BIOCONTROL TECHNOLOGY INC, S-1/A, 1999-04-14

BIOCONTROL TECHNOLOGY INC
S-1/A, 1999-04-14
ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS

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As filed with the Securities and Exchange Commission on April 14, 1999

Registration No. 333-63193

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
POST-EFFECTIVE AMENDMENT NO.1 TO
FORM S-1/A
under
THE SECURITIES ACT OF 1933
BIOCONTROL TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania 3841 25-1229323
(State or otherjurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) Number)

300 Indian Springs Road
Indiana, Pennsylvania 15701 (412) 349-1811
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices and principal
place of business)
___________________________________________
Fred E. Cooper, Chief Executive Officer
Biocontrol Technology, Inc.
2275 Swallow Hill Road, Building 2500, Pittsburgh, Pennsylvania 15220
(412)429-0673
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
___________________________________________
Copy to:
Sweeney & Associates P.C.
7300 Penn Avenue, Pittsburgh, Pennsylvania 15208
_____________________________________________________
Approximate date of commencement of proposed sale to the public:
As soon as possible after this registration statement becomes
effective.

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securiies Act of 1933 check the following box. [X]

CALCULATION OF REGISTRATION FEE

Title of Each Amount to Proposed Proposed Amount of
Class of be Maximum Maximum Registra-
Securities to be Registered Offering Aggregate tion Fee
Registered Price Per Offering
Share Price

Common Stock 375,000,000 $0.06(2) $37,500,000 $6,465.00(3)
(Primary Shares) (1) (3)

Total 375,000,000 $37,500,000 $6,465.00(3)
Total
Registration Fee

TOTAL OF SEPARATELY NUMBERED PAGES 84 EXHIBIT INDEX ON
SEQUENTIALLY NUMBERED PAGE 78

(1) Primary shares to be offered by the Registrant.
(2) Estimated solely for purposes of calculating the registration
fee pursuant to Rule 457(c) of the Securities Act of 1933, as
amended, and based on the average of the high and low sales
prices of the common stock of Registrant on the NASDAQ Small-
Cap Market reported in March, 1999.
(3) The proper calculations and filing fees for all prior shares
were included in prior filings of this Registration Statement
on Form S-3 and Form S-1/A. Therefore, only the filing fee
for 375,000,000 shares is being submitted with the filing of
this Post-Effective Amendment to Form S-1 pursuant to Rule
459.
_____________________

The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall
become effective on such date as the Commission acting pursuant to
Section 8(a) may determine.

_____________________

Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted prior
to the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification
under the securities laws of any such state.

[INSIDE FRONT COVER]

AVAILABLE INFORMATION

The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "1934 Act") and in
accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other
information concerning the Company can be inspected and copied at
the Public Reference Room of the Commission, 450 Fifth Street,
N.W., Washington, D.C. and at the Commission's regional offices
including those located at 601 Walnut Street, Curtis Center, Suite
1005E, Philadelphia, PA 19106-34322; and 75 Park Place, New York,
NY. Copies of this material may also be obtained from the Public
Reference section of the Commission, 450 Fifth Street, N.W.
Washington, D.C. 20549, at prescribed rates or electronically via
the Commission's website at www.sec.gov and EDGAR, the electronic
database for all filings with the Commission. The Company's
common stock is traded on the NASDAQ Electronic Bulletin Board.
In accordance with 1934 Act requirements, the Company files
reports, proxy statements and other information with NASDAQ. Such
reports, proxy statements and other information concerning the
Company can be inspected at NASDAQ's offices located at 1735 K
Street N.W., Washington D.C., 20006. This Prospectus omits
certain information contained in the Registration Statement and
the exhibits relating thereto which the Registrant has filed with
the Securities and Exchange Commission, under the Securities Act
of 1933 (the "1933 Act"), and to which reference is made for
additional information. Descriptions concerning the provisions of
any document are qualified in their entirety by reference to the
full text of such document as filed with the Commission as an
exhibit to the Registration Statement.

Until 90 days after the effective date of this Prospectus,
all dealers effecting transactions in these securities, whether
or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.

SUBJECT TO COMPLETION DATED April 14, 1999

PRELIMINARY PROSPECTUS

BIOCONTROL TECHNOLOGY, INC.
Common Stock

THE SALE OF 575,000,000 SHARES OF AUTHORIZED BUT UNISSUED SHARES
OF COMMON STOCK BY THE COMPANY.
______________________________________

The Prospectus filed with this Registration relates to an
offering of the following: up to 575,000,000 shares of common
stock (the APrimary Shares@ or "Common Stock"), of Biocontrol
Technology, Inc. (the "Company" or "BICO") at a price of $ .05
per share on a best-efforts, no minimum basis. The Common Stock
is authorized but unissued common stock to be sold directly by
the Company. The original Registration offered 200,000,000 shares
of common stock; the additional 375,000,000 shares are included in
this Post-Effective Amendment No. 1 pursuant to Rule 459.

The Company's common stock is traded on the Nasdaq Electronic
Bulletin Board under the trading symbol "BICO" and is also
reported under the symbol "BIOCNTRL TEC". (SEE, Risk Factors -
Market for Common Stock).

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND PROSPECTIVE
PURCHASERS SHOULD CAREFULLY CONSIDER THE FACTORS SPECIFIED UNDER
THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS ANY SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PRELIMINARY PROSPECTUS IS APRIL 14, 1999

SUMMARY INFORMATION
The following summary information is qualified in its
entirety by the more detailed information, including the Company's
financial statements and notes thereto, which are set forth in
this Prospectus. The Company is primarily engaged in the research
and development of biomedical and bioremediation products.
Although the Company does manufacture products on a contractual
basis, and has manufactured bioremediation products, the Company
currently has no material manufacturing and sales operations. All
prospective investors should carefully review the entire
prospectus when considering an investment in the Company,
especially the information in the section captioned `Risk
Factors'.

The Company

Biocontrol Technology, Inc. was incorporated in the Commonwealth
of Pennsylvania in 1972 as Coratomic, Inc. and is referred to
herein as "BICO" or the "Company". BICO's operations are
currently located at Kolter Drive, Indiana, PA, and its
administrative offices are located at 2275 Swallow Hill Road,
Bldg. 2500, Pittsburgh, PA. The Company is developing the
Noninvasive Glucose Sensor with Diasensor.com, Inc., its 52% owed
subsidiary. Where applicable, BICO and Diasensor.com will be
referred to herein as the "Companies".

The primary business of the Company is the development of new
devices which include models of a noninvasive glucose sensor (the
"Noninvasive Glucose Sensor"), an implantable port for drug
delivery and hemodialysis use, a polyurethane heart valve,
procedures relating to the use of whole-body extracorporeal
hyperthermia in the treatment of cancer and the human
immunodeficiency virus ("HIV"), and bioremediation products. Due
to economic and other factors, including the loss of orders, the
Company has discontinued its functional electrical stimulator and
Barnacle Ban projects (See `Management's Discussion and
Analysis'). In early 1998, the Company acquired a majority
interest in a company which manufactures and sells metal coating
products.

Forward-Looking Statements

From time to time, the Company may publish forward-looking
statements relating to such matters as anticipated financial
performance, business prospects, technological developments, new
products, research and development activities, the regulatory
approval process, specifically in connection with the FDA
marketing approval process, and similar matters. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements. In order to comply with the terms
of the safe harbor, the Company notes that a variety of factors
could cause the Company's actual results to differ materially from
the anticipated results or other expectations expressed in the
Company's forward-looking statements. The risks and uncertainties
that may affect the operations, performance, research and
development and results of the Company's business include the
following: additional delays in the research, development and FDA
marketing approval of the Noninvasive Glucose Sensor; delays in
the manufacture or marketing of the Company's other products and
medical devices; the Company's future capital needs and the
uncertainty of additional funding; BICO's uncertainty of
additional funding; competition and the risk that the Noninvasive
Glucose Sensor or its other products may become obsolete; the
Company's continued operating losses, negative net worth and
uncertainty of future profitability; potential conflicts of
interest; the status and risk to the Company's patents, trademarks
and licenses; the uncertainty of third-party payor reimbursement
for the Sensor and other medical devices and the general
uncertainty of the health care industry; the Company's limited
sales, marketing and manufacturing experience; the amount of time
or funds required to complete or continue any of the Company's
various products or projects; the attraction and retention of key
employees; the risk of product liability; the uncertain outcome
and consequences of the lawsuits pending against the Company; the
ability of the Company to maintain a national listing for its
common stock; and the dilution of the Company's common stock.

The Offering

Securities Offered: 575,000,000 of the Company's authorized but
unissued common stock; 200,000,000 of which
have been sold as of April 14, 1999.

Use of Proceeds: Proceeds from the Offering are intended
to be applied to the working capital needs of
the Company and its subsidiaries, including
general and administrative expenses; for the
marketing of its products, including its
noninvasive glucose sensor, which is being
marketed outside the United States, and for
the ongoing research and development of its
products.The Common Stock is being offered on
a continuous, best-efforts basis, and the
Company will not establish an escrow, trust
or similar account. The proceeds of this
Offering will be held in the Company's
corporate accounts (SEE, `Use of Proceeds').

Risk Factors: This is an Offering of securities which
involves a high degree of risk. Investors must
be able to accept the risk of the entire
loss of their investment (SEE, `Risk Factors').

RISK FACTORS

An investment in the Company's securities is highly specula
tive and should not be made by any investor who cannot afford the
loss of the entire investment. In addition to the other
information in the Prospectus, the following risk factors should
be considered carefully in evaluating an investment in the shares
offered hereby.

1. Continuing and Future Losses and Cash Flow. The Company
has experienced and continues to experience operating losses due
to the costs of its research and development activities and the
absence of commercially successful products. Without the
development of commercially viable products, such losses will
continue. If the products currently under development are not
fully developed, or do not generate sufficient revenues once
developed, the Company will continue to suffer losses. The
Company will not be able to continue its operations for an
indefinite period of time if such losses continue. It is
uncertain at this time whether the Company will achieve
profitability in the future. In the event that the Company is
unable to complete the development of, receive the necessary U. S.
Food and Drug Administration ("FDA") approval for, or successfully
market the Noninvasive Glucose Sensor as planned, the Company will
incur significant losses and its ability to continue its
operations will be jeopardized. The Company's net losses were
($24,045,702) in 1996; ($30,433,177) in 1997; and ($22,402,655)
in 1998. The Company's accumulated deficit aggregated
($120,699,236) as of December 31, 1997, and ($143,101,880) as of
December 31, 1998. The Company estimates that it has the
capacity, using available cash resources, including funds it
reasonably expects to be raised by BICO or its affiliates, to
fund BICO's operations through at least December 31, 1999;
however, absent additional funding, the Company will have limited
liquidity on a long-term basis. There can be no assurances
whether the amount and timing of the receipt of net proceeds from
any future securities Offering, or additional financing from third
parties, will be sufficient to fund the Company's operations.

2. "Going Concern" Condition of Independent Auditors'
Report. The Report of the Company's independent auditors includes
an emphasis paragraph relating to the Company's ability to
continue as a going concern based primarily upon its continuing
losses, limited cash flow and lack of revenues.

3. Uncertainty of Additional Funding Required to Meet
Future Capital Needs. There are no assurances that the Company
will receive any proceeds from this Offering, and the maximum
proceeds received will be limited to funds received from the sale
of the 475,000,000 Primary Shares. Such funds will not be
sufficient, however, to complete all proposed research and
development or manufacturing start-up projects; although the
Company does have sufficient capital to meet its short-term needs,
the Company currently does not possess sufficient capital to meet
all of its future capital needs.

The Company will require additional capital in order to
complete its Noninvasive Glucose Sensor, heart valve, hyperthermia
treatment and bioremediation projects. The Company anticipates
that its other sources of capital may include additional sales of
stock, private domestic and offshore placements of its securities,
bank financing or joint ventures with other biomedical companies
or venture capital firms. There can be no assurances that the
Company will be able to raise capital in a manner which meets its
timing requirements, or on terms which are favorable or acceptable
to the Company. Should the Company meet its future capital needs
via additional sales of stock, further dilution of existing
shareholders' equity and voting power will result. Although the
Company and its affiliates have a history of successful capital-
raising efforts, there can be no assurance that it will be
successful in meeting its future capital needs.

4. Uncertainty of Product Development and Lack of Revenues.
Research and development of new products involves a high degree of
financial risk and experimentation. The Company's development
projects involve the application of novel theories, unproven
technology and new engineering. The Company's products are at
various stages of development. In 1998, the Company received the
CE Mark which has enabled it to begin selling its Noninvasive
Glucose Sensor in Europe. In February 1996, the FDA's Panel
Review recommended that the Company conduct additional clinical
trials prior to the granting of marketing approval for the
Diasensor 1000 . In March 1998, the Company acquired a majority
interest in a company which produces metal-coating products, and
the Company has started marketing these products through joint
ventures and other distribution agreements. The bioremediation
products have been developed for various uses in water and on hard
surfaces; as to which manufacturing and sales have begun. The
hyperthermia project has received FDA approval to conduct
additional clinical trials, and if such trials are successful, an
FDA application for marketing the technology will be filed. The
Coraflex, Inc. ("Coraflex7") heart valve and other implantable
devices are in various stages of preliminary development. There
can be no assurance that new products currently under development
by the Company ultimately will be developed, and if developed,
there can be no assurance that such new products will be
commercially viable (SEE, "BUSINESS").

5. Competition. The Company and its affiliates are
currently focusing their efforts on developing biomedical devices
including Noninvasive Glucose Sensors, heart valves and
hyperthermia treatment procedures. In addition, the Company's
majority-owned affiliate ICTI, Inc. has developed metal-coating
products, and its subsidiary, Petrol Rem, Inc. ("Petrol Rem"), has
developed bioremediation products. Other research groups and
companies are also researching and developing such technologies,
devices and procedures. Those companies may be further along in
their research and development, may be better capitalized, may
have more sophisticated equipment and expertise and may have
various other competitive advantages over the Company. Such other
companies may be able to bring their products to market before the
Company, which could have a substantial negative impact on the
Company's plans with respect to developing technologies and future
business prospects.

Although its features are different, the Company's
Noninvasive Glucose Sensor, if successfully developed, will
compete with existing invasive glucose sensors which have an
established market with diabetics. In addition, the Company is
aware that other companies are developing noninvasive glucose
sensors, although the Company has very limited knowledge of the
status of other development projects, it is not aware of any other
company which has filed for FDA approval of its device. The
Company's metal-coating and bioremediation products will compete
with other groups and companies in their respective fields, many
of which are very large and well-established. The Company's
other products and procedures, which are still in early stages of
development, will also face similar competition if they are
successfully developed and brought to market (SEE, "Competition").

6. Noninvasive Glucose Sensor Manufacturing Obligation.
Pursuant to a Manufacturing Agreement with Diasensor.com, Inc.
("Diasensor.com"), the Company is obligated to manufacture the
Noninvasive Glucose Sensors if they are approved for marketing by
the FDA. The Company has leased manufacturing space in Indiana,
Pennsylvania, and has undertaken to complete substantial
renovations to make the space usable as its manufacturing
facility. The Company has the right, pursuant to the
Manufacturing Agreement, to enlist subcontractors, which the
Company believes will be capable, if necessary, of meeting its
manufacturing obligations until the facility is renovated.
Although the Company has previous manufacturing experience, it has
no experience in manufacturing large commercial quantities and its
current manufacturing activities are limited to bioremediation
projects.

7. Price of Noninvasive Glucose Sensor and Uncertainty of
Third Party Reimbursement. The Company currently estimates that
the price of the Diasensor 1000 model of the Noninvasive Glucose
Sensor will be substantially in excess of currently available
invasive technology. Such price may be set at a level which would
limit its sales absent third-party reimbursement. The Company is
unable to make projections regarding the availability of or
procedures required in order to obtain such third-party
reimbursement. Given the uncertainty of the state of the health
care industry, the risk exists that the sales potential for the
Noninvasive Glucose Sensor would be severely limited in the
absence of such reimbursement (SEE, "Current Status of the
Noninvasive Glucose Sensor").

8. Dependence on Key Officers. BICO is presently dependent
upon the experience and ability of the following persons: David
L. Purdy, its President, Treasurer and Chairman of the Board; and
Fred E. Cooper, its Chief Executive Officer, Executive Vice
President and a director.

9. Loss of Previous Revenue Source. During 1998, the
Company lost the primary purchaser of its functional electrical
stimulator product when NeuroControl, Inc. suspended its orders.
This loss had a significant negative impact upon the Company=s
revenues, liquidity and results of operations, since sales to
NeuroControl accounted for approximately 76% of total revenues
during the year ended December 31, 1997 and 51% of total revenues
for the year ended December 31 1998. The Company cannot estimate
whether or not sales to NeuroControl will resume; therefore,
prospective investors should assume that this material source of
revenue has been lost. (SEE, "MANAGEMENT'S DISCUSSION AND
ANALYSIS and BUSINESS").

10. Dependence on Independent Contractors. In experimenting
with and developing new technologies, devices and engineering, the
Company and its affiliates rely upon independent contractors who
may not devote full-time efforts to the development of the
Company's projects. Moreover, the Company's abilities to develop
new products depend, in part, upon the evaluation, coordination
and supervision of such independent contractors in areas where the
Company may not possess particular expertise.

11. Technological Obsolescence. The medical device industry
is subject to rapid technological innovation. While the Company's
management is not aware of any new or anticipated technology which
would make its new products under development obsolete, it is
always possible that future technological developments could make
the Company's products significantly less competitive or even
obsolete.

12. Dependence on Component Suppliers. The Company's
projects may involve the fabrication of custom, novel or unique
component parts for use in experimentation, testing and
development of new devices. Suppliers of such components may not
be readily available, or available at all, which may require the
Company to create such components in-house. Delays in obtaining
components can cause delays in the development process. An
inability to obtain or fabricate components can cause a total
failure of the development process. Although the Company attempts
to minimize the reliance on custom components in designing the
devices, unforeseeable problems may arise in the Company's
development processes for which no resolution may be available.

13. Government Regulation and Approval. BICO's and its
affiliates' operations, medical devices and certain other projects
are subject to regulation by the FDA, the Federal Nuclear
Regulatory Commission (the "NRC"), the Environmental Protection
Agency (the "EPA") and other federal and state regulatory
agencies. There exists the possibility that FDA and other
regulatory approval may not be obtained for a given product. FDA
approval is required prior to the marketing of the Noninvasive
Glucose Sensor in the United States. The Company has received the
CE Mark, which has enabled it to begin selling its Noninvasive
Glucose Sensor in Europe; other foreign countries have their own
regulatory requirements. The FDA review of the Company=s 510(k)
Notification has resulted in delays, and no assurance can be given
that approval will ultimately be received. If the FDA does not
approve the 510(k) Notification, the Company will be required to
comply with the FDA's pre-market approval process, which is
substantially more time-consuming and expensive. In that event,
the Company would require additional capital to meet such
expenses, and to support its operations until the Noninvasive
Glucose Sensor can be marketed (SEE, ABUSINESS@).

The EPA, through the National Environmental Technology
Applications Corporation ("NETAC"), conducted the testing of the
Company's bioremediation PRP product. The EPA monitors the use of
bioremediation products, and there can be no assurances that EPA
procedures will not delay the use of or cause modifications to any
given product (SEE, "BUSINESS").

14. Patents and Proprietary Rights. The Company holds
patents on some of its products, as well as trademarks on the
names of some of its products and procedures. In addition,
Diasensor.com holds patents, and has patent applications pending
on the Noninvasive Glucose Sensor. Both BICO and Diasensor.com
may undertake to file additional patent applications in the United
States and in foreign countries. Neither BICO nor Diasensor.com
can provide assurances that future patents will be granted, that
any patent held or pending will not be challenged or circumvented
by a competitor or other entity, or that any patent contest will
result in a favorable outcome. If any of the Company's or
Diasensor.com's patents are successfully challenged, or if future
patents are not granted, or if BICO or Diasensor.com is found to
have infringed upon another company's patent, it would result in
substantial costs and delays in the Company's product development,
and would otherwise result in materially adverse consequences.

15. Risk of Product Liability Claims. The Company is
engaged in activities which include the testing and selling of
biomedical devices. These activities expose the Company to
potential product liability claims. The Company and its
subsidiaries carry an aggregate amount of $500,000 in product
liability insurance. In the event that a successful claim in
excess of that amount is brought against the Company, the Company
may be liable for the excess.

