**UNITED
STATES**
 **SECURITIES
AND EXCHANGE COMMISSION**
 **Washington,
DC 20549**
 
 **FORM
10-QSB**
 
 x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
 
 For the
Quarter ending  **January
31, 2005** ****
 
 o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1943.
 
 For the
Transition period from ____________________ to
________________________
 
 
 **Commission
file number** **33-24566-A**
 
 
 **BIO-LOK
INTERNATIONAL INC.**
 (Name of
registrant in its charter)
 
 
 **DELAWARE**
    **65-0317138**(State
      or other jurisdiction of
    (IRS
      Employerincorporation
      or organization)
    Identification
      No.)
 
 
 **312/368
      S. Military Trail, Deerfield Beach, Florida**
    **33442**(Address
      of principal executive offices)
    (Zip
      Code)
 
 **Registrant's
telephone number, including area code: (954) 698-9998**
 
 
 
 Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES x NO o.
  APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
 
 Check
whether the issuer has filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. YES  o
NO o
  APPLICABLE
ONLY TO CORPORATE ISSUERS
 
 As of
January 31, 2005, the Registrant had 7,339,873 Common Stock shares outstanding,
at a par value $.01 per share.
 
 
  **TABLE
OF CONTENT**
 
 **PART****I**Item
      1.
    Financial
      Statements
    3Condensed
      Consolidated Statements of Operations for the three monthsended
      January 31, 2005 and 2004 (unaudited)Condensed
      Consolidated Balance Sheets for January 31, 2005 (unaudited)and
      October 31, 2004Condensed
      Consolidated Statements of Cash Flows for three monthended
      January 31, 2005 and 2004 (unaudited)Notes
      to Condensed Consolidated Financial StatementsItem
      2.
    Management’s
      Discussion and Analysis of Financial Results of OperationsAnd
      Financial Condition
    9Item
      3.
    Controls
      and Procedures
    12**PART****II**Item
      2.
    Changes
      in Securities
    13Item
      6.
    Exhibits,
      List and Reports on Form 8-K
    13Signatures
    14Certification
      by Pres. & CEO pursuant to Sec. 302
    15Certification
      by VP-Fin. & Admin. and CFO pursuant to Sec. 302
    16Certification
      pursuant to Sec. 906 by CEO
    17Certification
      pursuant to Sec. 906 by CFO
    18
  **-------------------------**
  2
  **PART
I**
  **Item
1.**  **Financial
Statements**
 
 **BIO-LOK
INTERNATIONAL INC. AND SUBSIDIARIES**
 **Condensed
Consolidated Statement of Operations**
 
 Three
      Months Ended
      January
      31,2005
    
    2004*(unaudited)
    
    (unaudited)Net
      Sales
    
    $
    1,549,672
    
    $
    1,022,370Cost
      of Goods Sold
    
    
    507,206
    
    
    324,315GROSS
      PROFIT
    
    
    1,042,466
    
    
    698,055Selling
    
    
    442,548
    
    
    268,287Admin.
      & General Exp.
    
    
    463,896
    
    
    286,227Research
      & Development
    
    
    104,580
    
    
    77,2871,011,024
    
    
    631,801Operating
      Income
    
    
    31,442
    
    
    66,254Gain
      on involuntary conversion
    
    
    105,841
    
    
    -Interest
      Expense
    
    
    (45,869
    )
    
    (37,562
    )Other
      Expenses
    
    
    (144
    )
    
    (25
    )59,828
    
    
    (37,587
    )Income
      before Taxes
    
    
    91,270
    
    
    28,667Income
      Taxes
    
    
    0
    
    
    0NET
      INCOME
    
    $
    91,270
    
    $
    28,667Net
      Income availableto
      Share Owners
    
    $
    91,270
    
    $
    28,667Earnings
      per Share  - Basic
    
    $
    .01
    
    $
    -0--
      Diluted
    
    $
    .01
    
    $
    -0-Weighted
      average SharesOutstanding 
      - Basic
    
    
    7,319,873
    
    
    7,153,701-
      Diluted
    
    
    9,639,077
    
    
    8,288,701
 
 * Recast
to reflect recording of Research & Development expenses broken out from
expenses on a separate line.
 
