2002
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

     |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002

                                       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 No. 0-21015

                      CELL TECH INTERNATIONAL INCORPORATED
             (Exact Name of Registrant as Specified in its Charter)

                  Delaware                               22-3345046
       (State or other Jurisdiction of                (I.R.S. Employer
        Incorporation or Organization)               Identification No.)

            565 Century Court
          KLAMATH FALLS, OREGON                                 97601
  (Address of Principal Executive Offices)                    (Zip Code)

       Registrant's Telephone Number, including Area Code: (541) 882-5406

                  Indicate by check mark whether the registrant
                (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 registrant was required to
              file such reports), and (2) has been subject to such
            filing requirements for the past 90 days. Yes |X| No |_|.

                    As of May 31, 2002, the number of shares
                  outstanding of the registrant's sole class of
                   common stock, par value $0.01 per share was
                                   10,640,895.

<PAGE>

                                TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION.................................................1

      Consolidated Balance Sheets..............................................1
      Consolidated Statement of Operations.....................................2
      Consolidated Statements of Cash Flows....................................3
      Notes to Consolidated Financial Statements...............................4
   ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   RESULTS OF OPERATIONS......................................................11
      Overview................................................................11
      Results of Operations...................................................12
      Three months ended March 31, 2002 compared with the three month2
      ended March 31, 2001....................................................12
      Liquidity and Capital Resources.........................................14
      Cash Flows..............................................................15
      Recent Accounting Pronouncements........................................15
      Special Note Regarding Forward-Looking Statements.......................16
   ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........17

PART II - OTHER INFORMATION...................................................17

   ITEM 1. LEGAL PROCEEDINGS..................................................17
      Dispute Between Principal Shareholders..................................18
   ITEM 2. CHANGES IN SECURITIES..............................................19
   ITEM 3. DEFAULTS UPON SENIOR SECURITIES....................................19
   ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................19
   ITEM 5. OTHER INFORMATION..................................................19
   ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................19
   SIGNATURES.................................................................24


                                       ii
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

                         Part I - Financial Information

Item 1. Financial Statements

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                           (Unaudited)
                                                                             March 31,   December 31,
                                                                               2002          2001
                                                                           -----------   -----------
<S>                                                                        <C>           <C>
Assets

Current assets
   Receivables                                                             $   284,974   $   327,083
   Inventories, current portion                                              2,000,000     2,000,000
   Prepaid expenses                                                            394,977       460,860
                                                                           -----------   -----------
Total current assets                                                         2,679,951     2,787,973
                                                                           -----------   -----------

Inventories, net of current portion                                          6,975,222     7,304,778
Property and equipment, net of accumulated depreciation                      7,211,622     7,318,683
Property and equipment held for sale, net                                    2,226,893     2,271,305
Other assets                                                                   329,251       292,092
                                                                           -----------   -----------
Total assets                                                               $19,422,939   $19,974,801
                                                                           ===========   ===========

Liabilities and Shareholders' Equity

Current liabilities
   Bank overdraft                                                          $   419,455   $   763,105
   Accounts payable                                                          2,527,369     2,527,080
   Commissions payable                                                       1,280,814     1,219,135
   Sales taxes payable                                                          87,283        82,343
   Accrued payroll and related liabilities                                     286,561       252,944
   Other accrued expenses                                                      909,805     1,133,438
   Current portion of long-term debt                                         2,042,329     2,160,986
   Related party payable                                                     1,010,578     1,086,099
                                                                           -----------   -----------
Total current liabilities                                                    8,564,194     9,225,129
                                                                           -----------   -----------
Long-term liabilities
   Long-term debt, net of current portion                                           --            --
                                                                           -----------   -----------
Total liabilities                                                            8,564,194     9,225,129
                                                                           -----------   -----------

Commitments and contingencies (Note 5)

Shareholders' equity
   Series A convertible preferred stock - no par value; 4,175,000 shares
     authorized; none issued and outstanding in 2002 and 2001                       --            --
   Series B convertible preferred stock - no par value; 800,000 shares
     authorized; none issued and outstanding in 2002 and 2001                       --            --
   Undesignated preferred stock - no par value; 1,825,000 shares
     authorized; none issued and outstanding in 2001 and 2001                       --            --
   Common stock - $.01 par value; in 2002 and 2001, 50,000,000 shares
     authorized, 10,640,895 and 10,640,895 shares issued and outstanding       106,409       106,409
   Additional paid-in capital                                                2,299,696     2,299,696
   Retained earnings                                                         8,452,640     8,343,566
                                                                           -----------   -----------
Total shareholders' equity                                                  10,858,745    10,749,672
                                                                           -----------   -----------
Total liabilities and shareholders' equity                                 $19,422,939   $19,974,801
                                                                           ===========   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       1
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

                      Consolidated Statement of Operations

<TABLE>
<CAPTION>
                                                                 (Unaudited)
                                                         For the Three Months Ended
                                                                  March 31,
                                                        ----------------------------
                                                            2002            2001
                                                        ------------    ------------
<S>                                                     <C>             <C>
Sales                                                   $  7,105,704    $  8,062,064

Cost of sales                                              1,965,995       2,578,332
                                                        ------------    ------------
Gross profit                                               5,139,709       5,483,732

Commissions                                                3,390,812       3,953,788
                                                        ------------    ------------
Gross profit after commissions                             1,748,897       1,529,944

Operating Expenses:
   Selling expenses                                          887,692       1,126,770
   General and administrative                                255,049         801,678
   Shipping and handling expenses                            428,866         467,387
   Research and development                                   35,880          69,583
                                                        ------------    ------------
Operating income (loss)                                      141,410        (935,474)

Other income                                                  14,809          66,300

Interest expense, net                                        (47,146)       (179,087)
                                                        ------------    ------------
Net income (loss)                                            109,073      (1,048,261)
                                                        ============    ============
Basic and diluted income  (loss) per share              $       0.01    $      (0.10)
                                                        ============    ============
Weighted average number of common shares outstanding
   used to calculate basic and diluted loss per share     12,317,783      10,640,895
                                                        ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       2
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                (Unaudited)
                                                         For the Three Months Ended
                                                                 March 31,
                                                         --------------------------
                                                            2002           2001
                                                         -----------    -----------
<S>                                                      <C>            <C>
Cash flows from operating activities
   Net income (loss)                                     $   109,073    $(1,048,261)
   Adjustments to reconcile net income (loss) to cash
     provided by operating activities:
     Depreciation and amortization                           303,786        869,103
     Loss on sale of fixed assets                              3,381             --
     Changes in assets and liabilities:
       Receivables                                            42,109        155,556
       Inventories                                           329,556        365,326
       Prepaid expenses                                       65,883         74,369
       Other assets                                          (37,158)       (26,142)
       Accounts payable                                          289         (7,467)
       Commissions payable                                    61,679        (10,350)
       Sales tax payable                                       4,940        (10,810)
       Accrued payroll and payroll related liabilities        33,617         64,486
       Other accrued expenses                               (223,633)        18,720
                                                         -----------    -----------
Net cash provided by operating activities                    693,522        444,530
                                                         -----------    -----------
Cash flows from investing activities
   Purchase of property and equipment                       (156,395)      (200,268)
   Proceeds from sale of equipment                               700             --
                                                         -----------    -----------
Net cash used for investing activities                      (155,695)      (200,268)
                                                         -----------    -----------
Cash flows from financing activities
   Bank overdraft                                           (343,650)        39,627
   Net payments on long-term debt                           (118,656)      (419,685)
   Net (repayments) proceeds from related party debt         (75,521)       135,796
                                                         -----------    -----------
Net cash used for financing activities                      (537,827)      (244,262)
                                                         -----------    -----------
Net change in cash and cash equivalents                           --             --

Cash and cash equivalents, beginning of year                      --             --
                                                         -----------    -----------

Cash and cash equivalents, end of year                   $        --    $        --
                                                         ===========    ===========
Supplemental disclosure of cash flow information
   Cash paid during the period for:
     Interest                                            $    47,146    $   165,750
                                                         ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 -- SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Business

Cell Tech International Incorporated ("Cell Tech") and The New Algae Company
("NAC"), collectively the "Company," are engaged in the production and marketing
of food supplement products made with blue-green algae harvested from Klamath
Lake, Oregon. The Company uses a multi-level distributor network throughout the
United States and Canada to distribute its products.