16. Liability Arising From Warranties. BICO has warranted
its conventional pacemakers against defects in materials and
workmanship for periods presently ranging from six to ten years
from implantation, and warrants its isotopic pacemaker for twenty
years. The Company is subject to liability in the event that
warranted pacemakers function improperly. The Company
discontinued its pacemaker operations in 1988; therefore only
pacemakers implanted prior to that time are subject to such
warranties.

17. No Common Stock Dividends. The Company has not paid
cash dividends on its common stock since its inception and cash
dividends are not presently contemplated at any time in the
foreseeable future.

18. Conflicts of Interest. David L. Purdy and Fred E.
Cooper are employed by BICO, and are also officers and/or
directors of Diasensor.com, a 52%-owned affiliate of BICO which
owns the patents and marketing rights to the Noninvasive Glucose
Sensor. Messrs. Purdy, Cooper, Anthony J. Feola and Glenn
Keeling are also officers and/or directors of BICO and its other
subsidiaries, Coraflex, Petrol Rem, and IDT, Inc. ("IDT").
Accordingly, management will not only be subject to competing
demands, but may face conflicts of interest. Therefore, the good
faith and integrity of management in all transactions with respect
to all of the companies and their businesses are of utmost
importance (SEE, "Certain Relationships and Related
Transactions").

19. Attraction and Retention of Key Personnel. The
Company's ability to develop commercially viable products and to
maintain a competitive position in a business environment
characterized by intense competition and technological development
depends upon, among other factors, its ability to attract and
retain skilled scientific, engineering, management, sales and
marketing personnel. Competition for the services of such
personnel is intense, and there can be no assurance that the
Company will be able to attract or retain the personnel necessary
for the Company's success. The loss by the Company of the
services of any of its key personnel could have a material adverse
impact on the business and prospects of the Company. The Company
currently does not have key-man life insurance for any of its
employees.

20. Prior Public Market; Possible Volatility of Stock Price.
The Company's common stock has been traded publicly since December
1982 and has had a limited number of market makers. The trading
volume on the Nasdaq Small-Cap Market averaged approximately
6,900,000 shares per week during the twelve months prior to
December 1998. The Company=s common stock now trades on the
Nasdaq Electronic Bulletin Board, since its delisting from the
Small-Cap Market, and no assurances can be made as to whether such
volume will continue. In addition, there can be no assurances
that a more active or established trading market for the Company's
common stock will develop, or if developed, that it will be
maintained. The trading price of the Company's common stock could
fluctuate significantly in response to variations in quarterly
operating results and many other factors. The risk exists that,
once delisted from the Small-Cap Market, the Company=s trading
volume and price will decline.

21. Dilution. The Primary Shares sold pursuant to this
Offering may bear selling prices which are significantly higher
than the common stock's book value per share. Dilution represents
the difference between the amount per share paid by purchasers
pursuant to this Offering and the book value of the common stock,
which may be substantial (SEE, "DILUTION").

22. Penny Stock Rules and Regulations. The Common Stock
of the Company is by virtue of its price subject to the
requirements of certain rules promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which
require additional disclosures by broker-dealers in connection
with any trades involving a stock defined as a Apenny stock@
(generally, any non-NASDAQ equity security that has a market price
of less than $5.00 per share, subject to certain exceptions).
Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock
market and the risks associated therewith, and impose various
sales practice requirements on broker-dealers who sell penny
stocks to persons other than established customers and accredited
investors (generally defined as an investor with a net worth in
excess of $1,000,000 or annual income exceeding $200,000, $300,000
together with a spouse). For these types of transactions, the
broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser=s written consent to
the transaction prior to sale. The broker-dealer also must
disclose the commissions payable to the broker-dealer, current bid
and offer quotations for the penny stock and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose the fact
and the broker-dealer's resumed control over the market. Such
information must be provided to the customer orally or in writing
prior to effecting the transaction and in writing before or with
the customer confirmation. Monthly statements must be sent
disclosing recent price information for the penny stock held in
the account and information on the limited market in penny stocks.
The additional burdens imposed upon broker-dealers by such
requirements may discourage them from effecting transactions in
the Common Stock, which could severely limit the liquidity of the
Common Stock and the ability of purchasers in this offering to
sell the Common Stock in the secondary market.

USE OF PROCEEDS

The Primary Shares in this Offering are being sold on a
continuous, best-efforts, no minimum basis. There are no
assurances that the Company will receive any proceeds from this
Offering. All proceeds will be immediately retained by the
Company regardless of how few shares are sold. There can be no
assurance that sufficient funds will be received through this
Offering to provide for the satisfaction of any aspect of the
financial requirements of the Company or of the Use of Proceeds
set forth below (SEE "RISK FACTORS").

Any proceeds received by BICO pursuant to this Offering will
be used by BICO both to continue the development of the
Noninvasive Glucose Sensor, and for inventory build-up, and to
satisfy general working capital requirements, if sufficient. If
less than all of the Primary Shares are sold, the Company will use
the net proceeds actually received, first for salaries of
employees, general and administrative, and legal expenses. The
rate of progress of the development of the Noninvasive Glucose
Sensor, the timing of the regulatory approval process and the
availability of alternative methods of financing will influence
the allocation of the Company's use of the net proceeds actually
received from the Offering among the uses described herein. The
maximum gross proceeds to be received by BICO from the sale of the
additional 375,000,000 Primary Shares, assuming a price per
Primary Share of $0.05, would be $18,750,000, before deducting
expenses payable by BICO estimated at approximately $32,000, which
excludes commissions.

Depending upon the actual price per Share at which BICO sells
the Primary Shares, the number of Primary Shares sold and the
timing of any such sales, BICO may not have sufficient funds
available at any given time to fund both the development of the
Noninvasive Glucose Sensor and to satisfy its general working
capital requirements. If the net proceeds of this Offering are
insufficient at any given time, BICO will be required to seek
additional financing from third parties at such time until
additional proceeds from the Offering are obtained, if at all. No
assurance can be given that such additional financing will be
available when needed or available on terms acceptable to BICO.
If such additional financing is unavailable or continues to be
insufficient, BICO would be required to cease operations and the
development of the Noninvasive Glucose Sensor altogether (SEE,
"RISK FACTORS").

In connection with the sale of the Primary Shares offered
hereby, the Company may utilize brokers, dealers, or market-
makers, who may receive compensation in the form of commissions
from the Company (SEE, "PLAN OF DISTRIBUTION").

DIVIDEND POLICY

The Company has not paid cash dividends on its common stock
or its preferred stock since its inception, and cash dividends are
not presently contemplated at any time in the foreseeable future.
In accordance with the Company's Articles of Incorporation, cash
dividends are restricted under certain circumstances.

DILUTION

As of December 31, 1998, the Company's common stock had a
negative net tangible book value of ($6,353,098) or ($.015) per
share based upon 420,773,569 shares outstanding. Net tangible
book value per share is determined by dividing the number of
shares of common stock outstanding into the Company's total
tangible assets less total liabilities, minority interest and
preferred stock.

The negative net tangible book value of BICO as of December
31, 1998, was ($6,353,098). Net tangible book value consists of
the net tangible assets of BICO (total assets less total
liabilities, intangible assets, minority interest and preferred
stock). As of December 31, 1998 there were 420,773,569 shares of
BICO's common stock outstanding. Therefore, the negative net
tangible book value of BICO's common stock as of that date was
($.015) per share.

In the event that all additional 375,000,000 Primary Shares
of Common Stock offered pursuant to this Prospectus are sold at a
price of $0.05 per share, the net tangible book value of the
Common Stock as of December 31, 1998 would be $12,364,902 or
approximately $.015 per share. These figures give effect to the
deduction of all of the estimated expenses, including filing,
printing, legal, accounting, transfer agent and other fees, and
excluding commissions. The net tangible book value of each share
will have increased by approximately $.030 per share to the
present stockholders, and decreased by approximately $.035 per
share to the investors, if the maximum offering is sold.

Dilution represents the difference between the Offering Price
and the net tangible book value per share immediately after the
completion of the Offering. Dilution arises mainly from the
arbitrary decision by BICO as to the Offering Price per share.
Dilution of the value of the shares purchased by the investors in
this Offering will also be due, in part, to the far lower book
value of the shares presently outstanding, and in part, to
expenses incurred in connection with the Offering. In the table
set forth below, no attempt was made to determine the dilutive
effect of the exercise of outstanding warrants, options, or the
conversion of debentures, which will further dilute the value of
the shares. The following table illustrates this dilution,
rounding off such dilution to the nearest thousandth of a cent:

ASSUMING: 100%-375,000,000 50%-187,500,000 10%-37,500,000
SHARES / SOLD SHARES / SOLD SHARES / SOLD

Offering Price Per Share $0.050 $0.050 $0.050

Net Tangible Book Value
Per Share Before Offering ($0.015) ($0.015) ($0.015)

Increase Per Share
Attributable to Payment
by Investors $0.030 $0.019 $.005

Net Tangible Book Value
Per Share After Offering $0.015 $0.004 $.01

Dilution Per Share
to Investors $0.035 $0.0496 $.06

CAPITALIZATION

The following table sets forth the capitalization of the
Company as of and December 31, 1997 and December 31, 1998. The
December 31, 1997 and 1998 figures were taken from the audited
financial statements for the years ended December 31, 1997 and
1998, which included a qualification regarding the Company's
ability to continue as a going concern.

(1) (1)
December 31, 1997 December 31, 1998
----------------- -----------------
Shareholders' Equity:
Common Stock, par value $.10
per share; authorized 600,000,000
shares; shares issued and
outstanding: 138,583,978 at
December 31, 1997 and 420,773,569
at December 31, 1998 $ 13,858,398 42,077,357
Additional Paid-in Capital 104,932,920 92,725,285
Note Receivable issued for
common stock (25,000) (25,000)
Warrants 6,396,994 6,396,994
Accumulated Deficit (120,699,236) (143,101,880)
--------------- -------------
Total Capitalization $4,464,076 $1,927,244
=============== =============

December 31, 1997 December 31, 1998
----------------- -----------------
(1) Does not include the effects
of the following:

Outstanding Warrants to purchase
common stock granted by the
Company, at exercise prices
ranging from $.25 to $4.03
per share, expiring 1998
through 2003. 5,346,662 8,911,662

Note: In March 1999, the Company's authorized common stock was
increased from 600,000,000 to 975,000,000 shares pursuant to a
vote of the shareholders.

MARKET PRICE FOR COMMON STOCK

The Company's common stock is traded on the Nasdaq Electronic
Bulletin Board under the symbol "BICO" and is also reported under
the symbol "BIOCNTRL TEC". On March 31, 1999, the closing price
for the common stock of the Company as reported by Nasdaq was
$.047. Pursuant to current disclosure guidelines, the following
table sets forth the high and low sales prices for the common
stock of the Company during the calendar periods indicated,
through December 31, 1998 as reported by Nasdaq:

Calendar Year and Quarter High Low

1996 First Quarter 3.9375 1.500
Second Quarter 3.0625 1.406
Third Quarter 2.969 1.625
Fourth Quarter 2.4375 .656

1997 First Quarter 1.500 .625
Second Quarter 1.000 .3125
Third Quarter .719 .3125
Fourth Quarter .406 .0937

1998 First Quarter .25 .0937
Second Quarter .1875 .0313
Third Quarter .359 .0313
Fourth Quarter .126 .049

As of December 31, 1998, the Company had approximately 47,000
holders, including those who hold in street name, for its common
stock and no holders of record for its preferred stock.

Because Nasdaq revised its requirements for companies listed
on its Small-Cap market to include a minimum trading price of
$1.00, the Company=s common stock was delisted from the Small-Cap
Market and is now listed on the Nasdaq Electronic Bulletin Board.
The risk exists that its trading volume and price will decrease.

SELECTED FINANCIAL DATA

The Selected Financial Data provided below is a summary of
the information set forth in the Company's audited financial
statements for the years ended December 31, 1994 through 1998.

YEARS ENDED DECEMBER 31st

1998 1997 1996 1995 1994

Total Assets $9,835,569 $12,981,300 $14,543,991 $9,074,669 $6,375,778

Long-Term
Obligations $1,412,880 $ 2,697,099 $ 2,669,727 $ 175,330 $ 163,201

Working Capital($9,899,008)$ 888,082 $ 1,785,576 $3,188,246 $2,612,884

Preferred Stock $ 0 $ 0 $ 0 $ 37,900 $ 54,900

Net Sales $1,145,968 $ 1,155,907 $ 597,592 $ 461,257 $ 184,507

TOTAL $1,378,213 $ 1,426,134 $ 776,727 $ 755,991 $ 481,453
REVENUES

Warrant $ 0 $ 4,046,875 $ 9,175,375 $12,523,220 $ 0
Extensions

Benefit $ 0 $ 0 $ 0 $ 0 $ 0
(Provision)for
Income Taxes

Net Loss ($22,402,644)($30,433,177)($24,045,702)($29,420,345)($11,672,123)

Net Loss per ($ .08)($ .43)($ .57)($ .84)($ .43)
Common Share

Cash Dividends
per share:
Preferred $ 0 $ 0 $ 0 $ 0 $ 0
Common $ 0 $ 0 $ 0 $ 0 $ 0

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following is a summary of the more detailed information
set forth in the financial statements attached hereto.

Forward-Looking Statements

In addition to other sections of this report, the Management's
Discussion and Analysis section also contains the type of forward-
looking statements discussed on page one herein. Please refer to
such discussion in connection with the information presented here.

Liquidity and Capital Resources

Working capital was ($9,899,008) at December 31, 1998 as compared
to $888,082 at December 31, 1997, and $1,785,576 at December 31,
1996. Working Capital fluctuations are due primarily to the
varied capital-raising efforts of the Company and its affiliate
Diasensor.com, which aggregated approximately $10,700,000 in 1998;
$22,300,000 in 1997; and $21,600,000 in 1996, as well as a
decrease in net inventory from $3,340,120 as of December 31, 1996
to $1,834,018 as of December 31, 1997, and to $74,515 as of
December 31, 1998.

Cash decreased from $3,802,874 at December 31, 1996 to $2,759,067
at December 31, 1997 to $125,745 at December 31, 1998. These
changes were attributable to the following factors. The Company's
sales of its securities raised funds aggregating $10,700,000
during 1998; $22,600,000 during 1997 ; and $21,600,000 during
1996. During those periods, the Company's cash flows used by
operating activities aggregated $11,855,294; $19,121,752; and
$19,972,000 respectively. During 1998 and 1997, such activities
included a $.8 and $2.1 million increase in inventory reserves,
respectively. The Company expended cash and other resources in
connection with its purchase of a majority interest in ICTI, which
is described below. In addition, the Company recorded a $4
million charge against operations due to warrant extensions by the
Company and its subsidiary in 1997, with similar charges of
approximately $9 million in 1996. (See, Note J to the Financial
Statements). The Company's other assets decreased from $669,243
at year-end 1997 to $200,000 at year-end 1998 due to an allowance
for related party receivables in 1998.

In March 1998, the Company acquired a majority interest of ICTI, a
metal-plating company in Florida.. ICTI is a development-stage
company which commenced operations in May 1997, but has incurred
losses to date. The purchase required the Company to make a cash
payment of $1,030,000, issue a $3,350,000 promissory note, 2
million shares of the Company's common stock, and other
consideration (See Note A to the Financial Statements).

The Company's current liabilities increased by $5,915,293 from
1997 to 1998; such increase was primarily due to an increased
issuance of convertible debentures and cash flow problems during
1998.

The Company continued to fund operations mostly from sales of its
securities. During 1998, the Company issued $10,700,000 of its 4%
Subordinated Convertible Debentures. The debentures have one-year
terms, minimum holding periods prior to conversion and mandatory
conversion provisions During 1997, the Company sold 22,000
shares of its Series B convertible preferred stock; and issued
$20.2 million in subordinated convertible debentures.

As of December 31, 1998 and 1997, the conversion price of the
debentures would have been approximately $.059 and $.146 per
share, respectively, based upon a formula which applies a discount
to the average market price for the previous week and determined
by the length of the holding period. As of December 31, 1998 and
1997, the number of shares issued upon conversion of all
outstanding debentures was approximately 60.1 million and 23.9
million shares, respectively, which would have reflected discounts
of approximately 23% and 18%, respectively.

Due to the Company's current limited sources of revenue, the
Company plans to seek additional financing which will be used to
finance development of, and to proceed to manufacture, the
Noninvasive Glucose Sensor and to complete the development of its
other projects. No assurances are made as to the availability of
any such financing (See, "BUSINESS").

The Company's products are at various stages of development and
will require additional funding for completion. This paragraph
summarizes the Company's estimates as to the aggregate amounts
needed to complete each project, assuming continued testing and
development is successful. The Company may choose to discontinue
any of its projects at any time if research and development
efforts indicate that continuation would be inadvisable.

The Company currently has a commitment for capital leases on
certain of its capital equipment and future commitments for new
capital expenditures will be required to continue the Company's
efforts in research and development, and to manufacture and market
its existing products and any other products it may develop.

As of March, 1999, the Company estimates that its short-term
liquidity needs will be met from currently available funds. The
Company estimates that such funds will be sufficient to complete
the research and development stage of the Noninvasive Glucose
Sensor, to complete the FDA submission process, and to begin
marketing the device. The Company anticipates that it will
finance those expenses with existing funds, as well as funds
raised through the sales of its securities and from the other
sources of funds described herein. The Company has a history of
successful capital-raising efforts; since 1989, and through
December 1998, BICO and its affiliate Diasensor.com have raised
over $110,000,000 in private and public offerings alone.

In prior years, the Company met a portion of its short-term
working capital needs through development contracts with other
organizations and through manufacturing for other companies on a
contractual basis, as described herein. During 1996, 1997 and
1998, the Company was awarded contracts by the Department of
Veteran's Affairs Medical Center for Case Western Reserve
University, Shriners Hospital - Philadelphia Unit, and Austin
Hospital to manufacture FES products. Such contracts generated
revenues of $508,561, $880,919 and $1,028,484 in 1996, 1997 and
1998, respectively. During 1998, orders related to such contracts
were terminated by these other entities. As a result, the Company
has terminated FES project activities for the present, and may not
receive any additional revenue on a going-forward basis. (See,
"BUSINESS").

In view of BICO's expenses resulting from its product development
projects, and other factors discussed herein, as compared to
BICO's contract revenues, currently available funds, and
established ability to raise capital in public and private
markets, BICO estimates that it will meet its liquidity needs for
a period of at least twelve months from December 31, 1998 from
currently available funds, including those expected to be raised
via additional sales of the Company's securities. This estimate
is based, in part, upon the current absence of any extraordinary
technological, regulatory or legal problems. Should such
problems, which could include unanticipated delays resulting from
new developmental hurdles in product development, FDA
requirements, or the loss of a key employee, arise, the Company's
estimates would require re-evaluation. There can be no assurances
that despite the Company's good-faith efforts, its estimates will
lead to accurate results.

The Company's long-term liquidity needs are expected to include
working capital to fund manufacturing expenses for its products
and continued research and development expenses for existing and
future projects. Delays in the development of the Company's
products will result in increased needs for capital from other
sources. The Company anticipates that such other sources will
include continued sales of common stock, and investment partners
such as venture capital funds and private investment groups.
There can be no assurances given that adequate funds will be
available. If the Company is unable to raise the funds necessary
to fund the long-term expenses necessary to complete the
development or manufacture of its products, the Company will be
unable to continue its operations.

As described hereinabove, management believes the Company has
sufficient liquidity to meet its projected expenditures on a
short-term basis. Absent additional funding, the Company will
have limited liquidity on a long-term basis. Moreover, many
demands on liquidity, such as technological, regulatory or legal
problems, could cause the Company's liquidity to be inadequate.
At present, the Company does not have any additional sources of
liquidity, including bank lines of credit. Long-term working
capital needs are expected to be met through sales of the
Noninvasive Glucose Sensor, the PRPr bioremediation product, and
other new products. There can be no assurances that any such
products will be successfully marketed or commercially viable.

Results of Operations

The following seven paragraphs discuss the Results of Operations
of the entire Company based on its consolidated financial
statements. A discussion of the business segments follows.