 
 See Notes
to Condensed Consolidated Financial Statements.
  3
  **BIO-LOK
INTERNATIONAL INC. AND SUBSIDIARIES**
 **Condensed
Consolidated Balance Sheets**
 
 
 January 31,
    
    October 31,2005
    
    2004 *(unaudited)**ASSETS**Current
      AssetsCash
    
    $
    111,346
    
    $
    24,133Accounts
      Receivable (Net of Allowanceof
      $123,911 and $46,695)
    
    
    1,243,939
    
    
    1,103,887Inventory
    
    
    2,107,410
    
    
    2,063,962Other
      Current Assets
    
    
    191,227
    
    
    63,740Total
      Current Assets
    
    
    3,653,922
    
    
    3,255,722Net
      Machinery & Equipment
    
    
    1,262,734
    
    
    1,224,530Other
      AssetsPatents
      & Related, net
    
    
    207,620
    
    
    207,608Inventory
    
    
    102,569
    
    
    80,989Deposits
      and Other Assets
    
    
    26,883
    
    
    29,883Total
      Other Assets
    
    
    337,072
    
    
    318,480**TOTAL
      ASSETS**
    
    $
    5,253,728
    
    $
    4,798,732**LIABILITIES
      & EQUITY**Current
      LiabilitiesRevolving
      loans payable
    
    $
    2,066,469
    
    $
    1,899,432Notes
      & loans payable
    
    
    251,344
    
    
    224,713Capital
      lease - current
    
    
    66,918
    
    
    68,810Accounts
      Payable
    
    
    145,209
    
    
    135,409Accrued
      expenses & other Payables
    
    
    310,898
    
    
    259,931Total
      Current Liabilities
    
    
    2,840,838
    
    
    2,588,295Long-Term
      LiabilitiesCapital
      leases - non-current
    
    
    94,697
    
    
    124,616Notes
      and loans payable - non-current
    
    
    191,414
    
    
    81,250Total
      Long-Term Liabilities
    
    
    286,111
    
    
    205,866Total
      Liabilities
    
    
    3,126,949
    
    
    2,794,161**STOCKHOLDERS’
      EQUITY**Preferred
      Stock - authorized500,000
      par value $.75;
    
    
    -0-
    
    
    -0-Common
      Stock - authorized20,000,000,
      par value $.01;outstanding
      7,339,873 shares
    
    
    73,399
    
    
    73,199Treasury
      Stock (17,327 commonshares)
    
    
    (7,277
    )
    
    (7,277
    )Paid-in
      Capital
    
    
    2,724,756
    
    
    2,694,018Retained
      Earnings
    
    
    (664,099
    )
    
    (755,369
    )Total
      Equity
    
    
    2,126,779
    
    
    2,004,571**TOTAL
      LIABILITIES & EQUITY**
    
    $
    5,253,728
    
    $
    4,798,732
 
 *
    The
      balance sheet at October 31, 2004, has been derived from the audited
      financial statements at that date; but, do not include all of the
      information and footnotes required by generally accepted accounting
      principals for complete financial statements.
 
 See Notes
to Condensed Consolidated Financial Statements.
  4
  **BIO-LOK
INTERNATIONAL INC. AND SUBSIDIARIES**
 **Condensed
Consolidated Statements of Cash Flows**
 
 Three Months EndedJanuary
31,2005
    
    2004(unaudited)
    
    (unaudited)**OPERATING
      ACTIVITIES:**Net
      Income
    
    $
    91,270
    
    $
    28,667Adjustments
      to reconcile net income tonet
      cash (used in) provided by operatingactivities:Provision
      for doubtful accounts
    
    
    64,975
    
    
    826Depreciation
      and amortization
    
    
    54,886
    
    
    38,892Gain
      on involuntary conversion
    
    
    (105,841
    )Option
      expense (amortization)
    
    
    28,938
    
    
    -Change
      in Current assets & liabilities:(Incr.)
      decr. in accts. rec.
    