Presentation of Interim Information

The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of Company's
management, the accompanying unaudited consolidated financial statements contain
all adjustments, consisting of normal recurring adjustments, considered
necessary for a fair statement of the Company's financial information as of and
for the periods presented. The consolidated results of operations of any interim
period are not necessarily indicative of the consolidated results of operations
to be expected for the fiscal year. For further information, refer to the
consolidated financial statements and accompanying footnotes included in the
Company's annual report on Form 10-K for the year ended December 31, 2001.

Going Concern

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As previously reported, the
Company has suffered recurring losses from operations and has negative working
capital. In addition, the Company is not in compliance with certain restrictive
covenants of its $15 million Line of Credit Agreement with a financial
institution. These factors raise substantial doubt about the Company' ability to
continue as a going concern.

Basis of Consolidation

The accompanying consolidated financial statements of the Company include the
accounts of Cell Tech and its subsidiary NAC. Intercompany transactions and
balances have been eliminated on consolidation.

Use of Estimates

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Actual results could differ
materially from those estimates.


                                       4
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 -- SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition

The Company recognizes revenue from the sale of its products upon shipment. The
Company estimates an allowance for sales returns based on historical experience
with product returns.

Sales Incentives

In November 2001, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
01-09, "Accounting for Consideration Given by a Vendor to a Customer or a
Reseller of the Vendor's Products," which addresses the accounting for
consideration given by a vendor to a customer or a reseller of the vendor's
products. In April 2001, the EITF reached a consensus on EITF Issue No. 00-25,
"Vendor Income Statement Characterization of Consideration Paid to a Reseller of
the Vendor's Products," which provides guidance on the income statement
classification of consideration from a vendor to a reseller in connection with
the reseller's purchase of the vendor's products or to promote sales of the
vendor's products. The Company pays commissions to its distributors as
compensation for sales and marketing activities as evidenced by downline growth
and sales volume and thus classifies these expenses as a cost and not a
reduction of revenue. There was no effect on the consolidated financial
position, results of operations or cash flows as a result of implementation of
this pronouncement.

Goodwill and Other Intangible Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142 Goodwill and Other Intangible Assets (SFAS 142). Under SFAS
142, Goodwill and indefinite life intangible assets are no longer amortized but
will be reviewed annually, or more frequently if impairment indicators arise,
for impairment. Other intangible assets with finite lives, consisting of
trademarks with a carrying value of $57,302 at January 1, 2002, will continue to
be amortized over their estimated useful lives of 10 years. As of the date of
the adoption of the new accounting standards, there was no remaining goodwill to
be amortized.

Impairment or Disposal of Long-Lived Assets

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." SFAS No. 144, which addresses financial accounting and reporting for
the impairment of long-lived assets and for long-lived assets to be disposed of,
supercedes SFAS No. 121. The adoption of SFAS No. 144 did not have effect
financial position or results of operations.

NOTE 2 -- EARNINGS PER SHARE COMPUTATION

The computations of the weighted-average common shares used in the computation
of basic and diluted net loss per share is based on 12,317,783 and 10,640,895
shares for the three months ended March 31, 2002 and 2001, respectively.
Potential dilutive securities were not included in the EPS calculation since


                                       5
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

their effect would be antidilutive. Potential dilutive securities consisted of
outstanding stock options and convertible preferred stock and common stock
purchase warrants.

NOTE 3 -- RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
143 ("SFAS No. 143"), "Accounting for Asset Retirement Obligations." SFAS No.
143 establishes standards associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
The Company has not yet assessed the impact of this standard on its financial
statements, but does not expect the impact to be material.

NOTE 4 -- CONTINGENCIES

Microcystis

As a result of certain conditions, a toxic strain of algae called Microcystis
occasionally blooms in Klamath Lake and contaminates a portion of the Company's
harvest of blue-green algae. In 1994, the Company began to test the algae
harvested at its facility for possible contamination. The existence of
Microcystis has been regularly measured at various levels. In the absence of
established regulatory criteria for determining an acceptable level of
Microcystin (the actual toxin), the Company sponsored an assessment of risk and
set its own standards for determining whether a particular batch of algae is
acceptable for human consumption. Algae, which does not meet the Company's
standards and cannot be used in alternative non-human consumable products is
isolated and not used in production.

On October 23, 1997, the Oregon Department of Agriculture issued an
Administrative Rule on the sale of blue-green algae, which stated that "the
agency has decided to adopt the 1 microgram per gram (1 ppm) level of
Microcystin in blue-green algae." This ruling may have an impact on the
Company's ability to process and distribute the raw algae harvested and finished
goods produced. Such ruling may also decrease the amount of salable inventory on
hand and may therefore have an adverse impact on the Company's ability to
realize the carrying value of its inventories. Management has recognized that an
impairment of its inventory may exist and therefore has recorded its best
estimate of the effect by establishing a reserve in the amount of $900,000 at
March 31, 2002 and December 31, 2001 for the possible effects of inventories
which may become unsaleable under this Rule. The Oregon Department of
Agriculture has raised no questions about the Company's products under this Rule
to date.

Litigation

The Company is involved in various legal matters arising in the normal course of
business. In the opinion of management, the Company's liability, if any, arising
from legal proceedings related to these matters is not expected to have a
material effect on the consolidated financial statements of the Company.

On March 27, 2002, the Nature Conservancy, a nonprofit corporation (the
"Plaintiff"), filed an action against us in the Circuit Court of the State of
Oregon, for the County of Klamath, alleging among other things, that our wholly
owned subsidiary The New Earth Company ("NEC") has failed to pay the annual
payment due on a non-interest bearing promissory note (the "Note") executed and
delivered to Plaintiff and that NEC's failure to make the payment constitutes a
default under certain provisions of the Note and a trust deed (the "Trust Deed")
to secure payment under the Note. The Plaintiff is seeking $375,000 in


                                       6
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

principal due under the Note plus interest from the date of default in addition
to certain leasehold rights that the Trust Deed grants to it. The Plaintiff is
also seeking injunctive relief to recover rent payments from any sublessees. We
have retained legal counsel to represent us in this matter. The Company has
previously recorded the net present value of the Note, which has a balance of
$313,790 included in long-term debt in the consolidated balance sheet at March
31, 2002.