In 1998, the Company's net sales increased to $1,145,968 from
$1,155,907 in 1997 and $597,592 in 1996. The increase was due to
an increase in all product sales, the vast majority of which were
from FES sales, which have been discontinued. (See, Note F to the
Financial Statements).

In 1998, 1997 and 1996, the Company received interest income in
the amount of $182,033; $165,977 and $176,478, respectively. The
fluctuation was due to the investment of the Company's liquid
assets (which are composed primarily of funds raised via sales of
securities), the availability of such assets and applicable
interest rates. The Company's other income decreased to $50,212
in 1998 as compared to $104,250 in 1997 from $2,657 in 1996. The
fluctuation was due primarily to payments made in connection with
legal actions.

In 1998, the Company's costs of products sold was $587,821 as
compared to $641,331 in 1997 and $325,414 in 1996. The increase
is primarily due to the Company's corresponding increases in
product sales, and products produced pursuant to FES and IRS
Device contracts, which have been discontinued.

The Company's research and development expenses were $6,340,676 in
1998, a decrease from $6,977,590 in 1997 and $8,742,922 in 1996.
The overall decrease was due to the Company's realignment of
personnel and resources in an effort to obtain a CE Mark for sale
of the Noninvasive Glucose Sensor outside the U.S., and, in 1998,
to a loss of personnel due to cash flow problems.

In 1998, General and Administrative expenses were $11,560,345 a
decrease from $12,704,146 in 1997, and compared to $8,963,693 in
1996. The decrease in 1998 from 1997 was due to a loss in
personnel and reduction in related expenses. The increase from
1996 to 1997 was due, in part, to the allocation of funds to
outside consultants and other advisors to assist the Company in
its efforts to obtain a CE Mark.

During 1997, the Company extended 177,800 warrants originally
granted to certain officers, directors, employees and consultants
in 1992, as compared to similar extension of 351,482 warrants in
1996. No such extensions were made during 1998. Because the
exercise price of some such warrants ($.25 to $3.50) was lower
than the market price of the common stock at the time of the
extensions $604,342 was charged to operations during 1996. During
1997, no expense was charged to operations since the market price
was lower than of the original warrant exercise price. In
addition, a similar charge of $4,046,875 in 1997 and $8,571,033
in 1996 was made by the Company's subsidiary, Diasensor.com (See,
"EXECUTIVE COMPENSATION" and Note J to the Financial Statements).

Interest expense on the Company's outstanding indebtedness was
$481,025 in 1998 as compared to $315,624 in 1997 and $133,460 in
1996. The increase was due to an increase in capital leases and
interest payment on the Company's subordinated debentures.

Segment Discussion

For purposes of accounting disclosure, the Company provides the
following discussion regarding three business segments:
Biomedical devices, which includes the operations of Biocontrol
Technology, Inc. and Diasensor.com, Inc.; Bioremediation, which
includes the operations of Petrol Rem, Inc.; and Marine Paint
Products, including the operations of Barnacle Ban Corporation,
which have been discontinued. More complete financial information
on these segments is set forth in Note F to the accompanying
financial statements.

Biomedical Device Segment. During the year ended December 31,
1998, sales to external customers increased to $1,028,484 from
$880,919 in 1997 and $508,561. These increases were primarily due
to increased sales of the functional electrical stimulators, which
have been discontinued. Corresponding increases in costs of
products goods sold occurred for the same reason, from $288,537 in
1996 to $445,843 in 1997, and $483,388 in 1998.

Bioremediation Segment. During the year ended December 31, 1998,
sales to external customers decreased to $45,382 as compared to
$138,362 in 1997 and $47,625 in 1996. The decrease from 1997 to
1998 was due to an inability to effectively penetrate the market
with products other than the Bio-Sok. The increase from 1996 to
1997 was due to increased sales of the Bio-Sok to boating
suppliers and users through trade shows and marketing exposure.
Costs of products sold fluctuated due to the same factors, from
$16,092 in 1996 to $88,178 in 1997 and $33,061 in 1998. The
relatively higher costs of products sold in 1997 was due to the
higher cost of producing the Bio-Sok as opposed to other
bioremediation products.

Marine Paint Products Segment. Sales to external customers
decreased to $40,835 in 1998 from $136,624 in 1997 and $41,406 in
1996. This decrease was due primarily to the Company's decision
to discontinue this segments operations. Costs of products sold
reflect the same impact, with $32,777 in 1998, $107,310 in 1997
and $20,785 in 1996.

Income Taxes

Due to the Company's net operating loss carried forward from
previous years and its current year losses, no federal or state
income taxes were required to be paid for the years 1987 through
1998. As of December 31, 1998, the Company and its subsidiaries,
except for Diasensor.com and Petrol Rem, had available net
operating loss carryforwards for federal income tax purposes of
approximately $83,220,000, which expire during the years 1998
through 2019 (See, Note K to the Financial Statements).

Year 2000 Issue

The Year 2000 Issue is the result of computer programs being
written using two digits (rather than four) to define the
applicable year. Programs which are susceptible to problems after
December 31, 1999 are those which would recognize the year 2000 as
`00', creating confusion with the year 1900, which could result in
miscalculations or system failures. Based upon a review of its
internal programs and software, as well as a survey of its outside
suppliers, landlords and vendors, the Company currently believes
that the Year 2000 will not pose significant operational or other
problems because such systems and third parties are either already
compliant or have undertaken to become compliant with minor
adjustments. It has not been necessary for the Company to expend
any material amounts in its effort to address the Year 2000 issue.
The Company has determined that minimal contingency plans may be
necessary to assure the avoidance of interruptions, and are
finalizing the preparation of such plans on a departmental basis.
However, the Company can make no assurances regarding certain
global system operations which are beyond the Company's control
such as utilities and banks. As a result, there can be no
assurance that Year 2000 issues will not adversely affect the
Company's systems or operations (See, Note P to the Financial
Statements).

Supplemental Financial Information

In January 1999, the Company's Form S-1 Registration Statement was
declared effective by the SEC. Approximately $5,020,000 has been
raised pursuant to such registration as of March 31, 1999.

BUSINESS OF THE COMPANY

General Development of Business

Forward-Looking Statements

Description of Business

Development of the Noninvasive Glucose Sensor

BICO and Diasensor.com have completed the development of the first
commercial Noninvasive Glucose Sensor, which is able to measure
the concentration of glucose in human tissue without requiring the
drawing of blood. Currently available glucose sensors require the
drawing of blood by means of a finger prick.

BICO's initial research and development with insulin pumps led to
a theory by which blood glucose levels could be detected
noninvasively by correlating the spectral description of reflected
electromagnetic energy from the skin with blood glucose levels in
the 50 milligrams per deciliter (mg/dl) to 500 mg/dl range in the
ingrared region of the electromagnetic spectrum. The method was
studied as early as 1986 and 1987 by BICO and is consultants at
Battelle Memorial Institute in Columbus, Ohio, using laboratory
instruments. These studies, along with later affirmative work,
led to a patent application by BICO's research team in 1990. A
patent covering the method was granted to the research team and
assigned to BICO in December 1991. The rights of this patent have
been purchased by Diasensor.com from BICO pursuant to a purchase
agreement (See, `Intercompany Agreements'). Other patent
applications were filed by BICO which contained new claims,
extending to new discoveries made during the development of the
Sensor. As of March, 1999, a total of seven U.S. patents assigned
to Diasensor.com have been granted, with additional U.S. and
foreign patent applications pending (See, `Current Status of the
Noninvasive Glucose Sensor and Patents, Trademarks and Licenses').
BICO has been granted the right to develop and manufacture Sensors
pursuant to agreements with Diasensor.com (See, `Intercompany
Agreements').

BICO's research team advanced its technology base through the
development of several research prototypes which were tested in
human clinical trials. In a trial conducted by BICO on 110 human
subjects in March 1992, spectral, blood and chemical data was
recorded for analysis in order to develop calibration data for the
Sensor. A second trial on 40 human subjects in July 1992
indicated that the device did not have a satisfactory signal-to-
noise ratio to allow for the calculation of algorithms of
sufficient accuracy to be acceptable for patient use. Signal-to-
noise ratio is determined by the relationship of the signal (the
glucose level) and the noise (random interferences). Other trials
were conducted at several testing sites under the guidance of the
sites Institutional Review Board using prototypes which addressed
the signal -to-noise problem. These prototypes were designed and
constructed to simulate production models.

On January 6, 1994, BICO submitted its initial 501(k) Notification
to the Food and Drug Administration (the `FDA') for approval to
market the production model, the Diasensor1000. The submission
was based on data obtained from the advanced research prototypes,
since management believed that the production model would be
identical to the advanced prototypes. In February 1996, the FDA
convened a panel of advisors to make a recommendation regarding
BICO's 510(k) Notification. The majority of the panel members
recommended that BICO conduct additional testing and clinical
trials of a production model prior to marketing the Diasensor
1000. BICO and Diasensor.com announced that they remained
committed to bringing the Diasensor 1000 to diabetics, and that
additional research, development and testing would continue (See,
`Current Status of the Noninvasive Glucose Sensor').

The Diasensor 1000 is a spectrophotometer capable of illuminating
a small area of skin on a patient's arm with infrared light, and
then making measurements from the infrared light diffusely
reflected back into the device. The Diasensor 1000 uses internal
algorithms to calculate a glucose measurement.

The Diasensor 1000 is the first home-use noninvasive blood glucose
monitor for use by patients with diabetes mellitus. Unlike
currently marketed invasive home-use devices, the Diasensor 1000
does not require that patients prick their fingers to obtain a
sample of blood to test their blood glucose. A patient only needs
to place his or her arm on the Diasensor 1000 and press a button
to perform a blood glucose test. The Diasensor is currently
approved for sale in the 15-country European Union, and plans are
currently being formulated for the next submission to the FDA to
seek approval to market the device in the U.S. (See, `Current
Status of the Noninvasive Glucose Sensor').

Current Status of the Noninvasive Glucose Sensor

Due to continued delays in the FDA approval process, which are
summarized below, and while continuing to work with the FDA and
conduct its mandated testing, the Companies turned their focus to
other markets for the Diasensor 1000 besides the U.S. BICO, as
design authority and manufacturer of the Diasensor 1000, applied
for certification to ISO 9001, a standard defined by the
International Organization for Standardization (`ISO') evidencing
that BICO has in place a total quality system for the design,
development and manufacture of its products. The certification
formalizing the ISO 9001 certification was received by BICO in
January 1998. At the same time, BICO also received certification
to EN46001, a standard specifically for medical products. The
certifications were received after an extensive audit by TUV
Rheinland, a company authorized to conduct `conformity
assessments' of an entity's quality system. In early 1998, BICO
submitted its technical file on the Diasensor 1000 to TUV
Rheinland to satisfy requirements of the European Medical Device
Directive. In addition, it submitted its device to a TUV testing
center in Connecticut for device electrical safety testing. In
March 1998 BICO received approval to apply a CE mark to the
device. The CE mark is provided by the regulatory bodies of the
European Community, or by authorized private bodies, such as TUV
Rheinland, to indicate that the device adheres to `quality
systems' of the ISO and the European Committee for
Standardization. The CE mark has permitted the Companies to begin
selling the Diasensor in Europe.

In order to facilitate sales in Europe, the Companies have
contracted with EuroSurgical Ltd., a distributor of medical
products in the United Kingdom. During 1998 BICO educated the
marketing and technical staffs of EuroSurgical in the use and
repair of the Diasensor 1000. Devices have now been placed with
patients in Portugal, Spain, Germany, South Africa and England.
Because of the lengthy calibration procedures, and the Companies'
agreement with the distributor to invoice after successful
calibration was completed, minimal sales were recorded for 1998.

With regard to marketing the device within the United States, the
Companies are continuing to work with the FDA to obtain approval.
Upon advice from the FDA, the Companies are planning to submit,
under the FDA's new modular review, a Premarket Approval
Application (`PMA'). In addition, the Companies plan to submit an
Investigational Device Exemption (`IDE') to conduct human clinical
trials at three clinical centers to obtain additional data.

FDA approval is necessary to market the Diasensor 1000 in the
United States. In addition to the Diasensor 1000, the Companies
are conducting further developments which will allow future models
of the device to be smaller, less costly, with reduced calibration
and evaluation periods. The Companies cannot speculate as to when
such developments will be completed. Any future models of the
Diasensor may be subject to the same regulatory testing and
approval processes as have been required for the Diasensor 1000,
both in the United States and abroad.

The Diasensor 1000 is intended to promote greater compliance for
self-monitoring blood glucose (`SMBG') for those patients
concerned with the pain and discomfort of frequent finger prick
procedures by allowing patients to perform a majority of their
daily SMBG with a noninvasive device. The use of the Diasensor
1000 in a defined target population is intended to assist the
physician responsible for the patient's diabetes care in making
appropriate treatment adjustments. Such adjustments may include
changes to the patient's daily insulin dose, caloric intake, and
exercise regimen. Averages of daily blood glucose test results
from the Diasensor 1000 obtained at clinically relevant times of
the day (e.g. fasting, pre-meal, post-meal, and bedtime) over at
least two to four weeks are to be used by physicians together with
other test results (including invasive home-use meters, laboratory
test such as HbA1c and fructosamine) changes in weight, patient-
reported acute complications (such as hypoglycemia or ketonuria)
and changes in lifestyle, to make appropriate treatment decisions.

Because of the current need for 60-day calibration, after which
there is a 30-day evaluation period, and the inability of the
Diasensor 1000 to completely replace a patient's invasive meter at
this point, the market will be limited by the number of patients
who opt to use the device. Due to the current vicissitudes of the
health-care insurance industryu, the Companies are unable to make
any projections as to the availability of, or procedures required
in connection with, third-party reimbursement. Although the
Companies estimate, based on 1998 American Diabetes Association
data, that there are nearly 16,000,000 diabetics in the United
States, not all diabetics will be suitable users of the
Noninvasive Glucose Sensor. Those diabetics who are in poor
glycemic control, who are currently under a physicians care, and
who do not perform SMBG because of the pain and discomfort of
fingersticks comprise the potential market for the Noninvasive
Glucose Sensor. The Companies are unable to estimate the size of
that market at this time.

Bioremediation

BICO is also involved in the field of biological remedial
("bioremediation") development. Bioremediation technology utilizes
naturally occurring micro-organisms or bacteria to convert various
types of contamination to carbon dioxide and water. This occurs
through the dual processes of chemical and microbiological
reactions. The product, PRPr, which stands for Petroleum
Remediation Product, is designed as an environmental microbial
microcapsule which is utilized for the collection, containment and
separation of oil-type products in or from water. The product's
purpose is to convert the contaminant, with no residual mass
(separated or absorbed) in need of disposal. When the PRPr comes
in contact with the petroleum substances, the contaminants are
bound to the PRPr, and they stay afloat. Because the product
contains the necessary nutrients and micro-organisms, the
bioremediation process begins immediately, which limits secondary
contamination of the air or surrounding wildlife. Eventually, the
product will biodegrade both the petroleum and itself.

In connection with this project, BICO created a subsidiary, Petrol
Rem, Inc. ("Petrol Rem"). Petrol Rem's officers and directors
include Anthony J. Feola and Fred E. Cooper, who are also
directors and/or officers of BICO and its other affiliates.

Part of Petrol Rem's initial research and development involved
field testing supervised by the National Environmental Technology
Applications Corporation ("NETAC"), a group endorsed by the
Environmental Protection Agency (the "EPA"), to determine whether
the product is effective. As a result of such testing, NETAC
reported positive results regarding the effectiveness of the
product.

PRPr is now being manufactured and marketed for use in water and
on solid surfaces in the form of Petrol Rem's OIL BUSTERr product,
which is used for small oil cleanups on hard surfaces such as the
floors of manufacturing facilities, garages and machine shops.

The product system is listed on the EPA's National Contingency
Plan ("NCP") Product Schedule, and is available in free-flowing
powder or absorbent socks. In 1995, the EPA required that all
products previously listed on the NCP be submitted to additional
testing. Because PRPr successfully passed the Tier II efficacy
test conducted by NETAC, the product was requalified for listing
on the NCP. Management believes that this requalification process
will limit the number of products available for use in clean-up
projects. As illustrative evidence, management notes that only
thirteen of the original fifty-three products in the
bioremediation agents category remain listed.

In April 1993, Petrol Rem entered into a lease for a facility in
the Pittsburgh, Pennsylvania area which is used to manufacture
PRPr. The current lease has a renewable three-year term, with
monthly rental payments of $2,888 plus utilities and applicable
business privilege taxes. Petrol Rem has also purchased equipment
which has the capability to produce PRPr in quantities of 2,500
pounds per day, and Petrol Rem has built an adequate inventory.

Petrol Rem has also completed development of a new spray
applicator for its PRPr product. The new applicator is a light-
weight, portable unit which provides a more continuous flow of
product. The lighter weight and smaller size will allow easier
access to remote sites which were impossible to reach with the
previous applicator.

In addition to PRPr, Petrol Rem has also developed other products.
In order to address water pollution issues at marinas, Petrol Rem
has introduced BIO-SOKr, which is PRPr contained in a 10" fabric
tube, is designed and used to aid in the cleaning of boat bilges.
Bilges are commonly cleaned out with detergents and emulsifiers,
which cause the oil pumped out of the bilge to sink to the bottom
of the water, where it is harmful to marine life, and becomes
difficult to collect. In addition, it is illegal to dump oil or
fuel into the water. The BIO-SOKr, when placed in the bilge,
absorbs and biodegrades the oil or fuel on contact, which
significantly reduces or eliminates the pollution; then the
product biodegrades itself. As a result, BIO-SOKr helps to keep
waters clear. In addition, BIO-SOKr helps to eliminate the chore
of bilge cleanup, and helps users such as boaters and marinas to
avoid fines for pumping oil and fuel into the waterways, which is
prohibited.

BIO-SOKr is guaranteed, lasts for an entire boating season, and is
available from quality marine supply stores in the coastal areas
of the United States, Canada, Europe and South East Asia, and is
recommended by the Canadian Coast Guard.

Petrol Rem has also developed OIL BUSTERr, which is a mixture of
PRPr and an absorbent material. OIL BUSTER r is used to clean up
and remediate oil spills on hard surfaces.

Petrol Rem's BIO-BOOMr product is used in water clean-up
projects. The product is a 3" x 10' fabric tube which is filled
with PRPr, and is used to both contain and biodegrade contaminants
in water. BIO-BOOMr is a superior product to most containment
products because, in addition to containing the oil or fuel spill,
or restricting the spread of an anticipated spill, it also
biodegrades the contaminant, then biodegrades itself. These
features act to virtually eliminate secondary contaminants,
thereby reducing disposal and clean-up costs. Initial sales have
occurred, and marketing efforts are accelerating.

Petrol Rem is marketing PRPr through trade shows, magazines,
direct mail advertising, and direct contacts with companies and
consultants specializing in petroleum clean-up, as well as
marketing directly to municipalities and corporations with needs
for the product. Although there can be no assurances that PRPr
will be successfully marketed, the Company believes, based on
their scientific determinations, the results of recent NETAC
testing, and the favorable response at the retail level, that PRPr
will be a viable product in the bioremediation marketplace.

The Company believes that it has expended the necessary funds to
complete the development of its bioremediation products, and to
build up sufficient inventory pending additional orders. The
Company has spent approximately $9,963,700 on this project through
December 31, 1998.

Whole-Body Extracorporeal Hyperthermia

In connection with this project, BICO formed a wholly-owned
subsidiary, IDT, Inc. IDT's executive officers and directors
include Glenn Keeling, who is also an officer and director of
BICO.

IDT and HemoCleanse, an unaffiliated company located in Lafayette,
Indiana, are currently engaged in a project which involves the
experimental use of a delivery system, the ThermoChem SystemT, for
perfusion-induced systemic hyperthermia (`PISH') to treat persons
with certain types of cancer and HIV/AIDS. HemoCleanse is an
Indiana corporation with offices located at 2700 Kent Avenue, West
Lafayette, Indiana 47906. HemoCleanse designs, manufactures and
markets products that treat blood outside the body to remove
toxins and simultaneously balance blood chemistries. HemoCleanse
believes that its systems are unique in being able to selectively
remove both small, intermediate and protein-bound toxins, and to
provide extracorporeal hyperthermia to selectively kill infected
or rapidly dividing cells without the risk of electrolyte
imbalances.