    
    (205,028
    )
    
    (6,674
    )(Incr.)
      decr. in inventories
    
    
    (65,027
    )
    
    (37,499
    )(Incr.)
      decr. in prepaid & othercurrent
      assets
    
    
    (5,918
    )
    
    18,899(Incr.)
      decr. in deposits & other assets
    
    
    3,000
    
    
    892Incr.
      (decr.) in A/P & Accr. exp.
    
    
    60,767
    
    
    (964
    )Due
      to stockholders
    
    
    -
    
    
    (2,294
    )Net
      Cash (used in) provided by OperatingActivities
    
    
    (77,978
    )
    
    40,745**INVESTING
      ACTIVITIES:******Investment
      in patents
    
    
    (4,859
    )
    
    (20,946
    )Insurance
      settlement from involuntaryConversion
    
    
    93,568
    
    
    -Purchase
      of Property, Plant & Equipment
    
    
    (35,289
    )
    
    (6,048
    )Net
      Cash provided by (used in) InvestingActivities
    
    
    53,420
    
    
    (26,994
    )**FINANCING
      ACTIVITIES:**Net
      proceeds - revolving loan
    
    
    167,037
    
    
    27,200Net
      change in Capital leases
    
    
    (31,811
    )
    
    (15,857
    )Proceeds
      on exercise of stock options
    
    
    2,000
    
    
    -Payment
      on notes payable
    
    
    (25,455
    )
    
    (38,738
    )Net
      Cash provided by (used in) FinancingActivities
    
    
    111,771
    
    
    (27,395
    )**NET
      INCREASE (DECREASE) IN CASH**
    
    $
    87,213
    
    $
    (13,644
    )Cash
      - Beginning of Period
    
    
    24,133
    
    
    40,852Cash
      - End of Period
    
    $
    111,346
    
    $
    27,208**SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION**Interest
      Paid
    
    $
    45,869
    
    $
    37,562Income
      Taxes Paid
    
    $
    -0-
    
    $
    -0-
 
 **SUPPLEMENTAL
DISCLOSURE OF NON-CASH ACTIVITES**
 During
the three months ended January 31, 2005, the Company acquired  $162,250
of equipment through the assumption of a long-term debt.
 During
the three months ended January 31, 2005, the Company retired a gain on
involuntary conversion of $105,841 of which $121,569 of the proceeds to be
received was included in other assets .
 
 See Notes
to Condensed Consolidated Financial Statements.
 
 
  5
 ****
 **BIO-LOK
INTERNATIONAL INC. AND SUBSIDIARIES**
 **Notes
to Condensed Consolidated Financial Statement**
 **(Unaudited)**
 
 
 **Note
A - Basis of Presentation**
 The
financial statements represent the activities of all the accounts of Bio-Lok
International Inc. (the “Company” or “Bio-Lok”) and its subsidiaries. The
consolidated results include the activities of Orthogen Corporation a research
and development company; and, Micro-Lok Mexico, Bio-Lok Chile and Bio-Lok
Australia established sales and marketing entities. All inter-company balances
and transactions have been eliminated in consolidation.
 
 The
accompanying condensed consolidated financial statements are unaudited and have
been prepared by the Company in accordance with the rules and regulations of the
Securities and Exchange Commission ('SEC'). Accordingly, certain information and
footnote disclosures usually found in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
Form 10-KSB, as filed with the SEC on January 31, 2005.
 
 The
accompanying condensed consolidated financial statements reflect all adjustments
(consisting of normal recurring adjustments) which, in the opinion of
management, are necessary to present fairly the financial position and results
of operations for the interim periods presented. The results of operations for
an interim period are not necessarily indicative of the results of operations
for a full fiscal year.
 