On January 28, 2002, the Company terminated its lease between NAC and Klamath
Cold Storage, Inc. ("KCS"), a corporation owned by some of its principal
shareholders, Daryl Kollman and Marta Kollman. On February 19, 2002, Daryl
Kollman, on behalf of himself and as an officer of KCS, filed two separate
Notice of Claim of Lien upon Chattels (the "Possessory Liens") against it and
its wholly owned subsidiary, NAC and/or NEC, in the County of Klamath, State of
Oregon, claiming a lien upon it and its wholly owned subsidiaries by alleging
among other things, that the Company owes him and Marta Kollman approximately
$497,525 in past due rent and that the Company owes KCS approximately $511,432
in past due rent for its use of certain real property owned by him and Marta
Kollman, our President and Chief Executive Officer, and KCS. Through the
Possessory Liens, Daryl Kollman is claiming that the Company is not entitled to
remove any of its property from the premises and that the properties will be
subject to foreclosure proceedings. On or about June 6, 2002, Daryl Kollman
filed a lawsuit in the Circuit Court for the State Oregon, County of Klamath, to
evict the Company from the facilites it occupies that are owned by Daryl Kollman
and Marta Carpenter (formerly known as Marta Kollman), and has also purported to
file, in the name of Klamath Cold Storage, a separate lawsuit to evict the
Company from the premises it occupies that are owned by Klamath Cold Storage.
Marta Carpenter is seeking to stop the evictions and the Company is resisting
Daryl Kollman's attempt to evict it. The properties in question include the
Company's facilities for processing and storing its products. The Company
believes it could not easily obtain subtitute facilities. If the Company is
evicted from the properties, it would have a material adverse impact on the
Company's financial condition and its ability to operate. The Company has
retained legal counsel to represent it in this matter.

In October 2001, Teachers for Truth in Advertising filed an action in the
Superior Court for the County of Tulare, State of California, alleging among
other things, that the Company's advertising is untrue or misleading, that the
Company's business practices are unlawful and fraudulent and unfair and that the
website contains misleading information about the products and the benefits that
a consumer may derive from their use. The plaintiff is seeking injunctive
relief, corrective advertising, and restitution to California consumers who
purchased the products. The matter is presently in the discovery phase and no
trial date has been scheduled. The Company does not believe that the plaintiff's
complaint is meritorious and believes that the Company will prevail in this
matter.

In 1996, the Company entered into an agreement with one of its vendors to
deliver 600,000 wet pounds of algae per month for processing for a five-year
period. The minimum monthly volume level increased in September 1996 to
1,000,000 wet pounds of algae. On or about February 6, 1998, the vendor filed a
complaint against the Company. The complaint alleges that the Company wrongfully
terminated a contract requiring the Company to provide to the vendor not less
than a contractually agreed amount of raw product for processing every month, or
pay a penalty based on the shortfall until the contract was validly terminated.
In its amended complaint, the vendor is seeking $780,930 in damages as of
February 1998, plus additional damages that allegedly are continuing to accrue,
plus prejudgment interest and prevailing party attorney fees as provided by the
contract. The Company counter-claimed for breach of contract, alleging
liquidated damages due, overcharges, and failure to deliver product,
consequential damage for failure to utilize quality control methods required by
the contract, prejudgment interest and attorney fees. In the first quarter of
2002, a settlement agreement was negotiated in which the parties have agreed to
dismiss the lawsuit and counter-claim and to enter into a new agreement for the
processing of algae for a five-year period. The parties have also agreed that
the Company will pay $1,656,000 (included in accounts payable at March 31, 2002)
to the vendor; $1 million of which will be paid in cash and $656,000 will be in
the form of a promissory note payable to the vendor with interest at 10.5% per
annum. As of March 31, 2002, the Company has not signed the processing and
settlement agreements. The agreements are expected to be executed upon the
Company's receipt of financing. In the first quarter of 2002, the parties have
reached an


                                       7
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

interim arrangement whereby the Company will pay $0.15 per pound processed by
the vendor until a formal agreement is finalized.


                                       8
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4 -- CONTINGENCIES (Continued)

Lien on Company Stock

The Company stock owned by Daryl J. Kollman and Marta C. Kollman, is the subject
of a tax lien filed by the Internal Revenue Service for income taxes due from
them arising from taxable income attributed from the Company. The lien is
subordinated in favor of the lender for the Receivable Loans, Advances and
Inventory Loans, Term Loans, and Equipment Acquisition Loans.

Dispute Between Principal Shareholders

Daryl and Marta Kollman, shareholders who together own approximately 82% of our
outstanding shares of common stock, have filed divorce proceedings. Daryl
Kollman and Marta Kollman jointly, and their affiliate Klamath Cold Storage Co.,
are lessors of substantially all of our facilities, including office space,
processing and freezer storage space. Although one lease is in effect until
2005, we lease the rest of these facilities on a month-to-month or year-to-year
basis. The disposition of these properties pursuant to the divorce could have an
adverse or disruptive effect on our operations, if the party who receives a
particular property elects to significantly increase rents or terminate any such
lease arrangement at the end of the then current lease term. In addition,
compliance with discovery requests may also have a disruptive effect on our
business and operations, and it may be necessary for our Chief Executive
Officer, Marta Kollman, to spend a portion of her time devoted to handling
matters related to the divorce. Moreover, Daryl Kollman is no longer actively
involved in management and has been unwilling to execute personal guarantees on
our behalf, as he has done in the past. On May 14, 2001, Marta Kollman
petitioned the Circuit Court for the State of Oregon with a motion seeking,
among other court orders, to enjoin Daryl Kollman from interfering with any
future loan applications of Marta Kollman or us and a self executing judgment
provision whereby the court would sign a loan application on behalf of Daryl
Kollman. The court subsequently held that Daryl Kollman is to cease and desist
from any such endeavors of interfering with our loan applications during the
pendency of the dissolution proceedings and is prohibited from writing letters
or communicating orally with any lending institutions unless requested to do so
by the institution. The court also held that Daryl Kollman, if presented with
loan documents to sign and if he objects to those documents in form or content,
he must first raise it with the court.

On January 29, 2002, the Court issued its written Order after the matter was
heard before the court at trial on December 10, 11, and 12, 2001. The Court
ruled that Marta Kollman and Daryl Kollman were each entitled to an equal
division of their respective stock ownership in our Company, thus resulting in
no change in our current ownership. The Court also ruled Daryl Kollman and Marta
Kollman's joint ownership in certain real property assets leased by us from them
will be divided equally in each property and that they must sell the properties
and improvements to pay the indebtedness to the Internal Revenue Service. Any
remaining proceeds after the payment of Federal and State taxes applicable to
the sale will be shared equally.

The Company does not believe the Court Order issued on January 29, 2002, will
have a material impact on our business since we believe that we can maintain our
favorable leases in the event of the sale of the properties or provide for an
adequate transition to other properties for the orderly continuation of our
business.


                                       9
<PAGE>

                      CELL TECH INTERNATIONAL INCORPORATED
                                AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Covenants Related to the Private Placement to Mr. Zubair Kazi

In connection with the sale of 1,157,895 common shares to a private investor in
1999, the Company made certain promises to the investor. In the event that the
consolidated shareholders' equity of the Company is less than $20,000,000 at
December 31, 1999 and the first reset date (see Annual Report on Form 10K for
the year ended December 31, 2000, incorporated herein by reference), the Company
shall immediately issue to Mr. Zubair Kazi ("Kazi") additional common stock and
warrants. The amount shall equal 1,157,895 multiplied by the percentage by which
the shareholders' equity is less than $20,000,000. The Company did not maintain
a shareholders' equity of $20,000,000 at December 31, 1999 and as a result,
1,893,134 shares and 1,893,134 warrants are due to Kazi as of March 31, 2002.
The accrued liability related to the issuance of these shares and warrants of
$381,207, based on the fair value of the securities, has been accounted for in
the financial statements. The Company is obligated, upon the effective date of
its next registration statement (First reset date), to issue additional
purchased securities in accordance with certain reset rights. Since the Company
has not yet filed its first registration statement, the first reset date has not
yet occurred.

