1997














<PAGE>




                                TABLE OF CONTENTS
                                -----------------


                                                                          PAGE #
                                                                          ------


            INDEPENDENT AUDITORS REPORT                                  F-1
            ----------------------------------------------------------------

            ASSETS                                                       F-2
            ----------------------------------------------------------------


            LIABILITIES AND STOCKHOLDERS' EQUITY                         F-3
            ----------------------------------------------------------------


            STATEMENT OF OPERATIONS                                      F-4
            ----------------------------------------------------------------


            STATEMENT OF STOCKHOLDERS' EQUITY                            F-5
            ----------------------------------------------------------------


            STATEMENT OF CASH FLOWS                                      F-6
            ----------------------------------------------------------------


            NOTES TO FINANCIAL STATEMENTS                         F-7 - F-12
            ----------------------------------------------------------------


<PAGE>


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

Board of Directors                                             February 28, 2000
BIOSYNTECH, INC.
Las Vegas, Nevada

            I have audited the accompanying Balance Sheets of BIOSYNTECH,  INC.,
(Formerly Dream Team International,  Inc.), (A Development Stage Company), as of
December 31, 1999,  December  31, 1998,  and December 31, 1997,  and the related
statements  of  operations,  stockholders'  equity  and cash flows for the three
years ended December 31, 1999,  December 31, 1998, and December 31, 1997.  These
financial  statements are the  responsibility  of the Company's  management.  My
responsibility  is to express an opinion on these financial  statements based on
my audit.

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

            In my opinion,  the financial  statements  referred to above present
fairly, in all material respects,  the financial  position of BIOSYNTECH,  INC.,
(Formerly Dream Team International,  Inc.), (A Development Stage Company), as of
December 31, 1999,  December 31, 1998, and December 31, 1997, and the results of
its  operations  and cash flows for the three years  ended  December  31,  1999,
December 31, 1998, and December 31, 1997, in conformity with generally  accepted
accounting principles.

            The accompanying  financial  statements have been prepared  assuming
the Company  will  continue as a going  concern.  As discussed in Note #5 to the
financial statements,  the Company has suffered recurring losses from operations
and has no established  source of revenue.  This raises  substantial doubt about
its ability to continue as a going concern. Management's plan in regard to these
matters is described in Note #5. These  financial  statements do not include any
adjustments that might result from the outcome of this uncertainty.




Barry L. Friedman
Certified Public Accountant
1582 Tulita Drive
Las Vegas, NV 89123
(702) 361-8414


<PAGE>

                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)


                                  BALANCE SHEET
                                  -------------


                                     ASSETS
                                     ------


                                        December    December     December
                                        31, 1999    31, 1998     31, 1997
                                       ----------  ----------   -----------


CURRENT ASSETS                         $        0   $        0   $         0
                                       ----------   ----------   -----------

      TOTAL CURRENT ASSETS             $        0   $        0   $         0
                                       ----------   ----------   -----------


OTHER ASSETS                           $        0   $        0   $         0
                                       ----------   ----------   -----------

      TOTAL OTHER ASSETS               $        0   $        0   $         0
                                       ----------   ----------   -----------



TOTAL ASSETS                           $        0   $        0   $         0
                                       ----------   ----------   -----------










     The  accompanying  notes are an  integral part of the financial statements.

                                       F-2

<PAGE>

                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)

                                  BALANCE SHEET
                                  -------------

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

                                          December    December      December
                                          31, 1999    31, 1998      31, 1997
                                          --------    --------      --------

CURRENT LIABILITIES

      Advances Payable(Note #5)          $   4,235   $    1,135   $       235
                                         ---------   ----------   -----------

      TOTAL CURRENT LIABILITIES          $   4,235   $    1,135   $       235
                                         ---------   ----------   -----------

STOCKHOLDERS' EQUITY (Note #4)

      Common stock
      Par value $0.001
      Authorized 50,000,000 shares
      Issued and outstanding at

      December 31, 1997 -
      6,000,000 shares                                            $     6,000

      December 31, 1998 -
      6,000,000 shares                               $    6,000

      December 31, 1999 -
      22,500,00 shares                   $  22,500

      Additional Paid-In Capital           -16,500            0             0

      Deficit accumulated during
      The development stage                -10,235       -7,135        -6,235

TOTAL STOCKHOLDERS' EQUITY               $  -4,235   $   -1,135   $      -235
                                         ---------   ----------   -----------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                     $       0   $        0   $         0
                                         ---------   ----------   -----------






    The accompanying notes are an integral part of the financial statements.