 **Note
B - Nature of Business**
 Bio-Lok
is a manufacturer and distributor, domestically and internationally, of the **Bio-Lok
Precision Dental Implant System.** The line
consists of a number of select implants (both screw and cylinder), related
prosthetic parts, devices, associated tools, and irrigated drills and reamers.
The Company markets its product line domestically direct to the end user,
internationally via select distributors and majority owned
entities.
 
 Revenues
are attributable to the distribution and sale of its manufactured or purchased
for resale products and are recognized when products are shipped.
 
 **Note
C - Line of Credit**
 On March
26, 2003, the Company executed a new revolving loan agreement with CommerceBank,
N.A., for a maximum loan amount of $2,000,000. The Company pledged essentially
all of its assets as collateral to secure the loan arrangement. The interest
rate is the prime rate in effect plus 2%. To provide added security for the
loan, the Company also has obtained EximBank credit guarantees on the Company’s
inventory allocated for international sales and qualified international
receivables as invoices are issued and assigned. The principal under the line of
credit will is due on demand with an annual financial review date of December
31.
 
 On
December 30, 2004, the Company entered into an extension to December 31, 2005,
of its current CommerceBank N.A. and EximBank US insurance guarantee for
international inventory and receivables totaling $2,500,000 up from $2,000,000.
A separate domestic receivables credit line totaling $250,000, and the
continuation of its existing term debt agreement entered into in 2001. The
Company pledged essentially all of its assets as collateral to secure the loan
arrangement and the international revolving loan is in turn 90% guaranteed by
EximBank. The interest rate is at the prime rate in effect plus 1.0% down from
2.0% with the domestic revolving loan remaining at 2.0%.
 
 6
 
 Additionally,
to provide added security to the Bank for the above revolving loan, the Company
also has obtained EximBank credit guarantees on select international receivables
at a cost of $.80 down from $1.06 per $100 as invoices are issued and reported.
 
 **Note
D - Net Income Per Share**
 The
Company’s basic and diluted net income per share amounts have been computed by
dividing the results by the weighted average number of outstanding common
shares. For the three months ended January 31, 2005 and 2004, the Company
reported a net income and as such, common share equivalents were included in the
computation of diluted net income per share.
 
 **Note
E - Segment Accounting**
 Statement
of Financial Accounting Standards No. 131, “Disclosures about Segments of an
Enterprise and Related Information”, (“SFAS 131”) requires that a public
business enterprise disclose financial and other information about its business
segments as a part of the consolidated financial statements.
  The
Company has only one product line consisting of its “Bio-Lok Precision Dental
Implant System”, which is sold both domestically and internationally. It is
practical to report by geographic area net sales only, which has been included
within this report for the quarter.
 
 
 Results
      of Operation
      for
      Three Month Ended
      January
      31,2005
    
    2004International
    
    $
    1,106,215
    
    $
    673,333Domestic
    
    
    443,457
    
    
    349,037Total
      Net Sales
    
    $
    1,549,672
    
    $
    1,022,370
 
 
 **Note
F - Shipping and Handling**
 Amounts
billed to customers for shipping and handling expenses are included in revenue
at the time the related product revenue is recognized. The costs incurred
related to shipping and handling expenses are included in cost of goods
sold.
 
 **Note
G - Stock Options**
 The
Company adopted the 2003 Stock Option Plan during its second quarter of fiscal
year ending 2003. It authorized the Company to issue 2,500,000 shares of common
stock under this plan. To date, under the Plan, 1,862,000 stock options have
been issued to officers and employees of the Company.
 
 During
the year ended 2003 the Company elected to account for the stock options under
the Financial Accounting Standards Board Statement No. 123, “Accounting for
Stock-Based Compensation.” During the quarter ending January 31, 2005 and 2004,
the Company recognized $28,938 and $28,135, respectively, in compensation
expense.
 