Additionally, the shares sold were to be registered within 120 days of the sale.
Additional penalties have accrued until such time that the shares are
registered. The additional expense in 2002, through March 31, 2002, is $55,968.

Also, if within one year after October 19, 1999, the Company sells its common
stock at a price less than $1.425 per share in an event other than in a
registered underwriting, the Company shall immediately issue to Kazi such
additional shares of common stock and warrants so that Kazi maintains his
percentage shareholdings as if he had purchased shares of common stock at the
reduced purchase price. The Company did not sell any common stock during the one
year period ended October 19, 2000 or for the year ended December 31, 2000.


                                       10
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

From time to time, our representatives or we have made or may make
forward-looking statements, orally or in writing, including in this Report. Such
forward-looking statements may be included in, without limitation, press
releases, oral statements made with the approval of one of our authorized
executive officers and filings with the Securities and Exchange Commission. The
words or phrases "anticipates," "believes," "expects," "intends," "will
continue," "estimates," "plans," "projects," or similar expressions are intended
to identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995.

Our forward-looking statements are subject to certain risks, trends, and
uncertainties that could cause actual results to vary materially from
anticipated results, including, without limitation, market acceptance of our
marketing and merchandising concepts, changes in political and general market
conditions, demand for and market acceptance of new and existing products,
availability and development of new products, increased competition, our failure
to attain satisfactory outside financing and adverse weather conditions at Upper
Klamath Lake. These factors are discussed in further detail below. Should any
one or more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results may vary materially from
those discussed herein as expected, believed, estimated, intended or
anticipated. We undertake no obligation to revise or publicly release the
results of any revisions to these forward-looking statements.

The following discussion is intended to assist in the understanding of our
financial position and our results of operations for the three months ended
March 31, 2002 compared to the same period in 2001. The Consolidated Financial
Statements and related Notes should be referred to in conjunction with this
discussion. Unless stated otherwise, all financial information presented below,
throughout this report and in the Consolidated Financial Statements and related
Notes includes all of our subsidiaries on a consolidated basis.

Overview

We develop and distribute products made with Aphanizomenon flos-aquae (trade
name Super Blue Green(R) Algae) ("SBGA") through a network of independent
distributors ("Distributors"). We currently offer twenty different products
intended to appeal to health-conscious consumers. Our products are divided into
five product lines including Daily Health Maintenance, Digestive Health,
Defensive Health, Powdered Drinks and Snacks, and Animal and Plant Food.

We harvest SBGA and manufacture most of our products at our modern production
facilities in Klamath Falls, Oregon. We market our products through independent
Distributors located in all fifty states, the District of Columbia, Guam, Puerto
Rico, American Samoa, the Virgin Islands and Canada. We encourage our
Distributors to recruit interested people as new Distributors for our products.
These recruits are placed beneath the recruiting Distributor in the "network"
and are referred to as the distributor's "downline" or "organization."
Distributors earn commissions on sales by their organizations as well as retail
profits on the sales they generate directly. We assist Distributors in
establishing their own businesses and provide support programs such as audio and
videotapes for training, empowerment teams, seminars and an annual convention
called the August Celebration at our headquarters. We have approximately 46,065
active Distributors as of March 31, 2002 compared to approximately 54,643 active
Distributors as of March 31, 2001. We define an active Distributor as having
purchased products in the last six months.

Our income per share was $0.01 for the three months ended March 31, 2002
compared to a loss of $0.10 per share in 2001. The net income for the three
months ended March 31, 2002 totaling $0.10 million is


                                       11
<PAGE>

primarily attributable to a decrease in costs, specifically due to the Company
no longer recording depreciation expense on the harvest site assets that have
been identified as being held for sale. The net loss for the three months ended
March 31, 2001 totaling $1.0 million primarily related to the decrease in net
sales.

Results of Operations

The following table summarizes our unaudited operating results as a percentage
of net sales for each of the periods indicated.

<TABLE>
<CAPTION>
                                     Three Months Ended March 31,
                                    -----------------------------
                                        2002             2001
                                    ------------     ------------
<S>                                        <C>              <C>
Revenue                                    100.0%           100.0%

Cost of sales                               27.7             32.2
                                    ------------     ------------
Gross profit                                72.3             67.8

Commissions                                 47.7             49.0
                                    ------------     ------------
Gross profit after commissions              24.6             18.8

Operating Expenses:

   Selling expenses                         12.5             14.0
   General and administrative                3.6             10.0
   Shipping and handling expenses            6.0              5.8
   Research and development                  0.5              0.9
                                    ------------     ------------
Operating income (loss)                      2.0            (11.6)

Other income                                 0.1             (0.8)

Interest expense                            (0.6)            (2.2)
                                    ------------     ------------
Net income (loss) before taxes               1.5            (13.0)

Income tax benefit                            --               --
                                    ------------     ------------
Net income (loss)                            1.5            (13.0)
                                    ============     ============
</TABLE>

Three months ended March 31, 2002 compared with the three months ended March 31,
2001

Net sales for the three months ended March 31, 2002 were $7.1 million, a
decrease of $0.96 million or 12% from net sales of $8.1 million for the three
months ended March 31, 2001. The decrease in sales is directly related to a 12%
decrease in orders for the same period. Average order size remained the same at
$118 compared to the same period. The average number of distributors for the
three months ended March 31, 2002 decreased to an average of 46,902, which was
15% lower than the average of 55,139 distributors for the three months ended
March 31, 2001. Sales of our food supplement products are made through a
multi-level marketing network of distributors, so sales are linked with the
number of distributors.


                                       12
<PAGE>

Gross profit represents net sales less the cost of goods sold, which includes
the cost of harvesting blue-green algae from Klamath Lake, the cost of other
materials, direct labor expenses, an allocation of overhead costs, amortization,
and depreciation. Gross profit increased to 72% from 68% of net sales between
the three months ended March 31, 2002 and 2001, respectively. The increase in
the gross profit margin is due to the fixed cost component of cost of goods sold
decreasing as a result of the cessation of the recording of depreciation expense
of certain fixed assets at the harvest site. These fixed assets have been
classified as held for sale as a result of the decision taken by management not
to continue to harvest at the harvest site at this time but rather to harvest
using the on-lake barge.

Gross profit after commissions represents gross profit less commission expense.
Commission expense for the three months ended March 31, 2002 and 2001 was $3.4
million and $3.95 million, respectively, a decrease of $0.56 million or 14%. We
are a multi-level marketing organization. Distributors make up our sales force.
Distributors buy algae products for their own consumption plus they actively
recruit other distributors into our network. Distributors are paid commissions
based upon their personal sales volumes and the sales of distributors beneath
them in their network. During the three months ended March 31, 2001, the Company
implemented a new commission structure in an attempt to attract and retain
Distributors. Commission expense as a percentage of sales was 47.7% and 49%
during the three months ended March 31, 2002 and 2001, respectively. The
decrease in the expense as a percentage of sales is due to the implementation of
the revised commission system.