HemoCleanse has developed two models of the device. The BioLogic-
DT is designed for use as a detoxifier for the treatment of drug
overdose and was approved for marketing in the United States by
the FDA in September 1994. The ThermoChem SystemT, which
incorporates this technology, is designed for use in the
hyperthermia procedure. The ThermoChem System? is used in IDT's
clinical trials.

Perfusion-induced systemic hyperthermia, a form of whole-body
hyperthermia, achieved through extracorporeal blood heating
(`PISH') involves heating the patient's blood outside the body to
approximately 48 degrees centigrade and returning it back to the
body, thus raising the body's core temperature to the desired
treatment temperature up to a maximum of 42.5 degrees centigrade.
Blood passes a roller pump which sends it onward to the heat
exchanger where indirect heating of the blood occurs, raising the
outside blood temperature to approximately 48 degrees centigrade.
A portion of the blood passes through a T-connection to the
ThermoChem-SB, located between the roller pump and the heat
exchanger, where it is chemically balanced on a real-time basis
and then returned to the blood flow path before it reaches the
heat exchanger. Continually circulating blood is returned to the
patient at 46 degrees centigrade, gradually raising the patient's
core body temperature to the desired treatment temperature, which
is measured by various temperature probes throughout the body.
Experimentation outside the United States to date, to the best
knowledge of the Company, has been somewhat limited and not well-
documented. IDT, and IDT's Scientific and Medical Advisory Board
believe that once a safe delivery system is established, serious,
extensive and well-documented testing will determine whether PISH
can be used as an effective treatment for persons with clinical
cancer or HIV.

Although other entities have experimented with the use of PISH,
one significant problem has been the safe delivery of the
procedure. IDT believes that the improvements inherent to their
ThermoChem System increase the safety of the procedure. The
ThermoChem System incorporates a single access device, utilizing
a parallel plate, cellulosic membrane dialyzer and a unique
sorbent suspension which can effectively remove a wide range of
chemicals and toxins from the blood, while maintaining a balance
of electrolytes and important nutrients. The system is also
comprised of several specially integrated devices that perform
blood propulsion, water heating and cooling to control
extracorporeal blood temperature, air embolism detection,
auxiliary unit roller pump occlusion detection, catheter access
occlusion, and monitoring and recording of cardiac output and
patient temperatures.

As a result, IDT believes that they have taken a significant step
towards the creation of a safe delivery system. Although there
can be no assurances that the ThermoChem System is safe for all
humans, clinical trials to date have confirmed that the humans
tested were able to safely tolerate PISH at a core temperature of
42 degrees centigrade for two hours. Based in part upon the
results of its initial clinical trials, the FDA has approved
additional clinical trials.

The ThermoChem System is a combination of three system
components: 1) the ThermoChem-HT, which circulates and heats blood
extracorporeally up to approximately 48 C and monitors the
patient's core temperature, which provides constant up to the
minute access information on the status of the patient; 2) the
ThermoChem-SB, which can effectively remove a wide range of
chemicals and toxins from the blood, while maintaining a balance
of electrolytes and important nutrients; and 3) the Disposable
Kit, which contains the patented sorbent suspension, as well as
temperature probes, catheters, and tubing set, etc. .

The ThermoChem System's specifications include an extracorporeal
continuous blood circuit, a blood flow rate of 2000 ml/minute
maximum, an integrated device which heats blood outside the body
to approximately 48 degrees centigrade and core temperature to a
maximum of 42.5 degrees centigrade, and a sorbent suspension
system where optimum chemical transfer between the blood and
sorbent is attained, which balances critical blood chemistries.
Pre-clinical trials were conducted on six swine to assure safety
at an increased flow rate and maintenance of a higher core
temperature of 43 degrees centigrade for a period of two hours.
This study concluded that blood chemistries were normalized with
the use of the ThermoChem System. In November 1996, the
Companies submitted an IDE application to the FDA for a study
utilizing the ThermoChem System for PISH for metastatic non-small
cell lung cancer. This protocol was developed by the University
of Texas in Galveston. The FDA responded in December 1996 with an
approval to conduct a Phase I trial. The University of Texas'
Institutional Review Board (IRB) granted approval of this study in
May 1997.

On September 11, 1997, IDT entered into an agreement with the
University of Texas Medical Branch at Galveston (UTMB) to begin a
human clinical trial in October 1997. The trial will utilize the
ThermoChem System and disposables to deliver perfusion-induced
systemic hyperthermia to treat patients with metastatic non-small
cell lung cancer.

One of the objectives of this Phase I trial is to evaluate the
ThermoChem System for the use in the treatment of metastatic non-
small cell lung cancer with regard to patient selection, tumor
response, patient performance status, and patient survival. The
follow-up of the patients is patterned after the Southwest
Oncology Group protocols, which are considered state-of-the-art
studies to follow response of cancer to the therapy.

The study is being conducted at the General Clinical Research
Center (GCRC) at UTMB, which is supported by the National
Institute of Health (NIH). This is the only PISH study for
metastatic non-small cell lung cancer approved by the FDA.

The ThermoChem-HT, a component of the ThermoChem System, which
circulates and heats blood extracorporeally up to approximately
48C and monitors the patient's core temperature, through various
temperature probes, and also provides constant up to the minute
access information on the patient can be used independently from
the ThermoChem System for regional hyperthermia. Regional
hyperthermia is utilized where a systemic treatment is not
necessary, and isolated limb perfusion, a form of regional
hyperthermia, which was developed 40 years ago to treat patients
with melanoma and sarcoma of the limb. Preclinical trials are
also being conducted for a Phase I trial to involve isolated limb
perfusion for melanomas and sarcomas of the limbs.

Pre-clinical trials are being conducted at M.D. Anderson Cancer
Center in preparation for a Phase I/II trials to involve
thermochemotherapy hemi-perfusion of patients with pelvic or lower
extremity recurrences of different types of cancer. These pre-
clinical studies are being used to develop the surgical techniques
necessary for a clinical trial on humans and to train and
familiarize the center's staff in the use of the system.

The Cancer Center Protocol Committee of Wake Forest School of
Medicine has approved a protocol concept to conduct a pilot study
investigating the safety of the ThermoChem-HT for intraperitoneal
hyperthermic chemotherapy (IPHC) in the treatment of advanced
gastrointestinal and ovarian cancers.

The technique of IPHC has been done at Wake Forest School of
Medicine since 1992 utilizing a non-standardized perfusion setup.
The ThermoChem-HT can possibly make the technique more efficient
with better temperature monitoring and control. An IDE has been
approved by the FDA to conduct this human trial.

IDT's Medical and Scientific Advisory Board consists of the three
following professionals. Currently, none of the board members
receive a fee for serving on the board, but are reimbursed for
expenses incurred.

Corklin R. Steinhart, M.D., Ph.D., is the medical director of
special immunology services at Mercy Hospital in Miami, Florida.

Milton B. Yatvin, Ph.D., is a professor in the Radiation & Thermal
Biology Division, Department of Radiation Oncology at Oregon
Health Sciences University in Portland, Oregon.

Stephen R. Ash, M.D., F.A.C.P., is the Chairman of the Board and
Director of Research and Development of HemoCleanse, a corporation
located in West Lafayette, Indiana.

The Company has expensed approximately $9,789,000 on this project
through December 31, 1998, which includes the Company's
acquisition of HemoCleanse common stock, via a purchase of common
stock and the conversion of a loan into common stock.

Other Projects

Implantable Technology

In April 1996, BICO was granted FDA approval to market its
theraPORTr Vascular Access System ("VAS"). The approval was in
connection with the Company's 510(k) Notification filed in January
1996. The device is comprised of a reservoir which is implanted
beneath the skin in the chest region with a catheter inserted in a
vein and provides a delivery system for patients who require
continual injections. Because such repeated injections can cause
veins to shut down and collapse, the theraPORTr offers an improved
delivery system by eliminating that vascular trauma. If necessary
to accommodate multiple drug therapy with incompatible drugs, dual
ports can be implanted. Such devices are frequently used in
cancer drug therapy. BICO began selling the standard ports during
the second quarter of 1997. A second device with a low profile
has been developed for pediatric use, and a 510(k) was submitted
to the FDA in November 1997 for marketing approval. In early
February, 1998, BICO submitted a supplement to the FDA in response
to a request for additional information. The Company is currently
developing a dual port device and plans to submit another 510(k)
for that device in the near future.

Through its subsidiary, Coraflex Inc. ("Coraflex"), BICO is
engaged in the development of a polyurethane heart valve which
management believes may not have the disadvantages of the
mechanical and bioprosthetic valves currently being marketed. The
Coraflex valve, which resembles the human heart's aortic valve, is
made by means of a proprietary manufacturing process. The
polyurethane used in the construction of the heart valve is
believed by BICO to exhibit strength and fatigue resistance which
compare favorably with that of other materials used for prosthetic
valves. In vitro testing, some of which has been performed
through the Children's Hospital of Pittsburgh, of the Coraflex r
valve to date has demonstrated superior fatigue resistance and
flow characteristics relative to the currently available
bioprosthetic and mechanical devices, respectively. Additional
development and testing must be conducted by BICO prior to its
making an application to the FDA for approval to begin clinical
testing in humans. BICO will need additional financing to
complete clinical testing of the valve and to begin production.
No assurances can be made that BICO will receive the necessary
funding to complete testing, will receive FDA-marketing approval,
will be able to produce and sell the valve, or that the valve will
be commercially viable.

BICO also has developed technology for other implantable devices,
such as hemodialysis ports, implantable insulin dispensers and
rate-adaptive pacemakers. Because BICO's management decided to
focus most of the Company's resources on the research and
development of the Noninvasive Glucose Sensor, little progress was
made on these projects. Consequently, some of these devices are
in a very preliminary stage of development, and it is unclear at
this time whether their development will be pursued or completed.

Functional Electrical Stimulator Project. The Company has
discontinued its functional electrical stimulator project due to a
loss of orders from NeuroControl, its sole purchaser. Because
these products accounted for the majority of the Company's sales
revenues, this loss is significant and will have a corresponding
negative impact upon the Company's cash flows, liquidity and
revenue.

Metal-Plating Technology

During 1998, the Company acquired a majority interest in
International Chemical Technologies, Inc. (`ICTI') from its
existing majority shareholders, none of whom had any prior
affiliation with the Company. In connection with such purchase,
the Company paid consideration consisting of cash, common stock,
and the undertaking to make certain additional payments (See,
`Management's Discussion and Analysis').

ICTI developed a metal-coating or plating process known as
Cemkoter, a hard, wear-resistant coating engineered to be
environmentally safe and cost effective. ICTI obtained a patent
on the product. Cemkoter began as an answer to the search for an
environmentally friendly replacement for chrome, and testing
revealed additional attractive features.

During 1998, ICTI focused on the research and development, testing
and application of cemkoter on a number of parts and products for
various companies. For example, research and testing was
conducted to determine whether cemkoter could be produced to meet
military and commercial aircraft specifications.

When the Company acquired its interest in ICTI, the Company made
disclosures in its Form 8-K which contained estimates of the
potential revenues of both the metal-finishing industry and the
potential revenue of ICTI. The Company also disclosed, based on
estimates as of the date of the acquisition, that it expected
cemkoter to `generate immediate revenue and be a major profit
center' for the Company. The results have differed materially
from the Company's initial estimates. ICTI did not acheive any
significant revenue during 1998. The Company's early estimates
were based upon its assessment not only of the marketability of
the product, but on the Company's ability to penetrate the metal
finishing market using the features of the product. The Company's
actual experience has indicated that it is much more difficult to
exploit the existing market, regardless of whether the Company's
product has superior features. As a result, the Company has been
compelled to adjust its marketing strategy. Accordingly, the
Company can no longer estimate the amounts or timing of any
revenue or profit which may be generated by cemkoter.

A new Chief Executive Officer for ICTI has been hired and assumed
his position effective January 1, 1999. Among other duties, the
new CEO, who has more than 37 years' experience in the metal
finishing industry, will thoroughly evaluate the Company's current
cemkoter product as well as other metal coatings for use at ICTI.

The information set forth herein regarding BICO's projects is of a
summary nature, and the status of each project is subject to
constant change. There can be no assurances as to the completion
or success of any project.

RESEARCH AND DEVELOPMENT

The Company continues to be actively engaged in the research and
development of new products. Its major emphasis has been the
development of a Noninvasive Glucose Sensor. In order to raise
funds for the research and development of new products, the
Company and Diasensor.com have conducted sales of stock. (See,
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS").

MARKETING AND DISTRIBUTION

Petrol Rem began marketing of its bioremediation product, PRPr, in
mid-1993, and is now sold in quality marine supply stores in the
coastal areas of the United States, Canada, Europe and South East
Asia. These projections are based on management's belief, as to
which there can be no assurances, that the development and
manufacture of those products will continue to proceed
successfully and on schedule.

PATENTS, TRADEMARKS AND LICENSES

The Company owns patents on certain of its products and files
applications to obtain patents on new inventions when practical.
Additionally, the Company endeavors to obtain licenses from others
as it deems necessary to conduct its business.

The Company also relies upon trade secret protection for its
confidential and proprietary information. Although BICO,
Diasensor.com and their affiliates take all reasonable steps to
protect such information, including the use of Confidentiality
Agreements and similar provisions, there can be no assurance that
others will not independently develop substantially equivalent
proprietary information or techniques, otherwise gain access to
the Company's trade secrets, disclose such technology, or that the
Company can meaningfully protect its trade secrets.

Noninvasive Glucose Sensor

Diasensor.com owns a patent entitled "Non-Invasive Determination
of Glucose Concentration in Body of Patients" (the "Patent") which
covers certain aspects of a process for measuring blood glucose
levels noninvasively. Such Patent was awarded to BICO's research
team in December 1991 and was sold to Diasensor.com pursuant to a
Purchase Agreement dated November 18, 1991 (See, "Intercompany
Agreements"). The Patent will expire, if all maintenance fees are
paid, no earlier than the year 2008. If marketing of a product
made under the Patent is delayed by clinical testing or regulatory
review, an extension of the term of the Patent may be obtained.
Diasensor.com's Patent relates only to noninvasive sensing of
glucose but not to other blood constituents. Diasensor.com has
filed corresponding patent applications in a number of foreign
countries.

A second patent application was filed by BICO in December 1992,
which was assigned to Diasensor.com. This second patent contained
new claims which extend the coverage based upon additional
discoveries and data obtained since the original patent was filed.
The patent application was amended in October 1993, and was
granted in January 1995.

In May 1993, four additional patent applications were filed by
BICO's research teams related to the methods, measurement and
noninvasive determination of analyte concentrations in blood.
As of March, 1999, a total of seven U.S., including two design
patents, have been issued, all of which have been assigned to
Diasensor.com, and additional patents are pending.

Corresponding patent applications have been filed in foreign
countries where the Company anticipates marketing the Noninvasive
Glucose Sensor.

Diasensor.com or BICO may file applications in the United States
and other countries, as appropriate, for additional patents
directed to other features of the Noninvasive Glucose Sensor and
related processes.

Those competitors known by BICO to be currently developing non-
invasive glucose sensors own patents directed to various devices
and processes related to the non-invasive monitoring of
concentrations of glucose and other blood constituents. It is
possible that such patents may require the Companies to alter any
model of the Noninvasive Glucose Sensor or the underlying
processes relating to the Noninvasive Glucose Sensor, to obtain
licenses, or to cease certain activities.

The Company also relies upon trade secret protection for its
confidential and proprietary information. Although BICO and
Diasensor.com take all reasonable steps to protect such
information, including the use of Confidentiality Agreements and
similar provisions, there can be no assurance that others will not
independently develop substantially equivalent proprietary
information or techniques, otherwise gain access to the Company's
trade secrets, disclose such technology, or that the Company can
meaningfully protect its trade secrets.

The Company was granted trademark protection for the term
"Diasensor 1000", which is intended for use in connection with
the Diasensor models. The Company intends to apply, at the
appropriate time, for registrations of other trademarks as to any
future products of the Company.

Whole-Body Hyperthermia

In September 1992, a research team funded by the Company applied
for a domestic patent in connection with the use of PISH and the
treatment of HIV-positive patients; the patent has been assigned
to IDT. In October 1994, IDT received notification that the
patent application for its specialized method for whole-body
extracorporeal hyperthermia had been issued. A Continuation in
Part, which included the ThermoChem System was filed by IDT, was
allowed in July 1995 and issued in December 1995.

The patent, entitled `Specialized Perfusion Protocol for Whole-
Body Hyperthermia', contains seventeen claims for the hyperthermia
procedure, including the method of heating all of the blood in the
extracorporeal blood circuit to raise the patient's core
temperature to approximately 42 degrees centigrade. A
Continuation in Part, which was filed by IDT and included the
ThermoChem System, was allowed in July 1995 and was issued in
December 1995.

Implantable Technology

During 1995, the Company renewed its U.S. trademark registration
for the name Coraflexr, which was originally granted in 1988. The
Company has also obtained trademark registration for the name
theraPORTr (See, "BUSINESS - Implantable Technology").

In October, 1996, a patent was issued for the Company's heart
valve product.

Bioremediation

In 1992 and 1993, Petrol Rem applied for patents in connection
with its bioremediation product, all of which are still pending.
The Company has received trademark authorization for the use of
the product names PRPr, BIO-SOKr, BIO-BOOMr, and Oil Busterr
(See, "BUSINESS - Bioremediation").

WARRANTIES AND PRODUCT LIABILITY

The Company's present product liability insurance coverage is
$1,000,000 in the aggregate, which management considers to be a
sufficient amount due to the Company's discontinuance of sales of
certain products, including its former pacemaker line and its
functional electrical stimulators, and potential exposure to
liability.

SOURCE OF SUPPLY

In connection with the manufacture the Noninvasive Glucose Sensor,
the Company will be dependent upon suppliers for some of the
components required for the devices fabrication. The Company
plans to assemble the devices, but will need to purchase
components, including some components which will be custom made
for the Company from certain suppliers. These components will not
be generally available, and the Company may become dependent upon
those suppliers which do provide such specialized products.

If the Company successfully develops other new products, and
receives the regulatory approvals to manufacture such products, it
may become dependent on certain suppliers for custom parts.

COMPETITION

Noninvasive Glucose Sensor

With the rapid progress of medical technology, and in spite of
continuing research and development programs, the Company's
developmental products are always subject to the risk of
obsolescence through the introduction by others of new products or
techniques. Management is aware that other research groups are
developing noninvasive glucose sensors, but has limited knowledge
as to the technology used or stage of development of these
devices. There is a risk that those other groups will complete
the development of their devices before the Company does. To the
best knowledge of the Companies, there is no other company
currently producing or marketing noninvasive sensors for the
measurement of blood glucose similar to those being developed by
the Company.

The Noninvasive Glucose Sensor will compete with existing invasive
glucose sensors. Although the Company believes that the features
of the Noninvasive Glucose Sensor, particularly its convenience
and the fact that no blood samples are required, will compete
favorably with existing invasive glucose sensors, there can be no
assurance that the Noninvasive Glucose Sensor will compete
successfully. Most currently available invasive glucose sensors
yield accuracy levels of plus or minus 25% to 30%, range in price
from $80 to $200, not including monthly costs for disposable
supplies and accessories, and are produced and marketed by eight
to ten sizable companies. Those companies include Miles
Laboratories, Inc., Boehringer Mannheim Diagnostics, and Lifescan
(an affiliate of Johnson & Johnson).

Such companies have established marketing and sales forces, and
represent established entities in the industry. Certain of the
Company's competitors (including their corporate or joint venture
partners or affiliates) currently marketing invasive glucose
sensors have substantially greater financial, technical, marketing
and other resources and expertise than Diasensor.com, and may have
other competitive advantages over Diasensor.com (based on any one
or more competitive factors such as accuracy, convenience,
features, price or brand loyalty). Additionally, competitors
marketing existing invasive glucose sensors may from time to time
improve or refine their products (or otherwise make them more
price competitive) so as to enhance their marketing
competitiveness relative to the Company's Noninvasive Glucose
Sensor. Accordingly, there can be no assurance that the product,
or Diasensor.com as marketer for the Noninvasive Glucose Sensor,
will be able to compete favorably with such competition.