                                       F-3

<PAGE>

                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)


                             STATEMENT OF OPERATIONS
                             -----------------------

<TABLE>
<CAPTION>

                                              Year           Year         Year       Dec.15,1994
                                              Ended          Ended        Ended      (Inception)
                                            Dec. 31,       Dec. 31,     Dec. 31,     to Dec. 31,
                                               1999          1998         1997          1999

<S>                                      <C>            <C>            <C>            <C>
INCOME
Revenue                                  $        0     $        0     $        0     $        0
                                         ----------     ----------     ----------     ----------


EXPENSES

General, Selling and
Administrative                           $    3,100     $      900     $        0     $   10,235
                                         ----------     ----------     ----------     ----------

            TOTAL EXPENSES               $    3,100     $      900     $        0     $   10,235
                                         ----------     ----------     ----------     ----------


NET PROFIT/LOSS (-)                      $   -3,100     $     -900     $       -0     $  -10,235
                                         ----------     ----------     ----------     ----------



Net Profit/Loss(-)
per weighted share
(Note 1)                                 $   -.0001     $   -.0001     $      NIL     $   -.0005
                                         ----------     ----------     ----------     ----------



Weighted average
Number of common
shares outstanding                       22,500,000     22,500,000     22,500,000     22,500,000
                                         ----------     ----------     ----------     ----------

</TABLE>





    The accompanying notes are an integral part of the financial statements.

                                       F-4

<PAGE>
                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)


                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  --------------------------------------------

<TABLE>
<CAPTION>

                                                                                    Additional            Accumu-
                                                  Common              Stock           paid-in              lated
                                                  Shares             Amount           Capital             Deficit

<S>                                             <C>                <C>              <C>                  <C>
Balance,
December 31, 1996                               6,000,000          $ 6,000          $         0          $       -6,235

Net loss year ended
December 31, 1997                                                                                                     0
                                               ----------          -------          -----------          --------------


Balance,
December 31, 1997                               6,000,000          $ 6,000          $         0          $       -6,235

Net loss year ended
December 31, 1998                                                                                                  -900
                                               ----------          -------          -----------          --------------

Balance,
December 31, 1998                               6,000,000          $ 6,000          $         0          $       -7,135

December 28, 1999
Forward Stock Split
3.75:1                                         16,500,000           16,500              -16,500                       0

Net loss year ended
December 31, 1999                                                                                                -3,100
                                               ----------          -------          -----------          --------------

Balance,
December 31, 1999                              22,500,000          $22,500          $   -16,500          $      -10,235
                                               ----------          -------          -----------          --------------

</TABLE>





    The accompanying notes are an integral part of the financial statements.

                                       F-5

<PAGE>

                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)

                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                            Year               Year                  Year              Dec.15,1994
                                            Ended              Ended                 Ended             (Inception)
                                          Dec. 31,           Dec. 31,              Dec. 31,            to Dec. 31,
                                            1999               1998                  1997                 1999
<S>                                    <C>                <C>                   <C>                    <C>
Cash Flows from
Operating Activities

      Net Loss                         $   -3,100         $        -900         $            0         $       -10,235

      Adjustment to
      Reconcile net loss
      To net cash provided
      by operating
      Activities                                0                     0                      0                       0

Changes in assets and
Liabilities

      Increase in current
      Liabilities

      Advances Payable                     +3,100                  +900                                         +4,235
                                       ----------         -------------         --------------         ---------------
Net cash used in
Operating activities                   $        0         $           0         $            0         $        -6,000

Cash Flows from
Investing Activities                            0                     0                      0                       0

Cash Flows from
Financing Activities

      Issuance of Common
      Stock for Cash                            0                     0                      0                  +6,000
                                       ----------         -------------         --------------         ---------------

Net Increase (decrease)                $        0         $           0         $            0         $             0

Cash,
Beginning of period                             0                     0                      0                       0
                                       ----------         -------------         --------------         ---------------

Cash, End of period                    $        0         $           0         $            0         $             0
                                       ----------         -------------         --------------         ---------------

</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       F-6

<PAGE>

                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)


                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

           December 31, 1999, December 31, 1998, and December 31, 1997



NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY

            The Company was organized  December 15, 1994,  under the laws of the
            State of Nevada as  BIOSYNTECH,  INC. The Company  currently  has no
            operations  and  in  accordance   with  SFAS  #7,  is  considered  a
            development  company.  On December 28, 1999, the company changed its
            name from Dream Team International, Inc., to BIOSYNTECH, INC.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Accounting Method
            -----------------

                        The Company  records  income and expenses on the accrual
method.