Operating expenses include shipping and handling expenses, selling expenses,
research and development expenses and general and administrative expenses. In
total, operating expenses decreased $0.8 million or 30% to $1.7 million for the
three months ended March 31, 2002 from $2.5 million for the three months ended
March 31, 2001. The components of operating expenses are discussed below.

      o     Selling expenses includes order operator and distributor services
            expenses, marketing and promotion expenses, and the expenses of the
            Office of the President and CEO. Selling expenses decreased $0.2
            million between 2002 and 2001 to $0.9 million from $1.1 million.
            This decrease was primarily due to a decrease in salaries and
            compensation of $89,000. Selling expenses as a percent of net sales
            were 12.5% for the three months ended March 31, 2002 and 14.0% of
            sales for the three months ended March 31, 2001.

      o     General and administrative expenses decreased by $0.55 million
            between 2002 and 2001 to $0.25 million from $0.8 million. For the
            three months ended March 31, 2002, general and administrative
            expenses averaged 3.6% of sales while they were 10% of sales for the
            three months ended March 31, 2001. The decrease between 2002 and
            2001 is attributable a decrease in payroll costs associated with the
            cost-cutting initiative of the Company and a decrease in legal and
            consulting fees incurred during 2002. Additionally, we did not renew
            the canal lease and as a result this cost was not recorded in 2002.

      o     Shipping and handling expenses includes purchasing, receiving, and
            materials management. Shipping and handling expenses decreased $0.04
            million or 8.2%, to $0.43 million in 2002 from $0.47 million in
            2001. The decrease was due to a $38,521 decrease in freight expenses
            in 2002 due to the overall decrease in sales. Shipping and handling
            expenses as a percent of net sales increased to 6.0% for the three
            months ended March 31, 2002 from 5.8% for the three months ended
            March 31, 2001.

      o     Research and development expenses decreased 48.4% to approximately
            $36,000 in 2002 from approximately $70,000 in 2001, which
            constituted 0.5% and 0.9% of net sales, respectively.


                                       13
<PAGE>

Other income decreased to $14,809 for the three months ended March 31, 2002 from
approximately $66,300 for the three months ended March 31, 2001 principally due
to a decrease in sundry income collected from Distributors and also by recording
the fair value cost of penalty shares and warrants to be issued to an investor
in the amount of $56,000.

Net interest expense decreased to approximately $47,000 for the three months
ended March 31, 2002 from $179,000 for the three months ended March 31, 2001.
This decrease was due to a decrease in minimum interest charges paid to the
current lender, partially offset by a decrease in interest expense due to a
decrease in outstanding debt in 2002 versus 2001. Net Interest expense
represented 0.6% and 2.2% of sales for each of the three months ended March 31,
2002 and 2001, respectively.

Net loss decreased 110% to result in net income of $109,073 for the three months
ended March 31, 2002 from a net loss of $1,048,261 for the comparable period in
2001. As a percentage of net sales, net income increased to 1.5% for the three
months ended March 31, 2002 from a loss of 13% for the comparable period in
2001. The dollar increase was due to net sales decreasing by 12%, offset by the
curtailment of various operating expenses.

Liquidity and Capital Resources

The Company has experienced recurring net losses and has a working capital
deficit at March 31, 2002 amounting to $5,884,243, a decrease of $1,497,963 from
a working capital deficit of $7,382,206 as of March 31, 2001. At March 31, 2002,
we had a bank overdraft of $419,455 versus a bank overdraft of $1,350,178 as of
March 31, 2001. In addition, the Company is not in compliance with certain
restrictive covenants of its $15 million Line of Credit Agreement with a
financial institution. As a result, at December 31, 2001 (the Company's fiscal
year end), the Company's independent certified public accountants have expressed
substantial doubt about the Company's ability to continue as a going concern.

We believe that the future cash flows from operations and suspension of dividend
payments to shareholders should be adequate to fund our operations for at least
the next twelve months. We have no present commitments or agreements with
respect to any acquisitions or purchases of manufacturing facilities or new
technologies. As a result of a resolution of the Board of Directors and, as set
forth in a recent court order regarding the dispute between Marta and Daryl
Kollman, we are no longer paying Daryl Kollman consulting fees in the aggregate
amount of $120,000 per year. Any future changes in our operations could consume
available capital resources faster than anticipated. Our capital requirements
depend on numerous factors, including:

      o     the introduction of new products;

      o     change in the number of Distributors and the retention of the
            current Distributor base; and

      o     research and development efforts.

We have an ample supply of algae inventory for use in capsules and tablets (10.2
months are frozen and 4.4 months are freeze-dried powder) and for use with
vendor products (160 months are frozen and 78 months are freeze-dried powder).
Accordingly, we do not anticipate a shortage of supply. This availability of
inventory usage is based on our current consumption levels and our experts have
informed us that the nutritional quality of our algae does not change
significantly as a result of our harvesting and storage methods. As a result of
the large volume of inventory on hand, a portion of the inventory has been
classified as a long-term asset. If existing capital resources are insufficient
to meet our capital requirements, we would be required to raise additional
funds, which we cannot assure will be available on favorable terms, if at all.


                                       14
<PAGE>

Cash Flows

Net cash flows provided by operating activities for the three months ended March
31, 2002 amounted to $693,522 compared to cash flows provided by operations of
$444,530 for the three months ended March 31, 2001. The increase in cash flows
generated by operations is primarily due to a $0.3 million increase in selling
profit between the three months ended March 31, 2002 and 2001 and changes in
current assets and liabilities.

Cash flows used in investing activities for the three months ended March 31,
2002 was $155,695, representing a decrease of $44,573 from net cash used for
investing activities of $200,268 for the three months ended March 31, 2001, due
to a decrease in equipment purchases during the three months ended March 31,
2002.

Net cash flows used for financing activities was $537,827 for the three months
ended March 31, 2001 versus net cash used for financing activities of $244,262
during 2001. This change is principally due to a $343,650 decrease in our bank
overdraft during 2002 versus 2001 and a decrease in the proceeds from related
party borrowings.

Recent Accounting Pronouncements

Pronouncements Adopted

Sales Incentives

In November 2001, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
01-09, "Accounting for Consideration Given by a Vendor to a Customer or a
Reseller of the Vendor's Products," which addresses the accounting for
consideration given by a vendor to a customer or a reseller of the vendor's
products. In April 2001, the EITF reached a consensus on EITF Issue No. 00-25,
"Vendor Income Statement Characterization of Consideration Paid to a Reseller of
the Vendor's Products," which provides guidance on the income statement
classification of consideration from a vendor to a reseller in connection with
the reseller's purchase of the vendor's products or to promote sales of the
vendor's products. We pay commissions to our distributors as compensation for
sales and marketing activities as evidenced by downline growth and sales volume
and thus classifies these expenses as a cost and not a reduction of revenue.
There was no effect on the consolidated financial position, results of
operations or cash flows as a result of implementation of this pronouncement.

Goodwill and Other Intangible Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142 Goodwill and Other Intangible Assets (SFAS 142). Under SFAS
142, Goodwill and indefinite life intangible assets are no longer amortized but
will be reviewed annually, or more frequently if impairment indicators arise,
for impairment. Other intangible assets with finite lives, consisting of
trademarks with a carrying value of $57,302 at January 1, 2002, will continue to
be amortized over their estimated useful lives of 10 years.


                                       15
<PAGE>

Impairment or Disposal of Long-Lived Assets

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." SFAS No. 144, which addresses financial accounting and reporting for
the impairment of long-lived assets and for long-lived assets to be disposed of,
supercedes SFAS No. 121. The adoption of SFAS No. 144 did not have effect
financial position or results of operations.