 The fair
market value of each stock option granted was estimated on the date of grant
using the Black-Scholes Option-Pricing Model in accordance with SFAS 123
assuming: (1) a risk-free interest rate of 5.82% to 6.0%, (2) an expected life
of five to nine years, (3) an expected volatility of 101% to 141% and (4) no
expected dividends.
 
 7
 
 A summary
of the stock options issued as of January 31, 2005, is
 presented
below:
 
 Number
      of Options
    
    Weighted
      Average Exercise PriceStock
      Options**Balance
      at beginning of period**
    
    
    3,377,000
    
    $
    .28Granted
    
    
    —
    
    
    —Exercised
    
    
    (20,000
    )
    
    .10Expired
    
    
    —
    
    
    —Balance
      at end of period
    
    
    3,357,000
    
    $
    .28Options
      exercisable at end of period
    
    
    1,155,000
    
    $
    .13
 
 
 The
following table summarizes information about stock options at January 31,
2005:
 
 Exercise
      Prices
    
    Number
      Outstanding at
      January
      31, 2005
    
    Weighted
      Average Remaining Contractual Life
    
    Weighted
      Average Exercise Price
    
    Number
      Exercisable at
      January
      31, 2005
    
    Weighted
      Average Exercise Price$
    .05
    
    
    80,000
    
    
    7.44
    
    $
    .05
    
    
    70,000
    
    $
    .05.10
    
    
    80,000
    
    
    1.10
    
    
    .10
    
    
    80,000
    
    
    .10.12
    
    
    246,000
    
    
    8.67
    
    
    .12
    
    
    —
    
    
    .12.13
    
    
    1,546,000
    
    
    8.67
    
    
    .13
    
    
    —
    
    
    .13.25
    
    
    805,000
    
    
    2.68
    
    
    .25
    
    
    805,000
    
    
    .25.75
    
    
    100,000
    
    
    .04
    
    
    .75
    
    
    100,000
    
    
    .753.00
    
    
    100,000
    
    
    .04
    
    
    3.00
    
    
    100,000
    
    
    3.00(*)
    
    
    400,000
    
    
    —
    
    
    —
    
    
    —
    
    
    —$
    3,357,000
    
    
    4.87
    
    $
    .28
    
    
    1,155,000
    
    $
    .28
 
 (*)
Performance based options consisting of 200,000 shares to each of two
individuals (aggregating 400,000 shares) that represented the sellers of
Orthogen Corporation to the Company; subsequent to the acquisition one
individual became an employee and the other a consultant.
 
 **Note
H - Legal Matters**
 The
Company from time to time is a party to various legal proceedings. In the
opinion of management, none of the proceedings are expected to have a material
impact on its financial position or results of operations.
 
 **Note
I - Liquidity**
 During
the quarter ended January 31, 2005, the Company maintained its profitability,
net income totaled $91,270, and realized a reduction of cash flow from
operations of $75,978; the Company had an accumulated deficit of $664,099,
positive working capital of $813,084 and positive stockholders’ equity of
$2,126,779.
 
 As of
January 31, 2005, the Company had $111,346 in cash, $1,243,939 in net accounts
receivable, and $2,107,410 in current inventory. The Company had accounts
payable, accrued expenses and other payables in the aggregate of $456,107,
revolving loans payable of $2,066,469, and notes and loans payable - current and
capital leases current of $318,262.
 
 8
 
 Results
are positive but if not maintained can negatively impact the Company. The
ability of the Company to implement its business plan is dependent on the
Company’s ability to raise additional funding and/or capital. To this extent,
the Company has completed a Private Placement detailed under the section titled
Liquidity and Capital Resources.
 
 There is
no guarantee that the current financing arrangements will continue indefinitely.
If adequate funds are not available either through operations or financing
arrangements, the Company may be required to delay or scale back the growth of
operations, product and service development efforts.
 
 **Note
J - Notes Payable**
 On
December 30, 2004, CommerceBank N.A. in conjunction with Exim Bank extended the
Company’s line of credit to December 31, 2005 (see Note C second paragraph for
full details).
 