In addition to the invasive glucose sensors discussed above, there
exist invasive sensors, such as the Yellow Springs Sensor (the
"Clinical Sensors") which the Company believes achieve accuracy
levels within 30 minutes which are within plus or minus 3% of
actual glucose levels. The Company will also compete with this
technology, which is relatively non-portable and bears a price of
approximately $8,000. The Clinical Sensors are presently used
almost exclusively by hospitals and other institutions, and, like
all invasive sensors, still require repeated blood samples. It is
anticipated that the Company will also face competition from the
Clinical Sensors, at least in some markets. For example, certain
institutions that might otherwise purchase Diasensor.com's
products may decide to continue to use the Clinical Sensors,
whether due to the superior accuracy levels of that sensor or
institutional or historical bias, despite what Diasensor.com
believes will be the superior convenience and cost factors of the
Noninvasive Glucose Sensor.

The Company faces more direct competition from other companies who
are currently researching and developing noninvasive glucose
sensors. The Company has very limited knowledge as to the stage
of development of these sensors; however, should another company
successfully develop a noninvasive glucose sensor, achieve FDA
approval, and reach the market prior to the Company, it would have
an adverse effect upon the Company's ability to market its sensor.

The companies which are currently engaged in the research and/or
development of noninvasive glucose sensors include the following:
CME Telemetrix, Inc. (`CME'), Cygnus, Inc. ("Cygnus"), Technical
Chemicals and Products, Inc. (`TCPI'). Although the Company is
not aware, there may be other companies engaged in similar
research and development. The named companies, and others, may be
further along in their development than the Company is aware, and
may have access to capital and other resources which would give
them a competitive advantage over the Company. The following is a
summary of the Company's current knowledge regarding the companies
listed.

CME has developed a product called GlucoNIRr. In February 1999,
they announced an FDA meeting concerning the development and
initial testing of their device for use in institutional settings
such as nursing homes. CME is a Canadian company, and have
received approval to sell their device in Canada.

Cygnus of Redwood City, California has developed a device which,
when fastened to the wrist, extracts interstitial fluid by means
of an electrical voltage applied between the wrist and the device.
Cygnus has submitted the first part of a Premarket Approval
Application for the device, called the Gluco Watchr
AutomaticGlucose Biographer. Cygnus plans to submit the remainder
of their submission by June 1999.

TCPI of Pompano Beach, Florida, is developing the use of a
disposable patch which is a dermal transport system for the
transport of interstitial fluid. The patch is applied to the
forearm and read with a portable reflective meter. TCPI estimates
that the company is approximately 30% of the way toward the
completion of its FDA application.

Although not noninvasive like the Diasensor 1000r, devices which
claim to be less invasive than standard fingerpricks are being
introduced. One device, made by Chronimed in Minneapolis, uses a
laser rather than a sylett to draw blood from the finger. Another
company, Amira Medical, uses a small needle in conjunction with a
meter which draws blood from the forearm, upper arm or thigh.
These devices have been approved by the FDA. These devices are
purported by their makers to be improvements on the fingerprick
glucose sensors which use stylets to draw blood.

Certain organizations are also actively engaged in researching and
developing technologies that may regulate the use or production of
insulin or otherwise affect or cure the underlying causes of
diabetes. Diasensor.com is not aware of any new or anticipated
technology that would effectively render the Noninvasive Glucose
Sensor obsolete or otherwise not marketable as currently
contemplated. However, there can be no assurance that future
technological developments or products will not make the
Noninvasive Glucose Sensor significantly less competitive or, in
the case of the discovery of a cure for diabetes, even effectively
obsolete.

GOVERNMENT REGULATIONS

Since most of the Company's products are "medical devices" as
defined by the Federal Food, Drug and Cosmetic Act, as amended
(the "Act"), they are subject to the regulatory authority of the
FDA. The FDA regulates the testing, marketing and registration of
new medical devices, in addition to regulating manufacturing
practices, labeling and record keeping procedures. The FDA can
subject the Company to inspections of its facilities and
operations and may also audit its record keeping procedures at any
time. The FDA's Good Manufacturing Practices for Medical Devices
specifies various requirements for BICO's manufacturing processes
and maintenance of certain records.

In March 1993, the FDA announced that it intends to take steps to
enhance its review and approval procedures and guidelines relating
to the testing of medical devices, including imposing a higher
standard of proof on medical devices that might pose potential
health risks. BICO is unable to determine at this time whether
such action may have a material adverse effect on the approval by
the FDA of the Noninvasive Glucose Sensor, the hyperthermia
delivery system, any other product, or on BICO's business
generally. The extent of federal, state, local or foreign
governmental regulations that might result from any future
legislation or administrative action, and the impact of any such
action on BICO's products or business, cannot be accurately
determined.

In 1997, Congress enacted legislation directed toward regulation
of pharmaceutical and medical devices. The impact of the FDA
Administration Modernization Act of 1997 (`FDAMA') is expected to
reduce the quantity of information a company must submit for
approval of devices and allows product and establishment licenses
to be combined. In certain sections of the FDAMA concerned with
Risk-Based Regualtion of Medical Devices, the agency promulgated
guidance for industry on the use of national and international
consensus standards. The FDA anticipates that the use of
consensus standards will accelerate premarket notification
clearance. The impact of the FDAMA on the approval process for
obtaining marketing approval for the Diasensor 1000 has yet to be
established.

Noninvasive Glucose Sensor

Because the Noninvasive Glucose Sensor is subject to regulation by
the FDA, the Company will be required to meet applicable FDA
requirements prior to marketing the device in the United States.
These requirements include clinical testing, which must be
supervised by the IRBs of chosen hospitals. Clinical testing
began on the Noninvasive Glucose Sensor in May 1993 (See, "Current
Status of the Noninvasive Glucose Sensor"). In January 1994 the
Company submitted a 510(k) Notification to the FDA for approval to
market the Diasensor 1000?. The 510(k) Notification indicated
that the device is `substantially equivalent' a similar existing
device based on the following factors: (i) whether the device has
the same `intended use' as an existing device; and (ii) whether
the device has the same technological characteristics as the
existing device, unless the different technological
characteristics do not adversely affect its safety and
effectiveness. The Company formally withdrew its 510(k)
Notification after an FDA panel review, in which the majority of
the reviewers were not satisfied that the Company had produced
sufficient evidence to prove equivalence to an existing device.
In further discussions with the FDA, it was recommended that the
Company filed a PMA and conduct an additional clinical study under
an IDE. Biocontrol will submit a modular PMA which allows the
various aspects of the submission to be made in modules over a
period of time. The Modular PMA is a new method of submitting
information to the FDA, and resulted from the passage of the FDAMA
in 1997. The Company recently submitted a PMA Shell which
outlines plans for the Modular PMA submission.

The submission of a PMA will require that the Company conduct
additional testing, and may result in significant delays and
increased expenses. The FDA's PMA process is more expensive and
time consuming than a 510(k) Notification, and may also result in
additional delays in the time period in which the Companies could
begin manufacturing and marketing the device for sale in the
United States. The time elapsed between the completion of
clinical testing at IRBs and the grant of marketing approval by
the FDA is uncertain, and no assurance can be given that approval
to market the device in the U.S. will ultimately be obtained.

In June of 1998, the FDA instituted new Quality System Regulations
(QSR's) which took the place of Good Manufacturing Practices.
These regulations align closely with those guidelines specified by
the ISO which sets quality requirements for products being shipped
to the European Union (`EU'). These regulations have added
control of the design process as well as the manufacturing
process.

On January 14, 1998, the Company received certification to ISO
9001, and on June 23, 1998, it received the CE mark. The CE mark
and the ISO certification is provided by the regulatory bodies of
the EU or private `notified bodies' which are third-party
companies certified by the EU as able to also provide the
certifications. The CE mark indicates that the device adheres to
quality systems guidelines of the ISO and its European signatory,
European Norm Standards for Medical Devices (`EN'). Rigorous
audits were conducted at the Company to certify that the Company's
development and manufacturing procedures, as well as the Diasensor
1000? itself met the international standards laid down by the
Medical Device Directive. In order to maintain its approval to
ship the device into the EU, the Company must be vigilant in its
adherence to its quality system, and audits will be conducted on
an annual basis by its third-party notified body to verify that
the Company continues to meet the standards.

The Company may also be required to comply with the same
regulatory requirements prior to introducing the Diasensor? 2000,
or other models of the Noninvasive Glucose Sensor, to the market.
Any changes in FDA procedures or requirements will require
corresponding changes in the Company's obligations in order to
maintain compliance with FDA standards. Such changes may result
in additional delays or increased expenses.

BICO's products may also be subject to foreign regulatory approval
prior to any sales.

The FDA's Good Manufacturing Practices for Medical Devices
specifies various requirements for BICO's manufacturing processes
and maintenance of certain records.

Whole-Body Extracorporeal Hyperthermia

HemoCleanse has received FDA approval of its Form 510(k)
Notification in connection with the use of the BioLogic-DT model,
which is used in drug detoxification procedures. However, the
510(k) Notification process, which is intended to be a shorter,
less complex FDA procedure as compared to a full Pre-Market
Approval process, may not be available for the ThermoChem System
model which is used in the hyperthermia project. IDT and
HemoCleanse continuing to hold discussions with the FDA regarding
the number of patients which must be treated with the ThermoChem
System before the FDA will accept an application to market the
delivery system in the U.S., and the such companies have retained
a biostatistician to assist them in making that determination.
The Company believes, based on the federal government's statements
regarding the priority treatment to be afforded to drugs and
procedures in connection with the treatment of HIV and AIDS, that
its FDA application, in whatever form, may receive expedited
review. If either a Pre-Market Approval application or a 510(k)
Notification is approved by the FDA, it would allow IDT to market
the device.

Although the federal government has publicly stated that
experimental drugs and procedures in connection with the treatment
of HIV will receive priority treatment, there can be no assurances
that any future 510(k) Notifications, Pre-Market Approval
applications, or IDEs will obtain FDA approval. Without FDA
approval, the delivery system cannot be used or marketed in the
United States.

Bioremediation

The Company's bioremediation project will be supervised by NETAC,
a private group endorsed and supervised by the EPA and the
Pennsylvania Department of Environmental Resources. In addition,
each state in which the bioremediation products are used will
apply its own environmental regulations to the use and sale of the
products.

HUMAN RESOURCES

As of December 31, 1998, the Company had 76 full-time employees
who were located primarily in either the Indiana or Pittsburgh
locations. Due to its cash flow problems during 1998, the Company
was compelled to lay off certain employees; other employees
resigned.

The Company has employment contracts with some of its non-officer
employees, most of whom are scientists and engineers employed in
the Company's research and development operations. Such contracts
are typically for terms of five years and contain confidentiality
provisions. The Company also employs consultants as needed; some
of the consultants are employed pursuant to consulting contracts
which contain confidentiality provisions.

Properties

During 1998, the Company's research and development operations are
located in a 20,000 square foot one-story building at 300 Indian
Springs Road, Indiana, Pennsylvania. The building is leased by
the Company from the 300 Indian Springs Road Real Estate
Partnership (the "Partnership"). The lease period is 20 years and
runs concurrently for ten years with a mortgage arranged by the
Partnership at a stated amount of rent. At the end of ten years,
the amount of rent paid by the Company is subject to
renegotiation, based on refinancing of a balloon payment due on
the mortgage, unless the mortgage has been satisfied by the
Partnership. In addition to rent, the Company pays all taxes,
utilities, insurance, and other expenses related to its operations
at that location (See, "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS"). The Company has vacated this building and has
listed it for sale. The operations and activities formerly
located on Indian Springs Road have been moved to the
manufacturing space discussed below.

In September 1992, BICO entered into a ten-year lease agreement
with the Indiana County Board of Commissioners for 22,500 square
feet of space which BICO plans to use for the manufacture of the
Noninvasive Glucose Sensor, once developed. The facility,
comprised of 22,500 square feet, has been reconfigured to BICO's
specifications. BICO recently moved the balance of its Indiana,
Pennsylvania operations to this space. This facility contains
sufficient additional space to accommodate the Company's projected
operations through 1999.

LEGAL PROCEEDINGS

During April 1998, the Company and its affiliates were served
with subpoenas by the U.S. Attorneys' office for the U.S.
District Court for the Western District of Pennsylvania. The
subpoenas requested certain corporate, financial and scientific
documents and the Company continues to provide documents in
response to such requests.

On April 30,1996, a class action lawsuit was filed against the
Company, Diasensor.com and individual officers and directors.
The suit, captioned Walsingham v. Biocontrol Technology, et
al., has been certified as a class action, and is pending in
the U.S. District Court for the Western District of
Pennsylvania. The suit alleges misleading disclosures in
connection with the noninvasive glucose sensor and other
related activities. By mutual agreement of the parties, the
suit remains in the pre-trial pleading stage, and the Company
is unable to determine the outcome or its impact upon the
Company at this time.

The Company had leased space in two locations in Indiana County
for its manufacturing facilities. One space, which has been
upgraded with leasehold improvements, is still being used by
the Company. The other space, which had been leased as
expansion space, was the subject of a judgment proceeding. The
Company has given up possession of its expansion space in
Indiana County in response to the filing of such judgment for
nonpayment of lease fees. In return for possession of the
space, the leaseholder agreed not to pursue any action on the
judgment at this time.

DIRECTORS AND EXECUTIVE OFFICERS

Nominee Age Since Position

David L. Purdy 70 1972 President, Chairman of the
Board, Treasurer, Director

Fred E. Cooper 52 1989 Chief Executive Officer,
Executive Vice President, Director

Anthony J. Feola 50 1990 Senior Vice President, Director

Glenn Keeling 47 1991 Vice President, Director

Stan Cottrell 55 1998 Director

Paul W. Stagg 51 1998 Director
______________________________
The Company's six directors were most recently elected at its
Shareholders' Meeting on March 31, 1999.

DAVID L. PURDY, 70 is President, Chairman of the Board, Treasurer
and a director of the Company. Mr. Purdy has been a director and
Chairman of the Board since its organization in 1972 and is
considered the organizer and founder of the Company; he devotes
60% of his time to the business of the Company, and 40% of his
time to Diasensor.com. He has also served as President of the
Company from 1972 through December 1990, with the exception of
five months in 1980, when he served as Chairman and full-time
Program Director of the Company's implantable medicine dispensing
device program with St. Jude Medical, Inc., and from October 1,
1987 through July 15, 1988, when he served as Chairman and
Director of Research and Development for the Company. Prior to
founding the Company, he was employed by various companies in the
medical technology field, including Arco Medical, Inc. Mr. Purdy
is also an officer and director of Diasensor.com and Coraflex.

FRED E. COOPER, 52, is the Chief Executive Officer, Executive Vice
President and a director of the Company; he devotes approximately
60% of his time to the business of the Company, and 40% to
Diasensor.com. Prior to joining the Company, Mr. Cooper
co-founded Equitable Financial Management, Inc. of Pittsburgh, PA,
a company in which he served as Executive Vice President until his
resignation and divestiture of ownership in August 1990. In 1972,
Mr. Cooper founded Cooper Leasing Corp., Pittsburgh, Pennsylvania,
a company specializing in equipment and venture financing. Mr.
Cooper was appointed Chief Executive Officer in January 1990. He
is also an officer and director of Diasensor.com, and a director
of Petrol Rem and Coraflex.

ANTHONY J. FEOLA, 50, rejoined the Company as its Senior Vice
President in April, 1994, after serving as Diasensor.com's Vice
President of Marketing and Sales from January, 1992 until April,
1994. Prior to January, 1992, he was the Company's Vice President
of Marketing and Sales. Prior to joining the Company in November
1989, Mr. Feola was Vice President and Chief Operating Officer
with Gateway Broadcasting in Pittsburgh in 1989, and National
Sales Manager for Westinghouse Corporation, also in Pittsburgh,
from 1980 until 1989. He was elected a director of the Company in
February 1990, and also serves as a director of Diasensor.com,
Coraflex and Petrol Rem.

GLENN KEELING, 47, joined the Board of Directors in April 1991.
Mr. Keeling currently is a full-time employee of BICO in the
position of Vice President of Marketing; his primary
responsibilities during 1994 through 1997 have been the management
and operation of IDT's Whole-Body Extracorporeal Hyperthermia
project. From 1976 through 1991, he was a Vice President in
charge of new business development at Equitable Financial
Management, Inc., a regional equipment lessor. His
responsibilities included initial contacts with banks and
investment firms to open new lines of business referrals in
connection with financing large equipment transactions. He is
also President and a director of IDT.

STAN COTTRELL, 55, was appointed to the Board of Directors in
1998. Mr. Cottrell is the Chairman and Founder of Cottrell
Associates International, Inc., which provides international
business development, brokerage, specialty marketing and
promotional services. He is a former director of marketing for
Inhalation Therapy Services and was employed by Boehringer
Ingelheim, Ltd. as a national product manager. Mr. Cottrell is a
world ultra-distance runner and the author of several books.

PAUL W. STAGG, 51, was appointed to the Board of Directors in
1998. Mr. Stagg is the marketing manager for the Wholesale
Division of First Financial Resources, Inc., where he is
responsible for marketing, underwriting, supervising and
coordinating various types of financing for institutional
investors. Prior to his current position, he was District
Distributor of Marketing for Ginger Mae, a division of United
Companies of Baton Rouge, LA.

Pursuant to the disclosure requirements of Item 405 of Regulation
S-K regarding timely filings required by Section 16(a) of the
Securities and Exchange Act, the Company represents the following.
Based solely on its review of copies of forms received and written
representations from certain reporting persons, the Company
believes that all of its officers, directors and greater than ten
percent beneficial owners complied with applicable filing
requirements.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Employment Relationships

The Board of Directors of the Company approved employment
agreements on November 1, 1994 for its officers, David L. Purdy,
Fred E. Cooper, Anthony J. Feola and Glenn Keeling (See
"Employment Agreements").

David L. Purdy, President, Treasurer and a director of the
Company, is a director of Diasensor.com and Coraflex. He is also
the chairman and Chief Scientist of Diasensor.com, and the
President and Treasurer of Coraflex. Mr. Purdy devotes 60% of his
time to BICO, and 40% to Diasensor.com. Fred E. Cooper, Chief
Executive Officer, Executive Vice President and a director of the
Company, is a director of Diasensor.com, Coraflex and Petrol Rem.
He is also the President of Diasensor.com. Mr. Cooper devotes
approximately 60% of his time to BICO and 40% to Diasensor.com.
Anthony J. Feola, Senior Vice President and a director of the
Company, is also a director of Diasensor.com, Coraflex, and Petrol
Rem. Glenn Keeling, Vice President and a director of the
Company, was employed on January 1, 1992 as BICO's manager of
product development. Mr. Keeling is also the President and a
director of IDT.

Property

Three of the Company's current executive officers and/or directors
and two former directors of the Company are members of the
nine-member 300 Indian Springs Road Real Estate Partnership (the
"Partnership") which in July 1990, purchased the Company's real
estate in Indiana, Pennsylvania, and each has personally
guaranteed the payment of lease obligations to the bank providing
the funding. The five members of the Partnership who are also
current or former officers and/or directors of the Company, David
L. Purdy, Fred E. Cooper, Glenn Keeling, Jack H. Onorato and C.
Terry Adkins, each received warrants on June 29, 1990 to purchase
100,000 shares of the Company's common stock at an exercise price
of $.33 per share until June 29, 1995. Mr. Adkins, who was a
director at the time of the transaction, resigned from the Board
of Directors on March 30, 1992. Mr. Keeling, who was not a
director at the time of the transaction, joined the Board of
Directors on May 3, 1991. Mr. Onorato, who was not a director at
the time of the transaction, was a BICO director from September
1992 until April 1994.

In all instances where warrants were issued in connection with the
transactions set forth above, the exercise price of the warrants
was equal to or above the current quoted market price of the
Company's common stock on the date of issuance.

In April 1992, Diasensor.com purchased an office condominium
located at the Bourse Office Park, Virginia Manor, Building 2500,
Second Floor, Pittsburgh, Pennsylvania 15220 for $190,000. The
Company has entered into a lease with Diasensor.com and pays rent
in the amount of $3,544 per month, plus one-half of the utilities.

Warrants

The following paragraphs, along with the notes to the financial
statements, include disclosure of the warrants which were granted
to executive officers and directors of the Company from 1996
through 1998. These warrants were accounted for in accordance
with Accounting Principles Board Opinion 25 (based on the spread,
if any, between the exercise price and the quoted market price of
the stock on the date that the warrants were granted). No value
was recorded for these warrants since they were all granted at
exercise prices which were equal to or above the current quoted
market price of the stock on the date issued (See, Note J to the
Financial Statements). In 1995 and 1996, the Company extended
warrants granted in 1990 and 1991, which were scheduled to expire
in 1995 and 1996, until 1998-2000. Because the exercise price of
the warrants, which remained unchanged, was less than the market
price of the common stock on the dates of the extensions, charges
were made against operations (See, "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS", and
Note J to the Financial Statements).