Pronouncements Not Yet Adopted

In July 2001, the FASB issued Statement of Financial Accounting Standards No.
143 ("SFAS No. 143"), "Accounting for Asset Retirement Obligations." SFAS No.
143 establishes standards associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
The Company has not yet assessed the impact of this standard on its financial
statements, but does not expect the impact to be material.

Special Note Regarding Forward-Looking Statements

Some of our statements under "Legal Proceedings," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Quantitative and
Qualitative Disclosures about Market Risk," "Other Information," the Notes to
Consolidated Financial Statements and elsewhere in this report constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements are subject to certain events, risks and uncertainties that may be
outside our control. Some of these forward-looking statements include statements
of:

      o     management's plans, objectives and budgets for its future operations
            and future economic performance;

      o     capital budget and future capital requirements;

      o     meeting future capital needs;

      o     realization of any deferred tax assets;

      o     the level of future expenditures;

      o     impact of foreign currency translations;

      o     impact of recent accounting pronouncements;

      o     the outcome of regulatory and litigation matters; and

      o     the assumptions described in this report underlying such
            forward-looking statements. Actual results and developments may
            materially differ from those expressed in or implied by such
            statements due to a number of factors, including:

      o     those described in the context of such forward-looking statements;

      o     future product development and manufacturing costs;

      o     changes in our incentive plans;

      o     timely development and acceptance of new products;

      o     the markets of our domestic and international operations;

      o     the impact of competitive products and pricing;

      o     the political, social and economic climate in which we conduct
            operations; and

      o     the risk factors described in other documents and reports filed with
            the Securities and Exchange Commission.


                                       16
<PAGE>

In some cases, forward-looking statements are identified by terminology such as
"may," "will," "should," "could," "would," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "approximates," "predicts," "potential"
or "continue" or the negative of such terms and other comparable terminology.

Although we believe that the expectations reflected in these forward-looking
statements are reasonable, it cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor anyone else
assumes responsibility for the accuracy and completeness of such statements and
is under no duty to update any of the forward-looking statements after the date
of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have not entered into any transactions using derivative financial instruments
or derivative commodity instruments and believe that our exposure to market risk
associated with other financial instruments is not material.

Our primary market risks include fluctuations in our variable interest rates.
Our management believes that fluctuation in variable interest rates in the near
term would not materially affect our consolidated operating results, financial
position or cash flows as we have limited risks related to interest rate
fluctuations.

The Kollmans have sole voting and investment power with respect to their shares.
The Internal Revenue Service has a security interest in all of their shares
pursuant to a Notice of Determination dated June 18, 1999, under the terms of
which the shares are held in trust and will be released upon the Kollmans'
payment of their federal income tax liabilities for various specified years. The
Kollmans will sell their shares as needed and allowed by federal and state
securities laws to make quarterly payments to the Internal Revenue Service. The
Kollmans retain all voting rights incident to their shares while the shares are
held in trust. The Internal Revenue Service may seize the Kollmans' shares from
the trust if the Kollmans fail to timely cure a default upon their commitments
to the Internal Revenue Service under the Notice of Determination. The Internal
Revenue Service would thereafter proceed to sell or judicially foreclose some or
all of the shares for payment of the Kollmans' tax liabilities as allowed by
applicable law.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Other than as indicated below, there have been no material changes in, or
additions to, the legal proceedings previously reported in our Annual Report on
Form 10-K (File No. 0-21015) for year ended December 31, 2001 as filed with the
Commission on May 23, 2002.

On January 28, 2002, we terminated our lease between NAC and Klamath Cold
Storage, Inc. ("KCS"), a corporation owned by our principal shareholders, Daryl
Kollman and Marta Kollman. On February 19, 2002, Daryl Kollman, on behalf of
himself and as an officer of KCS, filed two separate Notice of Claim of Lien
upon Chattels (the "Possessory Liens") against us and our wholly owned
subsidiary, NAC and/or NEC, in the County of Klamath, State of Oregon, claiming
a lien upon us and our wholly owned subsidiaries by alleging among other things,
that we owe him and Marta Kollman approximately $508,246 in past due rent and
that we owe KCS approximately $576,232 in past due rent for our use of certain
real property owned by him and Marta Kollman, our President and Chief Executive
Officer, and KCS. Through the Possessory Liens, Daryl Kollman is claiming that
we are not entitled to remove any of our property from the premises and that the
properties will be subject to foreclosure proceedings. On or about June 6, 2002,
Daryl Kollman has a lawsuit in the Circuit Court for the State Oregon, County of
Klamath, to evict us from the facilities we occupy that are owned by Daryl
Kollman and Marta Carpenter (formerly known as Marta Kollman), and has also
purported to file, in the name of Klamath Cold Storage, a separate lawsuit to
evict us from the premises we occupy that are owned by Klamath Cold Storage.
Marta Carpenter is seeking to stop the evictions and we are resisting Daryl
Kollman's attempt to evict us. The properties in question include our facilities
for processing and storing our products. We believe we could not easily obtain
substitute facilities. If we are evicted from the properties, it would have a
material adverse impact on our financial condition and our ability to operate.
We have retained legal consel to represent us in this matter.

                                       17
<PAGE>

On March 27, 2002, the Nature Conservancy, a nonprofit corporation (the
"Plaintiff"), filed an action against us in the Circuit Court of the State of
Oregon, for the County of Klamath, alleging among other things, that our wholly
owned subsidiary The New Earth Company ("NAC") has failed to pay the annual
payment due on a non-interest bearing promissory note (the "Note") executed and
delivered to Plaintiff and that NAC's failure to make the payment constitutes a
default under certain provisions of the Note and a trust deed (the "Trust Deed")
to secure payment under the Note. The Plaintiff is seeking $375,000 in principal
due under the Note plus interest from the date of default in addition to certain
leasehold rights that the Trust Deed grants to it. The Plaintiff is also seeking
injunctive relief to recover rent payments from any sublessees. We have retained
legal counsel to represent us in this matter. We have previously recorded the
net present value of the Note, which has a balance of $313,790 included in
long-term debt in the consoldated balance sheet at March 31, 2002.

Dispute Between Principal Shareholders

Daryl and Marta Kollman, shareholders who together own approximately 82% of our
outstanding shares of common stock, have filed divorce proceedings. Daryl
Kollman and Marta Kollman jointly, and their affiliate Klamath Cold Storage Co.,
are lessors of substantially all of our facilities, including office space,
processing and freezer storage space. Although one lease is in effect until
2005, we lease the rest of these facilities on a month-to-month or year-to-year
basis. The disposition of these properties pursuant to the divorce could have an
adverse or disruptive effect on our operations, if the party who receives a
particular property elects to significantly increase rents or terminate any such
lease arrangement at the end of the then current lease term. In addition,
compliance with discovery requests may also have a disruptive effect on our
business and operations, and it may be necessary for our Chief Executive
Officer, Marta Kollman, to spend a portion of her time devoted to handling
matters related to the divorce. Moreover, Daryl Kollman is no longer actively
involved in management and has been unwilling to execute personal guarantees on
our behalf, as he has done in the past. On May 14, 2001, Marta Kollman
petitioned the Circuit Court for the State of Oregon with a motion seeking,
among other court orders, to enjoin Daryl Kollman from interfering with any
future loan applications of Marta Kollman or us and a self executing judgment
provision whereby the court would sign a loan application on behalf of Daryl
Kollman. The court subsequently held that Daryl Kollman is to cease and desist
from any such endeavors of interfering with our loan applications during the
pendency of the dissolution proceedings and is prohibited from writing letters
or communicating orally with any lending institutions unless requested to do so
by the institution. The court also held that Daryl Kollman, if presented with
loan documents to sign and if he objects to those documents in form or content,
he must first raise it with the court.