 
 **Item
2.**  **Management's
Discussion and Analysis of Financial Condition and Results of
Operations**
 
 **CRITICAL
ACCOUNTING POLICIES**
 Financial
Reporting Release No. 60, which was recently released by the U.S. Securities and
Exchange Commission, encourages all companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements. Our financial statements include a summary of the significant
accounting policies and methods used in the preparation of our financial
statements.
 
 Management
believes the following critical accounting policies affect the significant
judgments and estimates used in the preparation of the financial statements.
 
 **Revenue
Recognition.** Revenues
are recognized at the time of shipment of the respective merchandise. Revenues
in the accompanying financial statements for the three months ended January 31,
2005 and 2004 are presented net of returns and allowances, sales discounts,
advertising and promotions. The increase in revenues for the three months ended
January 31, 2005 was primarily due to increased marketing and sales promotional
efforts by the Company.
 
 **Use
of Estimates.** Management's
discussion and analysis of financial condition and results of operations is
based upon the financial statements having been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements required management to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenues,
and expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, management evaluates these estimates, including those related to
valuation allowance for the deferred tax asset, estimated useful life of fixed
assets and the carrying value of long-lived assets, intangible assets and
allowances for sales returns, obsolete and slow moving inventory and reserve for
customer liabilities. Management bases these estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.
 
 9
 **RESULTS
OF OPERATIONS (3 MONTHS 2005 VS 3 MONTHS 2004)**
 
 **Volume** The net
sales (revenues) for the quarter increased by 52% over the prior year comparable
quarter. The domestic market increased by 27% and the international market
increased by 66% over the comparable prior year quarter. The growth reflects
improved market penetration both domestic and internationally.
 
 **Cost
of Goods Sold** As a
percent of sales cost of goods sold increased by 1% over the comparable prior
year quarter. Cost incurred in relation to the sales activity reflected no
material change but does reflect increases in raw material costs.
 
 **Gross
Profit** Gross
profit for the period increased by 49% over the prior year comparable quarter;
gross margin percentages decreased by only 1% for the quarter. Margins are
expected to range between 65 to 70% over the next two years due to the continued
effort by management to develop its market presence.
 
 **Selling
Expenses** Selling
expenses for the quarter increased by 65% over the prior year comparable quarter
and are a direct result of an increased sales staff, and cost increases due
sales growth and continued market development. A domestic sales staff along with
sales and marketing managers are being hired; hence, costs are expected to
increase over the ensuing months.
 
 **Administrative
& General Expenses** Administrative
and general expenses increased by 62% over the comparable quarter of 2004. The
increased expenses incurred for the quarter compared to the same quarter prior
year was due to higher staff, professional fees, insurance, financial service,
freight and royalty expenses incurred.
 
 **Operating
Income** Results
from operations decreased by 53% to $31,442 compared to a gain of $66,254 for
the same quarter of 2004. The lower results are a directly due to managements
investment in market and sales development, new product development and
introduction of same into the dental industry.
 
 **Other
Income/Expenses** For the
quarter the Company realized insurance gains from involuntary conversion of
$105,841 from the loss of a machine which was insured at current replacement
value. Interest expense increased by 22% over the comparable quarter prior year,
and was a result of higher borrowings outstanding on the revolving line of
credit.
 
 **Net
Income** Net
income for the quarter was $91,270 compared to $28,667 for the three months
ended January 31, 2004, a 218% increase primarily due to the one-time gain from
an involuntary conversion of the loss of a production machine. The results are
not expected to be maintained as the management increases the sales and
marketing staff to gain market penetration both domestically and
internationally. Losses are anticipated to be realized over the next twelve to
eighteen months as cash generated from the equity infusion detailed under the
Liquidity and Capital Resources section is utilized in build the business
particularly sales and marketing operations.
 