On August 26, 1996, the Board of Directors approved the granting
of warrants to purchase 100,000 shares of common stock at $1.48
per share to Glenn Keeling, an officer and director of the
Company.

Loans

On October 1, 1990, the Board of Directors approved a $75,000 loan
from the Company to Fred E. Cooper. Mr. Cooper signed a
promissory note promising to pay the principal amount plus twelve
percent (12%) simple interest. Mr. Cooper repaid $66,500 of the
$75,000 principal balance during 1991. During 1991, the Company
granted loans to Fred E. Cooper in the aggregate amount of
$57,400. Mr. Cooper signed promissory notes promising to pay the
principal amounts upon demand plus ten percent (10%) simple
interest. In January 1992, the Company granted a loan to Fred E.
Cooper in the amount of $25,000. Mr. Cooper signed a promissory
note promising to pay the principal amount upon demand plus ten
percent (10%) simple interest. In 1997, the Companies granted
loans to Fred E. Cooper aggregating $158,000; Mr. Cooper signed
promissory notes promising to pay the principal amounts upon
demand plus 8.25% simple interest. In 1998, the Company granted
loans to Fred E. Cooper aggregating $275,000; Mr. Cooper signed a
promissory note promising to pay the principal amount upon demand
plus 8.25% simple interest. The aggregate balance of the loans as
of December 31, 1998, including accrued interest, was $633,499.

In November 1997, the Companies granted a loan to Anthony J. Feola
in the amount of $50,000. Mr. Feola signed a promissory note
promising to pay the principal amount upon demand plus 8.25%
simple interest. In February 1998, the Company granted a loan to
Anthony J. Feola in the amount of $185,000. Mr. Feola signed a
promissory note promising to pay the principal upon demand plus
8.25% simple interest. The aggregate balance of the loans as of
December 31, 1998, including accrued interest, was $253,219.

In December 1991, the Company granted a loan to Glenn Keeling in
the amount of $5,000. Mr. Keeling signed a Promissory Note
promising to pay the principal amount upon demand plus ten percent
(10%) simple interest. In December 1996, the Company granted a
loan to Glenn Keeling in the amount of $50,000. Mr. Keeling
signed a promissory note promising to pay the principal amounts
upon demand plus 8.25% simple interest. In November, 1997, the
Company granted a loan to Glenn Keeling in the amount of $20,000.
Mr. Keeling signed a promissory note promising to pay the
principal upon demand plus 8.25% simple interest. In February
1998, the Company granted a loan to Glenn Keeling in the amount of
$190,000. Mr. Keeling signed a promissory note promising to pay
the principal upon demand plus 8.25% simple interest. The
aggregate balance of the loans as of December 31, 1998, including
accrued interest, was $292,810.

In September 1995, the Company granted a loan in the amount of
$250,000 to Allegheny Food Services in the form of a one-year
renewable note bearing interest at prime rate as reported by the
Wall Street Journal plus one percent (1%). Interest and principal
payments have been made on the note, and as of December 31, 1998,
the balance was $200,000. Joseph Kondisko, a former director of
Diasensor.com, is a principal owner of Allegheny Food Services.

Each of the loans made to officers or directors and their
affiliates was made for a bona fide business purpose. All future
loans to officers, directors and their affiliates will be made for
bona fide business purposes only.

Intercompany Agreements

Management of the Company believes that the agreements between
BICO and Diasensor.com, which are summarized below, were based
upon terms which were as favorable as those which may have been
available in comparable transactions with third parties. However
no unaffiliated third party was retained to determine
independently the fairness of such transactions.

License and Marketing Agreement. Diasensor.com acquired the
exclusive marketing rights for the Noninvasive Glucose Sensor and
related products and services from BICO in August 1989 in exchange
for 8,000,000 shares of its common stock. That agreement was
canceled pursuant to a Cancellation Agreement dated November 18,
1991, and superseded by a Purchase Agreement dated November 18,
1991. The Cancellation Agreement provides that BICO will retain
the 8,000,000 shares of Diasensor.com common stock which BICO
received pursuant to the License and Marketing Agreement.

Purchase Agreement. BICO and Diasensor.com entered into a
Purchase Agreement dated November 18, 1991 whereby BICO conveyed
to Diasensor.com its entire right, title and interest in the
Noninvasive Glucose Sensor and its development, including its
extensive knowledge, technology and proprietary information. Such
conveyance includes BICO's patent received in December 1991 (See,
Report to Shareholders - "Business").

In consideration of the conveyance of its entire right in the
Noninvasive Glucose Sensor and its development, BICO received
$2,000,000. In addition, Diasensor.com may endeavor, at its own
expense, to obtain patents on other inventions relating to the
Noninvasive Glucose Sensor. Diasensor.com also guaranteed BICO
the right to use such patented technology in the development of
BICO's proposed implantable closed-loop system, a related system
in the early stages of development.

In December 1992, BICO and Diasensor.com executed an amendment to
the Purchase Agreement which clarified terms of the Purchase
Agreement. The amendment defines "Sensors" to include all devices
for the noninvasive detection of analytes in mammals or in other
biological materials. In addition, the amendment provides for a
royalty to be paid to Diasensor.com in connection with any sales
by BICO of its proposed closed-loop system.

Research and Development ("R&D") Agreement. Diasensor.com and
BICO entered into an agreement dated January 20, 1992 in
connection with the research and development of the Noninvasive
Glucose Sensor. Pursuant to the agreement, BICO will continue the
development of the Noninvasive Glucose Sensor, including the
fabrication of prototypes, the performance of clinical trials, and
the submission to the FDA of all necessary applications in order
to obtain market approval for the Noninvasive Glucose Sensor.
BICO will also manufacture the models of the Noninvasive Glucose
Sensor to be delivered to Diasensor.com for sale (See,
"Manufacturing Agreement"). Upon the delivery of the completed
models, the research and development phase of the Noninvasive
Glucose Sensor will be deemed complete.

Diasensor.com has agreed to pay BICO $100,000 per month for
indirect costs beginning April 1, 1992, during the 15 year term of
the agreement, plus all direct costs, including labor. BICO also
received a first right of refusal for any program undertaken to
develop, refine or improve the Noninvasive Glucose Sensor, and for
the development of other related products. In July 1995, BICO and
Diasensor.com agreed to suspend billings, accruals of amounts due
and payments pursuant to the R&D Agreement pending the FDA's
review of the 510(k) Notification.

Manufacturing Agreement. BICO and Diasensor.com entered into an
agreement dated January 20, 1992, whereby BICO will act as the
exclusive manufacturer of the Noninvasive Glucose Sensor and other
related products. Diasensor.com will provide BICO with purchase
orders for the products and will endeavor to provide projections
of future quantities needed. The original Manufacturing Agreement
called for the products to be manufactured and sold at a price to
be determined in accordance with the following formula: Cost of
Goods (including actual or 275% of overhead, whichever is lower)
plus a fee of 30% of Cost of Goods. In July 1994, the formula was
amended to be as follows: Costs of Goods Sold (defined as BICO's
aggregate cost of materials, labor and associated manufacturing
overhead) + a fee equal to one third (1/3) of the difference
between the Cost of Goods Sold and Diasensor.com's sales price of
each Sensor. Diasensor.com's sales price of each Sensor is
defined as the price paid by any purchaser, whether retail or
wholesale, directly to Diasensor.com for each Sensor. Subject to
certain restrictions, BICO may assign its manufacturing rights to
a subcontractor with Diasensor.com's written approval. The term
of the agreement is fifteen years.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the annual
and long-term compensation for services in all capacities to the
Company for the fiscal years ended December 31, 1998, 1997 and
1996, of those persons who were, at December 31, 1998 (i) the
Chief Executive Officer, and (ii) the other most highly
compensated executive officers of the Company whose remuneration
exceeded $100,000 (the "Named Executives").

SUMMARY COMPENSATION TABLE
YEARS ENDED DECEMBER 31, 1998, 1997, and 1996

==============================================================================
Annual Compensation | (1)Long Term Compensation
- ------------------------------------------------------------------------------
| Awards
Name and | Securities
Principal (2) | Underlying (2) All other
Position Year Salary($) Bonus($) Other($) | Warrants(#) Compensation
==============================================================================
David L. |
Purdy , 1998 $166,802 $0 $0 | 0 $0
President, 1997 $241,667 $0 $0 | 0 $0
Treasurer (4) 1996 $400,000 $0 $0 | 0 $0
- ------------------------------------------------------------------------------
Fred E. 1998 $556,173 $0 $0 | 0 $0
Cooper, 1997 $592,000 $0 $0 | 0 $0
CEO (5) 1996 $592,000 $0 $0 | 0 $0
- ------------------------------------------------------------------------------
Anthony J. 1998 $326,912 $0 $0 | 0 $0
Feola , Sr. 1997 $300,000 $0 $0 | 0 $0
Vice Pres.(6) 1996 $300,000 $0 $0 | 350,000 (3) $0
- ------------------------------------------------------------------------------
Glenn 1998 $180,003 $0 $0 | 0 $0
Keeling, VP 1997 $200,000 $0 $0 | 0 $0
(7) 1996 $200,000 $0 $0 | 100,000(8) $0
- -----------------------------

(1) The Company does not currently have a Long-Term Incentive
Plan ("LTIP"), and no payouts were made pursuant to any LTIP
during the years 1998, 1997, or 1996. The Company did not
award any restricted stock to the Named Executives during any
year, including the years 1998, 1997 or 1996. The Company
did not award any warrants, options or Stock Appreciation
Rights ("SARs") to the Named Executives during the years
ended December 31, 1998, 1997 or 1996; however, the Company
did extend warrants owned by the Named Executives, which
would have expired during 1996 (See Note 3, below). The
Company has no retirement, pension or profit-sharing programs
for the benefit of its directors, officers or other
employees.

(2) During the year ended December 31, 1998, the Named Executives
received medical benefits under the Company's group insurance
policy, including disability and life insurance benefits.
The aggregate amount of all perquisite compensation was less
than 10% of the total annual salary and bonus reported for
each Named Executive.

(3) During 1996, the Company extended warrants previously issued
to the Named Executives, which would have otherwise expired.
Although the extensions were in connection with warrants
already held by the Named Executives, they are shown in the
table set forth above as "awards" for executive compensation
disclosure purposes because at the time of the extension, the
exercise price of the warrants (which remained unchanged) was
less than the "market price" of the common stock

(4) In November, 1994, Mr. Purdy's employment agreement was
renegotiated to provide for an annual salary of $250,000
effective November1, 1994 through October 31, 1999. All
other terms of the contract remained substantially the same
(See, "Employment Agreements"). During 1995, Mr. Purdy's
salary was increased by $50,000. In 1996, 1997 and 1998, Mr.
Purdy was paid $87,500, $100,000 and $100,000 by
Diasensor.com; such amounts are included in the table above.
Mr. Purdy is paid a salary by the Company based on his
employment contract. Amounts paid to Mr. Purdy by
Diasensor.com are determined by the Diasensor.com Board of
Directors based upon services performed on its behalf.
During 1998, Mr. Purdy voluntarily reduced his salary by 69%.

(5) In November, 1994, Mr. Cooper's employment agreement was
renegotiated to provide for an annual salary of $250,000
effective November 1, 1994 through October 31, 1999. All
other terms of the contract remained substantially the same
(See, "Employment Agreements"). In addition, in 1998, 1997
and 1996, Mr. Cooper was paid $84,000, $96,000, and $96,000,
respectively by both Petrol Rem and IDT, both of which are
subsidiaries of BICO; such amounts are included in the table
above. In 1998, 1997, and 1996, Mr. Cooper was paid
$177,542, $150,000, and $150,000 in salary by
Diasensor.com, respectively; such amounts are included in
the table above. Mr. Cooper is paid a salary by the company
based on his employment agreement. Amounts paid to Mr.
Cooper by Diasensor.com, Petrol Rem and IDT are determined by
the Boards of Directors of those companies based upon
services performed on their behalf.

(6) In April, 1994, Mr. Feola's employment agreement with
Diasensor.com was assigned to BICO when he left Diasensor.com
to rejoin BICO as its Senior Vice President. In November,
1994, Mr. Feola's employment agreement was renegotiated,
provides for an annual salary of $200,000 and is effective
November 1, 1994 through October 31, 1999. All other terms
of the contract remained substantially the same (See,
"Employment Agreements"). During 1998, 1997, and 1996, Mr.
Feola's salary was increased by $27,000, $50,000 and $50,000
per year respectively.

(7) In November, 1994, Mr. Keeling entered into an employment
agreement with the Company, which provides for an annual
salary of $150,000 effective November 1, 1994 through October
31, 1999 (See, "Employment Agreements"). During 1996 and
1995, Mr. Keeling's salary was increased by $25,000 per year.

(8) On August 26, 1996, Mr. Keeling was granted warrants to
purchase 100,000 shares of the Company's common stock at a
price of $1.48 per share (the market price as of that date)
until August 26, 2001.

Option/Warrant/SAR Grants in Last Fiscal Year
No options, warrants or SARs were granted or extended to the Named
Executives during 1998.

AGGREGATED OPTION/WARRANT/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/WARRANT/SAR VALUE TABLE

Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Options/SARs 12/31/98 ($)
at 12/31/98 (#)
Shares Value
Acquired on Realized ($) Exercisable Exercisable/
Exercise (2) Unexercisable(3) Unexercisable (4)
Name (#)(1)
- -------------------------------------------------------------------------------
David L. 0 $ 0 767,200 $ 0
Purdy (5) (9)
- -------------------------------------------------------------------------------
Fred E. 0 $ 0 300,000 $ 0
Cooper (6) (9)
- -------------------------------------------------------------------------------
Anthony J. 0 $ 0 550,000 $ 0
Feola (7) (9)
- -------------------------------------------------------------------------------
Glenn 0 $ 0 100,000 $ 0
Keeling (8) (9)
__________________

(1) This figure represents the number of shares of common stock
acquired by each named executive officer upon the exercise of
warrants.

(2) The value realized of the warrants exercised was computed by
determining the spread between the market value of the
underlying securities at the time of exercise minus the
exercise price of the warrant.

(3) All warrants held by the Named Executives are currently
exercisable.

(4) The value of unexercised warrants was computed by subtracting
the exercise price of the outstanding warrants from the
closing sales price of the Company's common stock on December
31, 1998 as reported by Nasdaq ($.06).

(5) Includes warrants to purchase: 187,200 shares of common
stock at $.25 per share until April 24, 1995 (extended until
April 24, 1999); 500,000 shares of common stock at $.25 per
share until May 1, 1995 (extended until May 1, 1999); and
80,000 shares of common stock at $.33 per share until June
29, 1995 (extended until June 29, 1999) (See, "Warrants").

(6) Includes warrants to purchase: 300,000 shares of common stock
at $.25 per share until May 1, 1995 (extended until May 1,
1999) (See, "Warrants").

(7) Includes warrants to purchase: 100,000 shares of common
stock at $.25 per share until May 1, 1995 (extended until May
1, 1999); 100,000 shares of common stock at $.25 per share
until November 26, 1995 (extended until November 26, 1999);
and 350,000 shares of common stock at $.50 per share until
October 11, 1996 (extended until October 11, 1999) (See,
"Warrants").

(8) Includes warrants to purchase: 100,000 shares of common stock
at $1.48 per share until August 26, 2001.

(9) Because the market price as of December 31, 1998 was less
than the exercise price of the warrants, such warrants were
not in-the-money.

Employment Agreements

BICO has entered into employment agreements (the "Agreements")
with its Named Executives Fred E. Cooper, David L. Purdy, Anthony
J. Feola and Glenn Keeling effective November 1, 1994, pursuant to
which they are currently entitled to receive annual salaries of
$250,000, $300,000, $300,000 and $200,000 respectively, which are
subject to review and adjustment. The initial term of the
Agreements with Messrs. Cooper and Purdy expires on October 31,
1999, and continues thereafter for additional three-year terms
unless any of the parties give proper notice of non-renewal. The
initial term of the Agreements with Messrs. Feola and Keeling
expires on October 31, 1999, and continues thereafter for
additional two-year terms unless either of the parties give proper
notice of non-renewal. The Agreements also provide that in the
event of a "change of control" of BICO, BICO is required to issue
the following shares of common stock, represented by a percentage
of the outstanding shares of common stock of the Company
immediately after the change in control: five percent (5%) to Mr.
Cooper and Mr. Purdy; four percent (4%) to Mr. Feola; and three
percent (3%) to Mr. Keeling. In general, a "change of control" is
deemed to occur for purposes of the Agreements (i) when 20% or
more of BICO's outstanding voting stock is acquired by any person,
(ii) when one-third (1/3) or more of BICO's directors are not
Continuing Directors (as defined in the Agreement), or (iii) when
a controlling influence over the management or policies of BICO is
exercised by any person or by persons acting as a group within the
meaning of Section 13(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").

In addition, in the event of a change in control within the term
of the Agreements or within one year thereafter, Messrs. Cooper,
Purdy, Feola and Keeling are entitled to receive severance
payments in amounts equal to: 100% of their most recent annual
salary for the first three years following termination; 50% of
their most recent annual salary for the next two years; and 25% of
their most recent salary for the next five years. BICO is also
required to continue medical insurance coverage for Messrs.
Cooper, Purdy, Feola and Keeling and their families during such
periods. Such severance payments will terminate in the event of
the employee's death.

In the event that either Mr. Purdy or Mr. Cooper becomes disabled,
as defined in their Agreements, he will be entitled to the
following payments, in lieu of salary, such payments to be reduced
by any amount paid directly to him pursuant to a disability
insurance policy provided by the Company or its affiliates: 100%
of his most recent annual salary for the first three years; and
70% of his most recent salary for the next two years. In the
event that either Mr. Feola or Mr. Keeling becomes disabled, as
defined in their Agreements, he will be entitled to the following
payments, in lieu of salary, such payments to be reduced by any
amount paid directly to him pursuant to a disability insurance
policy provided by the Company or its affiliates: 100% of his most
recent annual salary for the first year; and 70% of his most
recent salary for the second year.

The Agreements also generally restrict the disclosure of certain
confidential information obtained by Messrs. Cooper, Purdy, Feola
and Keeling during the term of the Agreements and restricts them
from competing with BICO for a eriod of one year in specified
states following the expiration or termination of the Agreements.

In addition to the Employment Agreements described above, BICO
also entered into employment agreements with two of its non-
executive officer employees effective November 1, 1994. The terms
of such agreements are similar to those described for Messrs.
Feola and Keeling above, with the following amendments: the term
of one agreement is from November 1, 1994 through October 31,
2002, and is renewable for successive two-year terms; the term of
the other agreement is from November 1, 1994 through October 31,
1999, and is renewable for successive two-year terms; in the
event of a "change in control", BICO is required to issue both
employees shares of common stock equal to two percent (2%) of the
outstanding shares of the common stock of the Company immediately
after the change in control.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth the indicated information as of
December 31, 1998 with respect to each person who is known by the
Company to be the beneficial owner of more than five percent (5%)
of the outstanding common stock, each director of the Company, and
all directors and executive officers of the Company as a group.
The table excludes disclosure of entities such as Cede & Co. and
other companies which would reflect the ownership of entities who
hold stock on behalf of shareholders.

As of December 31, 1998, there were 420,773,659 shares of the
Company's common stock outstanding. The first column sets forth
the common stock currently owned by each person or group,
excluding currently exercisable warrants for the purchase of
common stock. The second column sets forth the percentage of the
total number of shares of common stock outstanding as of December
31, 1998 owned by each person or group, excluding exercisable
warrants. The third column sets forth the total number of shares
of common stock which each named person or group has the right to
acquire, through the exercise of warrants, within sixty (60) days,
plus common stock currently owned. The fourth column sets forth
the percentage of the total number of shares of common stock
outstanding as of December 31, 1998 which would be owned by each
named person or group upon the exercise of all of the warrants
held by such person or group together with common stock currently
owned, as set forth in the third column. Except as otherwise
indicated, each person has the sole power to vote and dispose of
each of the shares listed in the columns opposite his name.