On January 29, 2002, the Court issued its written Order after the matter was
heard before the court at trial on December 10, 11, and 12, 2001. The Court
ruled that Marta Kollman and Daryl Kollman were each entitled to an equal
division of their respective stock ownership in our Company, thus resulting in
no change in our current ownership. The Court also ruled that Daryl Kollman and
Marta Kollman's joint ownership in certain real property assets leased by us
from them will be divided equally in each property and that they must sell the
properties and improvements to pay the indebtedness to the Internal Revenue
Service. Any remaining proceeds after the payment of Federal and State taxes
applicable to the sale will be shared equally.

We do not believe the Court Order issued on January 29, 2002, will have a
material impact on our business since we believe that we can maintain our
favorable leases in the event of the sale of the properties or provide for an
adequate transition to other properties for the orderly continuation of our
business.


                                       18
<PAGE>

Item 2. Changes in Securities

      None.

Item 3. Defaults Upon Senior Securities

      Not applicable.

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

      None.

Item 5. Other Information

      None.

Item 6. Exhibits and Reports on Form 8-K

      (a)   Exhibits required by Item 601 of Regulation S-K

Exhibit Number    Description
-------------    -----------

(2)               Plan of Acquisition, Reorganization, Arrangement, Liquidation
                  or Succession

                           (2.1)    Agreement and Plan of Reorganization, dated
                                    July 16, 1999, among the Company, Daryl J.
                                    Kollman and Marta C. Kollman (filed as
                                    Exhibit 2.1 without schedules and exhibits
                                    to the Current Report on Form 8-K on August
                                    2, 1999 and incorporated by reference)

(3)               Articles of Incorporation and Bylaws

                           (3.1)    Certificate of Incorporation, as amended
                                    (filed as Exhibit 3.1 to the Registration
                                    Statement for Small Business on Form SB-2 on
                                    June 21, 1996 and incorporated by reference)

                           (3.2)    Certificate of Amendment of Certificate of
                                    Incorporation (filed as Exhibit 3.1(a) to
                                    the Current Report on Form 8-K on November
                                    19, 1999 and incorporated by reference)

                           (3.3)    Certificate of Designations, Preferences and
                                    Rights of Series B Convertible Preferred
                                    Stock (filed as Exhibit 3.1 to the Current
                                    Report on Form 8-K on August 2, 1999 and
                                    incorporated by reference)

                           (3.4)    Amended and Restated Bylaws (filed as
                                    Exhibit 3.2 to the Registration Form for
                                    Small Business on Form SB-2 on June 21, 1996
                                    and incorporated by reference)

(4)               Instruments Defining the Rights of Security Holders


                                       19
<PAGE>

                           (4.1)    Loan and Security Agreement, dated June 21,
                                    1999, by and among The New Earth Company,
                                    The New Algae Company and Coast Business
                                    Credit (filed as Exhibit 4.1 to the Current
                                    Report on Form 8-K on November 19, 1999 and
                                    incorporated by reference)

                           (4.2)    Continuing Guaranty, dated August 6, 1999
                                    (filed as Exhibit 4.2 to the Current Report
                                    on Form 8-K on November 19, 1999 and
                                    incorporated by reference)

                           (4.3)    Form of Common Stock Certificate (filed as
                                    Exhibit 4.1 to the Amendment to Registration
                                    Statement for Small Business on Form SB-2/A
                                    on July 26, 1996 and incorporated by
                                    reference)

                           (4.4)    Form of Series A Preferred Stock Certificate
                                    (filed as Exhibit 4.2 to the Amendment to
                                    Registration Statement for Small Business on
                                    Form SB-2/A on July 26, 1996 and
                                    incorporated by reference)

                           (4.5)    Form of Warrant to Purchase Shares of Common
                                    Stock to be issued to Andromeda Enterprises,
                                    Inc. or its designees, Hateley & Hampton or
                                    its designees and Wharton Capital Partners,
                                    Ltd. (filed as Exhibit 4.1 to the Current
                                    Report on Form 8-K on August 2, 1999 and
                                    incorporated by reference)

                           (4.6)    Nonqualified Stock Option Agreement between
                                    the Company and Physicians World
                                    Communications Group (filed as Exhibit 4.9
                                    to the Quarterly Report on Form 10-Q for the
                                    quarterly period ended September 30, 1998
                                    and incorporated by reference)

                           (4.7)    Warrant to Purchase Shares of Common Stock
                                    issued to Scantek Medical, Inc. as of May
                                    15, 1998 (filed as Exhibit 4.7 to the
                                    Quarterly Report on Form 10-Q for the
                                    quarterly period ended September 30, 1998
                                    and incorporated by reference)

                           (4.8)    Warrant to Purchase Shares of Common Stock
                                    issued to Zigmed, Inc. as of May 15, 1998
                                    (filed as Exhibit 4.8 to the Quarterly
                                    Report on Form 10-Q for the quarterly period
                                    ended September 30, 1998 and incorporated by
                                    reference)

                           (4.9)    Representative's Warrant Agreement between
                                    the Company and Keane Securities Co.,
                                    including Form of Warrant Certificate (filed
                                    as Exhibit 4.3 to the Amendment to
                                    Registration Statement for Small Business on
                                    Form SB-2/A on July 26, 1996 and
                                    incorporated by reference)

                           (4.10)   Form of Warrant Certificate for March Bridge
                                    Warrants (filed as Exhibit 4.4 to the
                                    Registration Statement for Small Business on
                                    Form SB-2 on June 21, 1996 and incorporated
                                    by reference)


                                       20
<PAGE>

                           (4.11)   Nonqualified Stock Option Agreements with
                                    Certain Officers (Donald Brounstein, James
                                    Whidden, Whidden & Associates, Inc., Amy
                                    Lewis, and Everett Lautin) (filed as Exhibit
                                    4.5 to the Registration Statement for Small
                                    Business on Form SB-2 on June 21, 1996 and
                                    incorporated by reference)

                           (4.12)   Form of Private Warrants issued in
                                    connection with May Private Placement (filed
                                    as Exhibit 4.6 to the Registration Statement
                                    for Small Business on Form SB-2 on June 21,
                                    1996 and incorporated by reference)

(10)              Material Contracts

                           (10.1)   General Release, dated January 25, 2000
                                    between the Company and Donald Brounstein
                                    (filed as Exhibit 10.1 to the Annual Report
                                    on Form 10-K for the year ended December 31,
                                    2000 and incorporated by reference)

                           (10.2)   Settlement Agreement, dated May 15, 1998,
                                    between the Company and Scantek Medical,
                                    Inc. (filed as Exhibit 10.16 to the
                                    Quarterly Report on Form 10-Q for the
                                    quarterly period ended June 30, 1998 and
                                    incorporated by reference)

                           (10.3)   Settlement Agreement, dated May 15, 1998,
                                    between the Company and Zigmed, Inc. (filed
                                    as Exhibit 10.17 to the Quarterly Report on
                                    Form 10-Q for the quarterly period ended
                                    June 30, 1998 and incorporated by reference)

                           (10.4)   Employment Agreement between the Company and
                                    Dr. Chris J. M. Blaxland, dated as of
                                    September 1, 1998 (filed as Exhibit 10.18 to
                                    the Quarterly Report on Form 10-Q for the
                                    quarterly period ended September 30, 1998
                                    and incorporated by reference)