 **LIQUIDITY and CAPITAL RESOURCES**
 
 On
November 26, 2001, the Company entered into an equipment loan of $300,000 from a
lender at an interest rate of 7.5% for a term of five years. The loan was
collateralized with existing equipment and repayable over the initial 12 months
at interest only and equal payments over the remaining 48 months.
 
 10
 On
December 30, 2004, the Company entered into an extension to December 31, 2005,
of its current CommerceBank N.A. and EximBank US insurance guarantee for
international inventory and receivables totaling $2,500,000 up from $2,000,000.
A separate domestic receivables credit line totaling $250,000, and the
continuation of its existing term debt agreement entered into in 2001. The
Company pledged essentially all of its assets as collateral to secure the loan
arrangement and the international revolving loan is in turn 90% guaranteed by
EximBank. The interest rate is at the prime rate in effect plus 1.0% down from
2.0% with the domestic revolving loan remaining at 2.0%.
 
 Additionally,
to provide added security to the Bank for the above revolving loan, the Company
also has obtained EximBank credit guarantees on select international receivables
at a cost of $.80 down from $1.06 per $100 as invoices are issued and reported.
 
 The
Company’s current ratio increased to 1.29 on January 31, 2005, from 1.16 on
January 31, 2004, due to sales growth. For the first quarter 2005, the Company’s
revolving loan payable increased by $167,037 and this increase was due to
domestic and international market development initiated by management. As market
penetration and related sales growth are achieved, the current ratio is expected
to continue to increase over the fiscal year 2005.
 
 In an
effort to increase sales related to the Company’s business, the Company has
actively been developing its sales force since 2002. The management plan has
improved sales continually. Management plans to continue its efforts to increase
sales at a comparable rate for the rest of fiscal year 2005 with expense
increases over the prior year for added management and sales staff.
 
 Future
financing may not be available on a timely basis, in sufficient amounts or on
terms acceptable to the Company. Future financing in the form of equity
transactions may result in dilution of equity. Any additional debt financing may
contain additional covenants.
 
 The
Company anticipates having adequate capital and liquidity for the next 36
months. The Company has capital expenditure commitments to purchase a new CNC
machines which will be financed on a 100% loan basis.
 
 The
Company completed a Private Placement for 5,000,000 shares of common stock on
March 2, 2005, for $3.75 million or $0.75 per share. Cost of this placement was
$225,000 and the issuance of warrants to purchase 500,000 shares. The financing
was led by healthcare venture capital firm Radius Ventures with other accredited
institutional and individual investors also participating.
 
 **OUTLOOK**
 
 Net
income objectives for the first quarter 2005 resulted in a gain from budget of
$81,533 which was totally due to the involuntary conversion of the loss of a
machine. Management expects to realize losses over the next 12 to 18 months due
to market development and expansion of the sales staff both domestic and
international. To this extent, management is in the process of hiring a Domestic
Sales Manager, a Marketing Manager and select support staff.
  **FORWARD-LOOKING
STATEMENTS**
 
 Certain
statements in this Form 10-QSB are forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Such statements imply
continued financial improvement of the Company by its management. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak as of the date made, and to advise
readers that various factors, including regional and national economic
conditions, substantial changes in levels of market interest rates, credit and
other risks of manufacturing, distributing or marketing activities, and
competitive and regulatory factors could affect the Company’s financial
performance and could cause the Company’s actual results for future periods to
differ materially from those anticipated by any forward-looking
statements.
 
 11
 The
Company does not undertake and specifically disclaims any obligation to update
any forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
statements.
 
 **Item
3.**  **Controls
and Procedures**
 
 The
Company, with the Audit Committee, has established and in-place procedures for
(1) the receipt, retention, and treatment of complaints received regarding
accounting, internal accounting controls, or auditing matters; and (2) the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
 
 **Management
Assessment of Internal Controls** It is
management’s responsibility to establish and maintain an adequate control
structure and procedures for financial reporting. Management believes that its
internal control structures and procedures for financial reporting as of the end
of the most recent quarter and fiscal year are sufficient to meet all of the
obligations of the financial reporting process required of it by the Security
Exchange Act of 1934.
 