            Estimates
            ---------

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

            Cash and equivalents
            --------------------

                        The   Company    maintains   a   cash   balance   in   a
                        non-interest-bearing bank that currently does not exceed
                        federally  insured  limits.   For  the  purpose  of  the
                        statements of cash flows, all highly liquid  investments
                        with the maturity of three months or less are considered
                        to be cash equivalents. There are no cash equivalents as
                        of December 31, 1999.


                                       F-7

<PAGE>



                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    -----------------------------------------

           December 31, 1999, December 31, 1998, and December 31, 1997


         NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


            Income Taxes
            ------------

                        Income taxes are provided for using the liability method
                        of accounting in accordance  with Statement of Financial
                        Accounting Standards No. 109 (SFAS #109) "Accounting for
                        Income  Taxes".  A deferred  tax asset or  liability  is
                        recorded for all temporary  difference between financial
                        and  tax  reporting.   Deferred  tax  expense  (benefit)
                        results from the net change  during the year of deferred
                        tax assets and liabilities.



            Loss Per Share
            --------------

                        Net  loss per  share  is  provided  in  accordance  with
                        Statement  of  Financial  Accounting  Standards  No. 128
                        (SFAS #128)  "Earnings Per Share".  Basic loss per share
                        is  computed  by  dividing  losses  available  to common
                        stockholders  by the weighted  average  number of common
                        shares outstanding  during the period.  Diluted loss per
                        share   reflects  per  share  amounts  that  would  have
                        resulted if dilative  common stock  equivalents had been
                        converted to common stock.  As of December 31, 1999, the
                        Company had no dilative common stock equivalents such as
                        stock options.


            Year End
            --------

                        The Company has selected December 31st as its year-end.







                                       F-8

<PAGE>

                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

           December 31, 1999, December 31, 1998, and December 31, 1997


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


            Year 2000 Disclosure
            --------------------

                        The year 2000 issue is the result of  computer  programs
                        being  written  using  two  digits  rather  than four to
                        define the applicable year.  Computer programs that have
                        time sensitive  software may recognize a date using "00"
                        as the year 1900 rather  than the year 2000.  This could
                        result in a system  failure or  miscalculations  causing
                        disruption  of  normal  business  activities.  Since the
                        Company currently has no operating business and does not
                        use  any  computers,  and  since  it has  no  customers,
                        suppliers or other  constituents,  there are no material
                        Year 2000 concerns.



NOTE 3 - INCOME TAXES

            There is no provision for income taxes for the period ended December
            31, 1999, due to the net loss and no state income tax in Nevada, the
            state of the Company's domicile and operations.  The Company's total
            deferred tax asset as of December 31, 1999 is as follows:

                       Net operation loss carry forward        $   10,235
                       Valuation allowance                     $   10,235

                       Net deferred tax asset                  $        0


            The federal net operation  loss carry forward will expire in various
            amounts from 2014 to 2019.

            This  carry  forward  may be  limited  upon  the  consummation  of a
            business combination under IRC Section 381.


                                       F-9

<PAGE>

                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    -----------------------------------------

           December 31, 1999, December 31, 1998, and December 31, 1997



NOTE 4 - STOCKHOLDERS' EQUITY

            Common Stock
            ------------

            The  authorized   common  stock  of  the  corporation   consists  of
            50,000,000 shares with a par value of $0.001 per share.


            Preferred Stock
            ---------------

            The corporation has no preferred stock.


            On December 15, 1994,  the Company  issued  6,000,000  shares of its
            $0.001 par value common stock in consideration of $6,000 in cash.

            On December  28,  1999,  the  company  had a forward  stock split of
            3.75:1,  thus  increasing  the  number  of shares  outstanding  from
            6,000,000 to 22,500,000.



NOTE 5 - GOING CONCERN

            The Company's  financial  statements  are prepared  using  generally
            accepted accounting  principles  applicable to a going concern which
            contemplates   the   realization   of  assets  and   liquidation  of
            liabilities in the normal course of business.  However,  the Company
            does not have significant cash or other material assets, nor does it
            have an  established  source  of  revenues  sufficient  to cover its
            operating  costs and to allow it to continue as a going concern.  It
            is the  intent of the  Company  to seek a merger  with an  existing,
            operating company. Until that time, the stockholders/officers and or
            directors  have  committed to advancing the  operating  costs of the
            Company interest free.