Amount and Nature Percent of
Name and Address of of Beneficial Percent of Ownership with Class with
Beneficial Owner Ownership(1) Class (2) Warrants (3) Warrants(4)

David L. Purdy (5) 400,140 * 1,167,340(6) *
300 Indian Springs Road
Indiana, PA 15701

Fred E. Cooper 776,200 * 1,076,200(7) *
Building 2500, 2nd Floor
2275 Swallow Hill Rd.
Pittsburgh, PA 15220

Anthony J. Feola 354,000 * 904,000(8) *
Building 2500, 2nd Floor
2275 Swallow Hill Rd.
Pittsburgh, PA 15220

Glenn Keeling 138,500 * 238,500(9) *
200 Julrich Drive
McMurray, PA 15317

All directors and 1,668,840 * 3,386,040(10) *
executive officers
as a group (4 persons)
* Less than one percent
________________________
(1) Excludes currently exercisable warrants set forth in the
third column and detailed in the footnotes below.

(2) Represents current common stock owned by each person, as set
forth in the first column, excluding currently exercisable
warrants, as a percentage of the total number of shares of
common stock outstanding as of December 31, 1998.

(3) Includes ownership of all shares of common stock which each
named person or group has the right to acquire, through the
exercise of warrants, within sixty (60) days, together with
the common stock currently owned.

(4) Represents total number of shares of common stock owned by
each person, as set forth in the third column, which each
named person or group has the right to acquire, through the
exercise of warrants within sixty (60) days, together with
common stock currently owned, as a percentage of the total
number of shares of common stock outstanding as of December
31, 1998. For computation purposes, the total number of
shares of common stock outstanding as of December 31, 1998
has been increased by the number of additional shares which
would be outstanding if the person or group owned the number
of shares set forth in the third column.

(5) Does not include shares held by Mr. Purdy's adult children.
Mr. Purdy disclaims any beneficial interest to shares held by
members of his family.

(6) Includes currently exercisable warrants to purchase the
following: 187,200 shares of common stock at $.25 per share
until April 24, 1995 (extended until April 24, 1999); 80,000
shares of common stock at $.33 per share until June 29, 1995
(extended until June 29, 1999); and 500,000 shares of common
stock at $.25 per share until May 1, 1995 (extended until May
1, 1999) pursuant to Mr. Purdy's previous employment
agreement. In addition, Mr. Purdy is entitled to certain
shares of Common Stock upon a change of control of BICO as
defined in his employment agreement (See, "Employment
Agreements").

(7) Includes currently exercisable warrants to purchase the
following: 300,000 shares of common stock at $.25 per share
until May 1, 1995 (extended until May 1, 1999) pursuant to
Mr. Cooper's previous employment agreement. In addition, Mr.
Cooper is entitled to certain shares of Common Stock upon a
change of control of BICO as defined in his employment
agreement (See, "Employment Agreements").

(8) Includes currently exercisable warrants to purchase the
following: 100,000 shares of common stock at $.25 per share
until November 26, 1995 (extended until November 26, 1999);
100,000 shares of common stock at $.25 per share until May 1,
1995 (extended until May 1, 1999) pursuant to Mr. Feola's
previous employment agreement; and 350,000 shares of common
stock at $.50 per share until October 11, 1996 (extended
until October 11, 1999). In addition, Mr. Feola is entitled
to certain shares of Common Stock upon a change of control of
BICO as defined in his employment agreement (See, "Employment
Agreements").

(9) Includes currently exercisable warrants to purchase 100,000
shares of common stock at $1.48 per share until August 26,
2001. In addition, Mr. Keeling is entitled to certain shares
of Common Stock upon a change of control of BICO as defined
in his employment agreement (See, "Employment Agreements").

(10) Includes shares of common stock, including stock currently
owned, available under currently exercisable warrants as set
forth above.

DESCRIPTION OF SECURITIES

BICO's authorized capital currently consists of 975,000,000
shares of common stock, par value $.10 per share and 500,000
shares of cumulative preferred stock, par value $10.00 per share.
As of December 31, 1998, there were 420,773,569 shares of common
stock and zero shares of preferred stock outstanding. In March
1999, the Company's shareholders approved the authorization of an
additional 375,000,000 shares of common stock.

Preferred Stock
The Articles of Incorporation of BICO authorize the issuance
of a maximum of 500,000 shares of non-voting cumulative
convertible preferred stock, and authorize the Board of Directors
of BICO to divide such class of preferred stock into series and
to fix and determine the relative rights and preferences of the
shares.

As of December 31, 1998, the Company had no outstanding
shares of preferred stock.

Common Stock
All the shares of common stock will be equal to each other
with respect to liquidation rights and dividend rights and there
are no preemptive rights to purchase any additional shares of
common stock. Holders of common stock are entitled to one vote
per share on all matters submitted to a vote of shareholders, but
are not entitled to cumulate their votes in the election of
directors. Accordingly, the holders of more than 50% of the
outstanding common stock voting for the election of directors,
could elect the entire slate of the Board of Directors of BICO,
and the holders of the remaining common stock would not be able to
elect any member to the Board of Directors. As of December 31,
1998, there were 420,773,569 shares of common stock outstanding.
In March 1999, the Company=s shareholders approved the
authorization of an additional 375,000,000 shares of common stock.

In the event of liquidation or dissolution of BICO, holders
of the common stock are entitled to receive on a pro rata basis
all assets of BICO remaining after satisfaction of all liabilities
including liquidation preferences granted to holders of the
preferred stock of BICO.

Convertible Debentures

As of December 31, 1998, the Company had outstanding
$2,825,000 in Convertible Debentures. The debentures are
convertible beginning ninety days from issuance into shares of
common stock. As of December 31, 1998 and 1997, the conversion
price of the debentures would have been approximately $.059 and
$.146 per share, respectively, based upon a formula which applies
a discount to the average market price for the previous week and
determined by the length of the holding period. As of December
31, 1998 and 1997, the number of shares issued upon conversion of
all outstanding debentures was approximately 60.1 million and 23.9
million shares, respectively, which would have reflected discounts
of approximately 23% and 18%, respectively. The convertible
debentures were sold pursuant to Section 4(2) and/or Regulation D,
bear a 4% interest rate, are redeemable by the Company at 115% of
face value, and are subject to mandatory conversion prior to or
upon one year from issuance.

Dividends

The Company has not paid cash dividends on its common stock
or preferred stock (with the exception of a cash dividend on its
preferred stock in 1983, and a common stock dividend on its
preferred stock in 1988) since its inception, and cash dividends
are not presently contemplated at any time in the foreseeable
future. The Company anticipates that any excess funds generated
from operations in the foreseeable future will be used for working
capital and for investment in research and new product
development, rather than to pay dividends.

In accordance with the Company's Articles of Incorporation,
cash dividends are restricted under certain circumstances.
Holders of common stock are entitled to cash dividends only when
and if declared by the Board of Directors out of funds legally
available for payment thereof. Any such dividends are subject to
the prior right of holders of the Company's preferred stock to
receive any accrued but unpaid dividends. Further, common stock
dividends may be paid only to the extent the net assets of BICO
exceed the liquidation preference of any outstanding preferred
stock.

Employment Agreement Provisions Related to Changes in Control

BICO has entered into agreements (the "Agreements") with Fred
E. Cooper, David L. Purdy, Anthony J. Feola, Glenn Keeling, and
two non-executive officer employees. The Agreements provide that
in the event of a "change of control" of BICO, BICO is required to
issue to Mr. Cooper and Mr. Purdy shares of common stock equal to
five percent (5%), to issue to Mr. Feola four percent (4%), to
issue Mr. Keeling three percent (3%), and to issue the two non-
executive officer employees two percent (2%) each of the
outstanding shares of common stock of the Company immediately
after the change in control. In general, a "change of control" is
deemed to occur for purposes of the Agreement: (i) when 20% or
more of BICO's outstanding voting stock is acquired by any person,
(ii) when one-third (1/3) or more of BICO's directors are not
Continuing Directors (as defined in the Agreements), or (iii) when
a controlling influence over the management or policies of BICO is
exercised by any person or by persons acting as a group within the
meaning of Section 13(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").

Warrants

As of December 31, 1998, there were outstanding warrants to
purchase 8,911,662 shares of the Company's common stock at
exercise prices of between $0.25 and $4.03 per share. These
warrants are held by members of the Company's Scientific Advisory
Board, certain employees, officers, directors, loan guarantors,
lenders and consultants.

The holders of warrants are not entitled to vote, to receive
dividends or to exercise any of the rights of the holders of
shares of common stock for any purpose until such warrants have
been duly exercised and payment of the exercise price has been
made.

Transfer Agent

Chase-Mellon Shareholder Services in New York, New York acts
as the Company's Registrar and Transfer Agent for its common and
preferred stock. The Company acts as its own warrant transfer
agent.

PLAN OF DISTRIBUTION

This Offering is a "best-efforts" offering, and will not be
underwritten nor will any underwriter be engaged for the
marketing, distribution or sale of any shares registered hereby.
The Primary Shares offered hereby by the Company may be sold from
time to time in one or more transactions at a price of $ .05 per
share. Such sales may be made to purchasers directly by the
Company or, alternatively, the Company may offer the shares
through dealers, brokers or agents, who may receive compensation
in the form of concessions or commissions from the Company and/or
the purchasers of the shares for whom they may act as agents. Any
dealers, brokers or agents that participate in the distribution of
shares may be deemed to be underwriters, and any profits on the
sale of the shares by them and any discounts or commissions
received by any such dealers, brokers or agents may be deemed to
be underwriting discounts and commissions under the 1933 Act.

To the extent required at the time a particular offer of the
shares by the Company is made, a supplement to this Prospectus
will be distributed which will set forth the number of shares
being offered and the terms of the offering, including the name or
names of any underwriters, or dealers, the purchase price paid by
any underwriter for the shares purchased from the Company, and any
discounts, commissions, or concessions allowed or reallowed to
dealers, including the proposed selling price to the public.

To comply with the securities laws of certain jurisdictions,
as applicable, the Primary Shares may be offered and sold only
through registered or licensed brokers or dealers. In addition,
the Primary Shares may not be offered or sold in certain
jurisdictions unless they are registered or otherwise comply with
the applicable securities laws of such jurisdictions by exemption,
qualification or otherwise.

SHARES ELIGIBLE FOR FUTURE SALE

So long as the Registration Statement concerning this
offering is effective under the 1933 Act and the Company remains
current in its information filing requirements under Rule 144,
promulgated under the 1933 Act, substantially all of the Resale
Shares will be freely transferable, or freely transferable upon
issuance in the case of shares issuable upon exercise of the
Warrants, without restriction or further registration under the
1933 Act, unless acquired by an affiliate of the Company.
"Affiliates" of the Company generally would include the directors
and executive officers of the Company and any other person or
entity which controls, is controlled by, or is under common
control with, the Company. Affiliates who acquire common stock
pursuant to this Prospectus will continue to be subject to the
volume restrictions of Rule 144, as set forth below.

In general, under Rule 144 as currently in effect, an
affiliate of the Company and any person (or persons whose shares
are aggregated) who has beneficially owned Restricted Shares for
at least two years would be entitled to sell within any three-
month period a number of shares which does not exceed the greater
of (i) one percent (1%) of the then outstanding shares of common
stock of the Company, or (ii) the average weekly trading volume of
the common stock on the open market during the four calendar weeks
preceding such sale. Rule 144 also requires such sales to be
placed through a broker or with a market maker on an unsolicited
basis and requires that there be adequate current public
information available concerning the Company. A person who is
deemed not to have been an affiliate of the Company at any time
during the three months preceding a sale, and who has beneficially
owned the Restricted Shares for at least two years, would be
entitled to sell such shares under Rule 144(k) without regard to
any of the limitations discussed above immediately following the
commencement of this offering. Restricted Shares properly sold in
reliance upon Rule 144 are thereafter freely tradable without
restriction or registration under the 1933 Act, unless thereafter
held by an affiliate of the Company.

The Company can make no prediction as to the effect, if any,
that sales of shares of common stock or the availability of shares
for sale will have on the market price prevailing from time to
time. Nevertheless, sales of substantial amounts of common stock
in the public market could adversely affect the prevailing market
price of the common stock.

INTERESTS OF NAMED EXPERTS AND COUNSEL

The validity for the issuance of the Primary Shares offered
hereby will be passed upon for the Company by Sweeney & Associates
P.C., Pittsburgh, Pennsylvania. Thomas E. Sweeney, Jr., Esq., the
President of Sweeney & Associates P.C., currently holds warrants
to purchase the following shares of the common stock of
Diasensor.com, an affiliate of the Company: 40,000 shares at $.50
per share until October 23, 2000 and 60,000 shares at $1.00 per
share until January 6, 2000.

EXPERTS

The financial statements of the Company as of December 31,
1998, 1997 and 1996, as well as the financial statements of
International Chemical Technologies, Inc. (>ICTI=) as of December
31, 1997 (which reports included an explanatory paragraph
referring to an uncertainty regarding the Company's ability to
continue as a going concern), incorporated in this Prospectus,
have been audited by Thompson Dugan, independent certified public
accountants, as stated in their report appearing in the Company's
Form 10-K for the year ended December 31, 1998 and the December
31, 1997 statements of ICTI, and have been so included in reliance
upon such report given upon the authority of that firm as experts
in auditing and accounting.

No dealer, salesman or other person has been authorized
to give any information or to make any representation
other than those contained in this Prospectus and, if
given or made, such information or representation must
not be relied upon as having been authorized by the
Company, the selling shareholders or any underwriter.
Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs
of the Company since the date of this Prospectus. This
Prospectus does not constitute an offer to sell or
solicitation of an offer to buy any securities offered
hereby in any jurisdiction in which such offer or
solicitation is not qualified to do so or to anyone to
whom it is unlawful to make such offer or solicitation.
__________________________

TABLE OF CONTENTS Page

Prospectus Delivery Requirements...........................ii
Incorporation by Reference.................................ii
The Company................................................1
Risk Factors...............................................2
Use of Proceeds............................................6
Dilution...................................................7
Capitalization.............................................8
Market Price for Common Stock..............................9
Description of Securities..................................43
Plan of Distribution.......................................44
Shares Eligible for Future Sale............................44
Legal Proceedings..........................................31
Interests of Named Experts and Counsel.....................45
Experts....................................................45
Indemnification of Directors and Officers..................45

575,000,000 Shares

BIOCONTROL TECHNOLOGY INC.

Common Stock

____________________

P R O S P E C T U S

____________________

April 14, 1999

THOMPSON DUGAN
CERTIFIED PUBLIC ACCOUNTANTS
________________________

Pinebridge Commons
1580 McLaughlin Run Rd.
Pittsburgh, PA 15241

Report of Independent Certified Public Accountants

Board of Directors
Biocontrol Technology, Inc.

We have audited the accompanying consolidated balance sheets
of Biocontrol Technology, Inc. and its subsidiaries as of December
31, 1998 and 1997, and the related consolidated statements of
operations, changes in stockholders' equity (deficiency) and cash
flows for each of the three years in the period ended December 31,
1998. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements
present fairly, in all material respects, the consolidated
financial position of Biocontrol Technology, Inc. and its
subsidiaries as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared
assuming that the Corporation will continue as a going concern.
As discussed in Note B to the financial statements, the
Corporation has incurred losses and negative cash flows from
operations in recent years through December 31, 1998 and these
conditions are expected to continue through 1999, raising
substantial doubt about the Corporation's ability to continue as a
going concern. Management's plans in regard to these matters are
also discussed in Note B. These financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

Pittsburgh, Pennsylvania
March 25, 1999

<PAGE> F-1
<TABLE>
Biocontrol Technology, Inc. and Subsidiaries
Consolidated Balance Sheets
<CAPTION>

Dec. 31, 1998 Dec. 31, 1997
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents (note A) $ 125,745 $ 2,759,067
Accounts receivable - net of allowance for doubtful accounts
of $27,059 at Dec. 31, 1998 and $14,931 at Dec. 31, 1997 55,959 383,747
Inventory - net of valuation allowance (notes A and D) 74,515 1,834,018
Notes receivable - related parties (notes C and L) 0 35,000
Notes receivable (note C) 0 87,000
Interest receivable (note C) 0 2,134
Prepaid expenses 170,544 137,862
Advances - Officers 0 34,732
------------- -------------

TOTAL CURRENT ASSETS 426,763 5,273,560

PROPERTY, PLANT AND EQUIPMENT (notes A and H)
Building 1,429,906 1,444,273
Land 133,750 246,250
Construction in progress 0 1,465,152
Leasehold improvements 1,477,573 1,197,977
Machinery and equipment 5,014,103 5,042,736
Furniture, fixtures & equipment 794,740 812,221
------------- -------------
Subtotal 8,850,072 10,208,609

Less accumulated depreciation 4,244,650 3,516,677
------------- -------------
4,605,422 6,691,932

OTHER ASSETS
Related Party Receivables
Notes receivable - (notes C and L) 1,223,900 623,900
Interest receivable - (notes C and L) 155,628 75,343
Advances-Officers 90,779 0
------------- -------------
1,470,307 699,243
Allowance for related party receivables (1,270,307) 0
------------- ------------
200,000 699,243

Notes receivable - (notes C) 142,493 0
Interest receivable 19,778 0
Goodwill, net of amortization - (note A) 4,423,421 0
Deposit on equipment 0 300,000
Patents, net of amortization (note A) 2,433 6,765
Other assets 15,259 9,800
------------- -------------
4,803,384 1,015,808
------------- -------------
TOTAL ASSETS $ 9,835,569 $ 12,981,300
============= =============

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE> F-2
<TABLE>
Biocontrol Technology, Inc. and Subsidiaries
Consolidated Balance Sheets
(Continued)
<CAPTION>

Dec. 31,1998 Dec. 31, 1997
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,750,188 $ 646,535
Current portion of long-term debt (note G) 4,552,178 18,765
Current portion of capital lease obligations (note H) 99,061 109,933
Debentures payable (note I) 2,825,000 3,301,280
Accrued liabilities (note E) 1,096,644 215,119
Escrow payable (note J) 2,700 2,700
Deferred revenue on contract billings (note A) 0 116,146
------------- -------------
TOTAL CURRENT LIABILITIES 10,325,771 4,410,478

LONG-TERM LIABILITIES
Capital lease obligations (note H) 1,412,880 2,688,293
Long-term debt (note G) 0 8,806
------------- -------------
1,412,880 2,697,099

COMMITMENTS AND CONTIGENCIES (notes M)

UNRELATED INVESTORS'INTEREST
IN SUBSIDIARY (note A) 24,162 1,409,647

STOCKHOLDERS' EQUITY (notes J and O)

Common stock, par value $.10 per share,
authorized 600,000,000 shares, issued and
outstanding 420,773,568 at Dec. 31, 1998 and
138,583,978 at Dec. 31, 1997 42,077,357 13,858,398
Additional paid-in capital 92,725,285 104,932,920
Notes receivable issued for common stock-related party (note L) (25,000) (25,000)
Warrants 6,396,994 6,396,994
Accumulated deficit (143,101,880) (120,699,236)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY (1,927,244) 4,464,076
-------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDER' EQUITY $9,835,569 $12,981,300
============= =============

The accompanying notes are an integral part of these statements.