 **Disclosure
Controls and Procedures** The
Company maintains controls and procedures designed to ensure that it is able to
collect the information it is required to disclose in the reports it files with
the SEC, and to process, summarize and disclose this information within the time
periods specified in the rules of the SEC. The Chief Executive and Chief
Financial Officers believe that these procedures are effective to ensure that
the Company is able to collect, process and disclose the information it is
required to disclose in the reports it files with the SEC within the required
time periods.
 
 **Internal
Controls** The
Company maintains a system of internal controls designed to provide reasonable
assurance that transactions are executed in accordance with management’s general
or specific authorization and that transactions are recorded as necessary (1) to
permit preparation of financial statements in conformity with generally accepted
accounting principles, and (2) to maintain accountability for assets; access to
assets is permitted only in accordance with management’s general or specific
authorization; and the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any difference.
 
 Since the
date of the most recent evaluation of the Company’s internal controls by the
Chief Executive and Chief Financial Officers, there have been no significant
changes in such controls or in other factors that could have significantly
affected those controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
 **PART
II.**
 
 **Item
2.**  **Changes
in Securities**
 
 In May
2004 Bio-Lok issued 9,000 shares of common stock at a cost of $6,390. The shares
were issued to clinicians for services rendered in support of marketing
activities of the company.
 
 12
 
 In May
2004 Bio-Lok issued 75,172 shares of common stock at a cost of $17,290 which had
been accrued in the prior year. The shares where issued pursuant to the 401k
Plan and represented the company’s participation for 2003. Distribution was
authorized by the Board on December 3, 2003.
 
 In July
2004 Bio-Lok issued 60,000 shares of common stock at a cost of $31,200. The
shares where issued to Directors for 2003 and services to 7/2004.
 
 During
September 2004 Bio-Lok issued 22,000 shares of common stock at a cost of
$11,220. The shares where issued to clinicians for services rendered in support
of marketing activities of the company.
 
 In
January 2005 the Company was requested to exercise 20,000 of Options at a price
of $.10 per share. Options were issued January 2002 for services
rendered.
 
 March 2,
2005 the Private Placement was closed and 5,000,000 common stock shares are
being issued at a cost of $.75 per share.
 **Item
6. Exhibits, List and Reports on Form 8-K**
 
 (a)
    ExhibitsExhibit
      #
    Description3.1
    Articles
      of Incorporation *3.2
    By-Laws
      *Amendment
      to By-Laws *5
    Opinion
      re legality *21
    Subsidiaries
      of Registrant included in theConsolidated
      Financial Statements of the Issuer are:Name
      of entity
    State
      or CntryOrthogen
      Corporation
    New
      JerseyMicro-Lok
      Mexico S.A.CE C.V.
    Mexico
      DFBio-Lok
      Chile S.A.
    ChileBio-Lok
      Int’l. Pty. Inc.
    Australia31.1
    Certification
      by Pres. & CEO pursuant to Sec. 30231.2
    Certification
      by VP-Fin.& CFO pursuant to Sec. 30232.1
    Certification
      pursuant to Sec. 906 by CEO32.2
    Certification
      pursuant to Sec. 906 by CFO*
      Filed
      previously(b)
    Form
      8-K’s filed – none for the quarter –
 
  13
  
 **SIGNATURES**
 
 
 **In
accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.**
 
 BIO-LOK INTERNATIONAL INC. (Registrant)Date: March 15, 2005
    By:
    /s/ Bruce L. HollanderBruce L. Hollander, 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 date indicated per the final audit report issued by
accountants.
 
 **Signature**
    
    **Title**/s/ Bruce L. Hollander
    
    President,
      CEO and Director
    
    Date: March 15, 2005Bruce L.
      Hollander/s/
      Ingo K. Kozak
    
    VP - Finance, CFO, Secretary and
      Director
    
    Date: March 15, 2005Ingo
      K. Kozak
  14