                                      F-10

<PAGE>

                                BIOSYNTECH, INC.
                    (Formerly Dream Team International, Inc.)
                          (A Development Stage Company)


                    NOTES TO FINANCIAL STATEMENTS (Continued)
                    -----------------------------------------

           December 31, 1999, December 31, 1998, and December 31, 1997


NOTE 6 - RELATED PARTY TRANSACTIONS

            The Company  neither owns nor leases any real or personal  property.
            An officer  of the  corporation  provides  office  services  without
            charge.  Such costs are  immaterial to the financial  statements and
            accordingly,  have not been  reflected  therein.  The  officers  and
            directors of the Company are involved in other  business  activities
            and  may,  in  the  future,   become   involved  in  other  business
            opportunities. If a specific business opportunity becomes available,
            such  persons may face a conflict in  selecting  between the Company
            and their other business interests. The Company has not formulated a
            policy for the resolution of such conflicts.



NOTE 7 - SUBSEQUENT EVENTS

         Pursuant  to an  Amalgamation  Agreement  and  related  agreements,  as
         amended (the  "Exchange  Agreements"),  dated  February 15, 2000 by and
         among the Company, its wholly-owned subsidiary 9083-5661 Quebec Inc., a
         Quebec  corporation  (the  "Purchaser"),  Bio  Syntech  Ltd.,  a Quebec
         corporation  ("Bio Syntech"),  and the shareholders of Bio Syntech (the
         "Bio Syntech  Shareholders"),  on February 29, 2000,  the Purchaser and
         Bio Syntech were merged into one company  under the name of Bio Syntech
         Canada  Inc.  ("Bio  Syntech  Canada").  As a  result  of the  Exchange
         Agreements,  the Company became the record and beneficial  owner of all
         of the issued and  outstanding  shares of Bio Syntech  Canada's  Common
         Stock  and  the  Bio  Syntech   Shareholders   were  issued  non-voting
         exchangeable shares of Bio Syntech Canada's Preferred Stock (the "Class
         A Shares").  The Class A Shares are  exchangeable on a  share-for-share
         basis, for an aggregate of 15,177,036  shares (the "Company Shares") of
         Common  Stock,  $.001 par value,  of the  Company.  The Company  Shares
         issued under the Exchange  Agreements are held in trust under the terms
         of an Exchange and Voting  Agreement  (the "Trust  Agreement"),  by and
         among the Company, Pierre Barnard (the "Trustee"),  Bio Syntech and the
         Purchaser.  (The foregoing  transactions  are referred to  collectively
         hereinafter as the "Transactions").

         Prior to the Transactions, there were 11,625,000 shares of Common Stock
         outstanding,  taking  into  account a 3.75 for 1 split  effectuated  on
         December 28, 1999 and the  repurchase  of  10,875,000  shares of Common
         Stock on February  2, 2000.  As part of the  Transactions,  the Company
         completed two private  placements (the "Private  Placements")  yielding
         gross proceeds of $2,350,000 in which it issued an aggregate of 470,000
         shares of Common Stock and  warrants  (the  "Warrants")  to purchase an
         aggregate  of 470,000  additional  shares of Common Stock at a price of
         $7.00 on or before  September  30,  2001.  After  giving  effect of the
         Transactions,  there are 27,272,036 shares of Common Stock outstanding.
         In addition, 1,500,000 shares of Common Stock are reserved for issuance
         upon exercise of options granted or to be granted under the Bio Syntech
         Canada  Employee  Stock Option Plan and 470,000  shares of Common Stock
         are reserved for issuance upon exercise of the Warrants.

         Each beneficial  holder of the Class A Shares has voting rights in that
         number of Company Shares equal in number to the number

                                      F-11
<PAGE>



         of the  Class  A  Shares  held by such  holder.  Consequently,  the Bio
         Syntech  Shareholders  hold  securities  with  voting  rights  equal to
         approximately 55.7% of the total voting power of the outstanding Common
         Stock.  At such time as the holders of Class A Shares may exchange such
         shares for the Company  Shares,  they will have the right to direct the
         disposition of such Company Shares.

         The sole  source  of  consideration  for  issuance  to the Bio  Syntech
         Shareholders  of the Class A Shares was the exchange of the Bio Syntech
         shares held by them. At such time as the Bio Syntech  Shareholders  may
         exchange  their Class A Shares for Company  Shares,  the sole source of
         consideration  for the  transfer to them of the Company  Shares will be
         such Class A Shares.



                                      F-12