                           (10.5)   Employment Agreement between the Company and
                                    Donald Brounstein, dated January 1, 1996
                                    (filed as Exhibit 10.8 to the Registration
                                    Statement for Small Business on Form SB-2 on
                                    June 21, 1996 and incorporated by reference)

                           (10.6)   Employment Agreement between the Company and
                                    James J. Whidden (filed as Exhibit 10.9 to
                                    the Registration Statement for Small
                                    Business on Form SB-2 on June 21, 1996 and
                                    incorporated by reference)

                           (10.7)   Employment Agreement between the Company and
                                    Kenneth S. Hollander, dated June 3, 1996
                                    (filed as Exhibit 10.10 to the Registration
                                    Statement for Small Business on Form SB-2 on
                                    June 21, 1996 and incorporated by reference)


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<PAGE>

                           (10.8)   Consulting Agreement, dated March 1, 1996,
                                    between the Company and Don Anderson (filed
                                    as Exhibit 10.8 to the Annual Report on Form
                                    10-K for the year ended December 31, 2000
                                    and incorporated by reference)

                           (10.9)   Exclusive Supply and Distribution Agreement
                                    between the Company and Physician Sales &
                                    Services, Inc., as amended (filed as Exhibit
                                    10.1 to the Amendment to Registration
                                    Statement for Small Business on Form SB-2/A
                                    on July 26, 1996 and incorporated by
                                    reference)

                           (10.10)  License Agreement, dated October 20, 1995,
                                    between the Company and Scantek Medical,
                                    Inc., as amended (filed as Exhibit 10.2 to
                                    the Registration Statement for Small
                                    Business on Form SB-2 on June 21, 1996 and
                                    incorporated by reference)

                           (10.11)  Construction Contract between the Company
                                    and Zigmed, Inc. (filed as Exhibit 10.3 to
                                    the Registration Statement for Small
                                    Business on Form SB-2 on June 21, 1996 and
                                    incorporated by reference)

                           (10.12)  Lease, dated June 11, 1996, between the
                                    Company and the Moen Organization, Inc.
                                    (filed as Exhibit 10.14 to the Registration
                                    Statement for Small Business on Form SB-2 on
                                    June 21, 1996 and incorporated by reference)

                           (10.13)  Lease Termination Agreement, dated February
                                    2, 1999, between the Company and the Moen
                                    Organization, Inc. (filed as Exhibit 10.13
                                    to the Annual Report on Form 10-K for the
                                    year ended December 31, 2000 and
                                    incorporated by reference)

                           (10.14)  Intentionally omitted

                           (10.15)  Commercial Lease Agreement, dated July 1,
                                    1995, between and among The New Earth
                                    Company, Daryl Kollman and Marta Kollman
                                    (filed as Exhibit 10.15 to the Annual Report
                                    on Form 10-K for the year ended December 31,
                                    2000 and incorporated by reference)

                           (10.16)  Commercial Lease Agreement, dated August 15,
                                    1995, between and among The New Algae
                                    Company, Daryl Kollman and Marta Kollman
                                    (filed as Exhibit 10.16 to the Annual Report
                                    on Form 10-K for the year ended December 31,
                                    2000 and incorporated by reference)

                           (10.17)  Ground Lease Agreement, dated December 9,
                                    1995, between and among The New Earth
                                    Company, Emil Nobel and Mary Ann Nobel
                                    (filed as Exhibit 10.17 to the Annual Report
                                    on Form 10-K for the year ended December 31,
                                    2000 and incorporated by reference)


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<PAGE>

                           (10.18)  Commercial Lease Agreement, dated May 1,
                                    1996, between and among The New Algae
                                    Company, Daryl Kollman and Marta Kollman
                                    (filed as Exhibit 10.18 to the Annual Report
                                    on Form 10-K for the year ended December 31,
                                    2000 and incorporated by reference)

                           (10.19)  Commercial Lease Agreement, dated September
                                    1, 1996, between Klamath Cold Storage, Inc.
                                    and The New Earth Company, including
                                    Sublease between The New Earth Company and
                                    The New Algae Company (filed as Exhibit
                                    10.19 to the Annual Report on Form 10-K for
                                    the year ended December 31, 2000 and
                                    incorporated by reference)

                           (10.20)  Voting and Stockholders' Rights Agreement,
                                    dated May 15, 1996 (filed as Exhibit 10.4 to
                                    the Registration Statement for Small
                                    Business on Form SB-2 on June 21, 1996 and
                                    by this reference incorporated herein)

                           (10.21)  Agreement to Issue Warrants, dated March 19,
                                    1996, between the Company and Udi Toledano
                                    (filed as Exhibit 10.5 to the Registration
                                    Statement for Small Business on Form SB-2 on
                                    June 21, 1996 and by this reference
                                    incorporated herein)

                           (10.22)  Agreement to Issue Warrants, dated March 19,
                                    1996, between the Company and Herbert V.
                                    Turk (filed as Exhibit 10.6 to the
                                    Registration Statement for Small Business on
                                    Form SB-2 on June 21, 1996 and by this
                                    reference incorporated herein)

                           (10.23)  Non-Negotiable Warrant Certificate between
                                    the Company and Physician Sales & Service,
                                    Inc. (filed as Exhibit 10.7 to the
                                    Registration Statement for Small Business on
                                    Form SB-2 on June 21, 1996 and by this
                                    reference incorporated herein)

                           (10.24)  HumaScan, Inc. Non-Employee Director Stock
                                    Option Plan (filed as Exhibit 10.12 to the
                                    Registration Statement for Small Business on
                                    Form SB-2 on June 21, 1996 and by this
                                    reference incorporated herein)

                           (10.25)  Form of Indemnification Agreement between
                                    the Company and its Executive Officers and
                                    Directors (filed as Exhibit 10.15 to the
                                    Annual Report for Small Business on Form
                                    10KSB40 for the fiscal year ended December
                                    31, 1997 and by this reference incorporated
                                    herein)

                           (10.26)  The Company's 2000 Stock Incentive Plan
                                    (filed as Exhibit 10.26 to the Annual Report
                                    on Form 10-K for the year ended December 31,
                                    2000 and incorporated by reference)


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<PAGE>

(16)              Letter from KPMG, dated November 2, 1999, agreeing with the
                  statements contained in the Company's Form 8-K, dated November
                  2, 1999 (filed as Exhibit 16 to the Current Report on Form 8-K
                  on November 22, 1999 and by this reference incorporated
                  herein)

(99)              Additional Exhibits

                           (99.1)   Internal Revenue Service Notice of
                                    Determination, dated July 18, 1999 (filed as
                                    Exhibit 99.2 to the Current Report on Form
                                    8-K on November 19, 1999 and by this
                                    reference incorporated herein)

                           (99.2)   Pledge and Escrow Agreement between and
                                    among Daryl Kollman and Marta Kollman, the
                                    Internal Revenue Service and West Coast
                                    Trust Co., Inc. (filed as Exhibit 99.3 to
                                    the Current Report on Form 8-K on November
                                    19, 1999 and by this reference incorporated
                                    herein)

(b)   Reports on Form 8-K.          None.

                                   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, in the City of Klamath
Falls, State of Oregon on June 18, 2002.

                      CELL TECH INTERNATIONAL INCORPORATED

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

By: /s/ Marta C. Kollman        President and Chief Executive     June 18, 2002
       -----------------             Officer and Director
        Marta C. Kollman        (principal executive officer,
                               principal financial officer and
                                principal accounting officer)


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