</TABLE>
<PAGE> F-3
<TABLE>
BIOCONTROL TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Revenues
Net Sales $1,145,968 $ 1,155,907 $ 597,592
Interest income 182,033 165,977 176,478
Other income 50,212 104,250 2,657
------------- ------------- -------------
1,378,213 1,426,134 776,727

Costs and expenses
Cost of products sold 587,821 641,331 325,414
Research and development (notes A and L) 6,340,676 6,977,590 8,742,922
General and administrative 11,560,345 12,695,628 8,963,693
Loss on disposal of assets 531,066 8,518 -
Debt issue costs (note A) 1,865,682 3,306,812 502,000
Warrant extensions (note J) - - 604,342
Warrant extensions - Subsidiary (note J) - 4,046,875 8,571,033
Interest expense 481,025 315,624 133,460
Beneficial convertible debt feature (note P) 3,799,727 6,278,853 1,650,000
------------- ------------- -------------
25,166,342 34,271,231 29,492,864
------------- ------------- -------------

Loss before unrelated investors' interest (23,788,129) (32,845,097) (28,716,137)

Unrelated investors' interest in net loss of
subsidiary 1,385,485 2,411,920 4,670,435
------------- ------------- -------------

Net loss (note P) $(22,402,644) $ (30,433,177) $ (24,045,702)
============= ============= ==============

Loss per common share (notes A and P) ($0.08) ($0.43) ($0.57)
============= ============== ==============

The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-4
<TABLE>

Biocontrol Technology, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

Note rec.
Preferred Stock Common Stock issued for Additional
--------------- ---------------- Common Stk Paid in Accumulated
Shares Amount Shares Amount Warrants Rel Party Capital Deficit Total
------- -------- --------- ---------- ---------- --------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 3,790 37,900 37,021,118 3,702,112 6,677,820 - 59,849,875 (66,220,357) 4,047,350
-------- ------- ---------- ---------- ---------- --------- ---------- ------------ -----------
Proceeds from stock offering - - 7,839,065 783,907 - - 12,571,822 - 13,355,729
Conversion of preferred stk. (22,730)(227,300) 1,958,602 195,860 - - 31,440 - -
Cash redemp. at par-pref stk. (1,060) (10,600) - - - - - - (10,600)
Proceeds from sale of
preferred stk.- series A 20,000 200,000 - - - - 1,640,000 - 1,840,000
Conversion of debenture - - 2,275,005 227,500 - - 1,799,623 - 2,027,123
Warrant extensions - - - - 604,342 - - - 604,342
Warrant extensions - sub. - - - - - - 4,441,262 - 4,441,262
Change in ownership int.-sub. - - - - - - (22,873) - (22,873)
Warrants exercised - - 120,000 12,000 (375,000) - 393,600 - 30,600
Issuance of convertible
debt (note P) - - - - - - 1,650,000 - 1,650,000
Net loss (note P) - - - - - - - (24,045,702) (24,045,702)
-------- -------- ----------- ---------- ---------- -------- ------------ -------------- ----------
Balance at Dec. 31, 1996 - - 49,213,790 4,921,379 6,907,162 - 82,354,749 (90,266,059) 3,917,231
-------- -------- ----------- ---------- ---------- -------- ------------ ------------ ----------
Proceeds from stk offering - - 1,705,000 170,500 - - 765,648 - 936,148
Conversion of preferred stk. (22,000)(220,000) 6,913,366 691,337 - - (471,337) - -
Proceeds from sale of
preferred stk.-Series B 22,000 220,000 - - - - 1,807,000 - 2,027,000
Conversion of debenture - - 80,599,022 8,059,902 - - 11,554,077 - 19,613,979
Warrant extensions - sub. - - - - - - 2,108,421 - 2,108,421
Change in ownership int-sub. - - - - - - 2,421 - 2,421
Warrants exercised - - 152,800 15,280 (510,168) (25,000) 533,088 - 13,200
Issuance of convertible
debt (note P) - - - - - - 6,278,853 - 6,278,853
Net loss (note P) - - - - - - - (30,433,177) (30,433,177)
-------- ------- ---------- ---------- --------- ------- --------- ----------- -----------
Balance at Dec. 31, 1997 - - 138,583,978 13,858,398 6,396,994 (25,000) 104,932,920 (120,699,236) 4,464,076
-------- ------- ---------- ---------- -------- ------- ---------- ------------ ----------
Proceeds from stock offering - - 2,055,000 205,500 - - 22,423 - 227,923
Conversion of debenture - - 280,134,590 28,013,459 - - (16,029,785) - 11,983,674
Issuance of convertible debt - - - - - - 3,799,727 - 3,799,727
Net Loss - - - - - - - (22,402,644) (22,402,644)
-------- ------- ---------- ---------- ---------- --------- ---------- ------------ ------------
-------- -------- ----------- ---------- ----------- --------- ----------- ------------- ----------
Balance at Dec. 31, 1998 - $ - 420,773,568 $42,077,357 $6,396,994 ($25,000) $92,725,285 ($143,101,880) ($1,927,244)
======== ======== =========== =========== =========== ========= =========== ============== ===========

The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE> F-5
<TABLE>

Biocontrol Technology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<CAPTION>

Year ended December 31,

1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows used by operating activities:
Net loss ($22,402,644) ($30,433,177) ($24,045,702)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 1,706,537 850,802 587,507
Loss of disposal of assets 531,066 - -
Unrelated investors' interest in susidiary (1,385,485) (2,411,920) (4,670,435)
Stock issued in exchange for services (22,063) 936,148 17,200
Stock issued in exchange for services by subsidiary - 600 7,000
Debenture interest converted to stock 106,894 164,055 -
Premium for extension on Debenture 680,500 527,113 -
Beneficial convertible debt feature 3,799,727 6,278,853 1,650,000
Provision for potential loss on notes receivable 1,270,307 - -
Warrant extensions - - 604,342
Warrant extensions by subsidiary - 4,046,875 8,571,033
(Decrease)increase in allowance for losses on accounts receivable 12,128 (180,909) 195,840
(Increase) in accounts receivable 268,195 (137,651) (92,083)
(Increase) in inventories 987,948 (586,029) (1,679,981)
(Increase) in inventory valuation allowance 779,050 2,092,131 -
(Increase) decrease in prepaid expenses (31,495) 113,397 (128,883)
(Increase) decrease in other assets 36,927 3,713 (2,445)
Increase (decrease) in accounts payable 1,078,124 (388,636) (803,237)
Increase (decrease) in other liabilities 845,136 66,737 (35,960)
(Decrease) in deferred revenue (116,146) (63,854) (146,000)
------------- ------------- -------------
Net cash flow used by operating activities (11,855,294) (19,121,752) (19,971,804)
------------- ------------- -------------
Cash flows from investing activities:
Purchase of property, plant and equipment (111,216) (845,512) (954,610)
(Increase) in notes receivable (31,493) (313,000) (50,000)
Deposit on equipment - (300,000) -
(Increase) in interest receivable (97,929) (23,519) (11,721)
Acquisition of ICTI (1,030,000) - -
------------- ------------- -------------
Net cash used by investing activites (1,270,638) (1,482,031) (1,016,331)
------------- ------------- -------------

Cash flows from financing activities:
Proceeds from stock offering - - 13,338,531
Proceeds from sale by subsidiary of its common stock - 3,500 (172,315)
Proceeds from warrants exercised - 13,200 30,600
Proceeds from warrants exercised-subsidiary - - 2,000
Proceeds from sale of Preferred stock-Series A - - 1,840,000
Proceeds from sale of Preferred stock-Series B - 2,027,000 -
Cash redemption at par - Preferred stock - - (7,900)
Proceeds from debentures payable 10,720,000 20,230,000 6,600,000
Payments on debentures payable - (2,605,833) -
Payments on notes payable (675,393) (41,904) (19,509)
Increase in notes payable 550,000 - -
Payments on capital lease obligations (101,997) (65,987) (24,899)
------------- ------------- -------------
Net cash provided by financing activities 10,492,610 19,559,976 21,586,508

Net increase (decrease) in cash (2,633,322) (1,043,807) 598,373
------------- ------------- -------------
Cash and cash equivalents, beginning of year 2,759,067 3,802,874 3,204,501
------------- ------------- -------------
Cash and cash equivalents, end of year $ 125,745 $2,759,067 $3,802,874
============= ============= =============

The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>F-6
<TABLE>

Biocontrol Technology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Continued)

<CAPTION>
Year ended December 31,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
Supplemental Information:
Interest paid $ 364,716 $ 155,647 $ 72,578
============= ============ ============

Supplemental schedule of non-cash
investing and financing activities:

Acquisition of equipment with note payable $ - $ - $ 145,063
============= =========== ============

Acquisition of ICTI with note payable $ 3,350,000 $ - $ -
============= =========== ============

Acquisition of property under a capital lease:
Building $ - $ - $ 1,205,760
Land - - 246,250
Construction in progress - - 1,137,500
Equipment 24,050 154,539 -
------------- ------------- -------------
$ 24,050 $ 154,539 $ 2,589,510
============= ============= =============

Capital Lease Termination
Reduction of capital lease obligation $ 1,184,288 $ - $ -
============= ============= =============
Reduction of property
Construction of Progress $ 1,459,110 $ - $ -
Land 112,500 - -
------------- ------------- -------------
$ 1,571,610 $ - $ -
============= ============= =============

Conversion of Series I-preferred stock for common stock:
Common stock $ - $ - $ 2,730
Additional paid-in capital - - 24,570
------------- ------------- -------------
$ - $ - $ 27,300
============= ============= =============

Redemption of preferred stock held in escrow $ - $ - $ 2,700
============= ============= =============
Conversion of Series A - preferred stock for common stock:
Common stock $ - $ - $ 193,130
Additional paid in capital - - 6,870
------------- ------------- -------------
$ - $ - $ 200,000
============= ============= =============

Conversion of Series B- preferred stock for common stock:
Common stock $ - $ 220,000 $ -
Additional paid-in capital - 1,807,000 -
------------- ------------- -------------
$ - 2,027,000 $ -
============= ============= =============

Conversion of debentures for common stock $ 11,876,780 $19,449,924 $ 2,000,000
============= ============= =============

Converion of debenture interest for common stock $ 106,894 $ 164,055 $ 27,122
============= ============= =============
Stock granted to related party for note receivable $ - $ 25,000 $ -
============= ============= =============
Conversion of warrants for common stock $ - $ 510,168 $ 375,000
============= ============= =============

The accompanying notes are an integral part of these statements.
</TABLE>

NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

1. Organization

Biocontrol Technology, Inc. - BICO (the Company) and its
subsidiaries are engaged in the development, manufacturing
and marketing of biomedical products and biological
remediation products.

2. Principles of Consolidation

The consolidated financial statements include the accounts
of: Diasensor.com, Inc. (Diasense) a 52% owned subsidiary
as of December 31, 1998 and 1997; Petrol Rem, Inc., a 67%
owned subsidiary as of December 31, 1998 and 1997; IDT,
Inc., a 99.1% owned subsidiary as of December 31, 1998 and
1997; International Chemical Technologies, Inc., a 58.4%
owned subsidiary as of December 31, 1998 and Barnacle Ban
Corporation, a 100% owned subsidiary as of December 31,
1998 and 1997. All significant intercompany accounts and
transactions have been eliminated. Subsidiary losses in
excess of the unrelated investors' interest are charged
against the Company's interest.

3. Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company
considers all highly liquid investments with a maturity of
three months or less at acquisition to be cash
equivalents.

4. Inventory

Inventory is valued at the lower of cost (first-in, first-
out method) or market. An inventory valuation allowance
is provided against finished goods and raw materials for
products for which a market has not yet been established.

5. Property and Equipment

Property and equipment are accounted for at cost and are
depreciated over their estimated useful lives on a
straight-line basis. Amortization of assets recorded
under capital leases is included with depreciation
expense.

6. Patents

Patents are amortized over their legal or useful lives,
whichever is less. Accumulated amortization on patents
was $94,508 and $90,176 at December 31, 1998, and 1997,
respectively.

7. Goodwill

The Company recognized $5,310,501 of goodwill in
connection with a Stock Purchase Agreement dated February
20, 1998 to acquire 58.4% of International Chemical
Technologies, Inc. For purposes of amortizing this
goodwill, management has determined a useful life of 5
years. Accumulated amortization on goodwill was $878,080
at December 31, 1998.

8. Deferred Revenue on Contract Billings

Revenue is recognized from sales when products are shipped
and/or services performed. Advance billings are recorded
as deferred revenue until shipment or performance.

9. Loss Per Common Share

Loss per common share is based upon the weighted average
number of common shares outstanding which amounted to
266,362,526 shares in 1998, 71,415,351 shares in 1997 and
42,266,597 shares in 1996, respectively. Shares issuable
under stock options, stock warrants, convertible
debentures and convertible preferred stock are excluded
from computations, as their effect is antidilutive.

10. Research and Development Costs

Research and development costs are charged to operations
as incurred. Machinery, equipment and other capital
expenditures, which have alternative future use beyond
specific research and development activities, are
capitalized and depreciated over their estimated useful
lives.

11. Income Taxes

The Company previously adopted Statement of Financial
Accounting Standards No. 109 (FAS 109), Accounting for
Income Taxes, which requires the asset and liability method
of accounting for income taxes. Enacted statutory tax
rates are applied to temporary differences arising from the
differences in financial statement carrying amounts and the
tax bases of existing assets and liabilities. Due to the
uncertainty of the realization of income tax benefits,
(Note K), the adoption of FAS 109 had no effect on the
financial statements of the Company.

12. Interest

The Company follows the policy of capitalizing interest as
a component of the cost of property, plant and equipment
constructed for its own use. Total interest incurred for
the periods December 31, 1998, 1997, and 1996 was $589,300
$528,942, and $236,280, respectively, of which $481,025,
$315,624, and $133,460, respectively, was charged to
operations.

13. Estimates and Assumptions

The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates. The Company has
established allowances based upon management's evaluation
of inventories, accounts receivable, and receivables from
related parties.

14. Common Stock Warrants

The Company recognizes cost, if any, on warrants granted
based upon the excess of the market price of the underlying
shares of common stock as of the warrant grant date over
the warrant exercise price. Had the Company adopted the
fair value based accounting method for recognizing stock-
based compensation (as permitted by Financial Accounting
Standard No. 123) its reported net losses (utilizing the
Black-Scholes method of valuation) for the periods ending
December 31, 1998, 1997 and 1996 would have been
approximately $25,500,000, $33,400,000, and $25,800,000,
respectively. Net loss per share under the fair value
based accounting method for the periods ending December 31,
1998, 1997 and 1996 would have been approximately $.10,
$.47, and $.92, respectively.

15. Debt Issue Costs

The Company follows the policy of expensing debt issue
costs on debentures during the period of debenture
issuance. Total debt issue costs incurred for the periods
December 31, 1998, 1997, and 1996 was $1,865,682,
$3,306,812, and $502,000, respectively.

16. Concentration of Credit Risk

Financial instruments, which potentially subject the
Company to significant concentrations of credit risk,
consist principally of cash investments at commercial banks
and receivables from officers and directors of the Company.
Cash and cash equivalents are temporarily invested in
interest bearing accounts in financial institutions, and
such investments may be in excess of the FDIC insurance
limit. Receivables from directors and officers of the
Company (Note C and L) are unsecured and represent a
concentration of credit risk due to the common employment
and financial dependency of these individuals on the
Company.

17. Comprehensive Income

The Company's consolidated net income (loss) is
substantially the same as comprehensive income to be
disclosed under Statement of Financial Accounting
Standards No. 130.

18. Beneficial Convertible Debt Feature

Beneficial conversion terms included in the Company's
convertible debentures are recognized as expense and
additional paid in capital at the time the associated
debentures are issued.

19. Reclassification

Certain items included in the financial statements of
prior periods have been reclassified to conform to
classifications in the 1998 financial statements. Such
reclassification had no effect on prior year reported net
losses.

NOTE B - OPERATIONS AND LIQUIDITY

The Company and its subsidiaries have incurred substantial
losses in 1998 and in prior years and have funded their
operations and product development primarily through the
sale of stock and issuance of debt instruments. Until
such time that products can be successfully developed and
marketed, the Company and its subsidiaries will continue
to need to fulfill working capital requirements through
the sale of stock and issuance of debt. The inability of
the Company to continue its operations, as a going concern
would impact the recoverability and classification of
recorded asset amounts.

The ability of the Company to continue in existence is
dependent on its having sufficient financial resources to
complete the research and development necessary to
successfully bring products to market and for marketplace
acceptance. As a result of its significant losses,
negative cash flows from operations, and significant
accumulated deficits for each of the periods ending
December 31, 1998, 1997 and 1996, there is substantial
doubt about the Company's ability to continue as a going
concern.

Management believes that its currently available working
capital, anticipated contract revenues, subsequent sales
of stock and future debt issuance will be sufficient to
meet its projected expenditures for a period of at least
twelve months from December 31, 1998.

NOTE C - NOTES RECEIVABLE

Notes receivable due from various related and unrelated
parties consisted of:

Dec. 31, Dec. 31,
1998 1997
Related Parties
Note receivable from Fred E.
Cooper, Chief Executive
Officer, payable upon demand $ 8,500 $ 8,500
with 12% interest.

Note receivable from Fred E.
Cooper, Chief Executive
Officer, payable upon demand 82,400 82,400
with 10% simple interest.

Note receivable from Fred E.
Cooper, Chief Executive
Officer, payable upon demand 83,000 83,000
with 8.25% simple interest.

Note receivable from Fred E.
Cooper, Chief Executive
Officer, payable upon demand 25,000 25,000
with 8.25% simple interest.

Note receivable from Fred E.
Cooper, Chief Executive
Officer, payable upon demand 35,000 35,000
with 8.25% simple interest.

Note receivable from Fred E.
Cooper, Chief Executive
Officer, payable upon demand 15,000 15,000
with 8.25% simple interest.

Note receivable from Fred E.
Cooper, Chief Executive
Officer, payable upon demand 25,000 -
with 8.25% simple interest.

Note receivable from Fred E.
Cooper, Chief Executive
Officer, payable upon demand 250,000 -
with 8.25% simple interest.

Note receivable from Glenn
Keeling, Director,
Payable upon demand with 10% 5,000 5,000
simple interest.

Note receivable from Glenn
Keeling, Director
Payable upon demand with 8.25% 50,000 50,000
interest.

Note receivable from Glenn
Keeling, Director
Payable upon demand with 8.25% 190,000 -
interest.

Note receivable from Glenn
Keeling, Director
Payable upon demand with 8.25% 20,000 20,000
interest.

Note receivable from T.J. Feola,
Director
Payable upon demand with 8.25% 50,000 50,000
interest.

Note receivable from T.J. Feola,
Director
Payable upon demand with 8.25% 185,000 -
interest.

Note receivable from Dave Purdy,
T.J. Feola, Fred Cooper, Glenn - 35,000
Keeling, all directors who are
jointly liable to the company.

Note receivable from Allegheny
Food Services, Inc. of which
Joseph Kondisko, a former 200,000 250,000
director, is principal owner,
payable in monthly installments
of $3,630, including interest at
9.25%, with a final balloon
payment on April 1, 2001.

Unrelated Parties
-----------------
Note receivable from an
individual, payable upon
Demand with 8.75% interest. 12,000 12,000

Note receivable from
HemoCleanse, Inc., payable
without Interest on demand. - 75,000

Note receivable from HemoCleanse
Inc, payable on demand after
December 31,2002 with interest
accrued at a Rate of 20% per annum. 130,493 -
----------- ---------
1,366,393 745,900
Less current notes receivable 0 122,000
----------- ---------
Noncurrent $ 1,366,393 $ 623,900
============== ===========

Accrued interest receivable on the related party notes as
of December 31, 1998 and 1997 was $155,628 and $75,343,
respectively.

Due to the financial dependency of the above officers and
directors on the Company, an allowance of $1,270,307 was
provided by Management during 1998.

NOTE D - INVENTORY

Inventories consisted of the following as of:

Dec. 31, Dec. 31,
1998 1997

Raw materials $ 3,498,976 $ 4,380,254
Work-in-process 0 47,976
Finished goods 954,589 1,005,788
------------ -------------
4,453,565 5,434,018
Less valuation allowance (4,379,050) (3,600,000)
------------- -------------
$ 74,515 $ 1,834,018
============= =============

The inventory valuation allowance was increased to
$4,379,050 in 1998, from $3,600,000 in 1997 and $
1,507,869 in 1996 based upon management's estimation of
market value of materials for products for which a market
has not yet been established.

NOTE E - ACCRUED LIABILITIES

Accrued liabilities consisted of the following as of:

Dec. 31, Dec. 31,
1998 1997
Current
Accrued interest $ 276,378 $ 37,347
Accrued payroll 733,657 12,500
Accrued payroll taxes 1,919 13,606
and withholdings
Accrued vacation 46,654 87,652
Other accrued liabilities 38,036 64,014
----------- ---------
$ 1,096,644 $215,119
=========== =========

NOTE F - BUSINESS SEGMENTS

The Company operates in three reportable business segments:
Biomedical devices, which includes the operations of Biocontrol
Technology, Inc., and Diasensor.com, Inc.; Bioremediation, which
includes the operations of Petrol Rem, Inc.; and Marine Paint
Products, which includes the operations of Barnacle Ban
Corporation. Following is summarized financial information for
the Company's reportable segments:

<TABLE>
Biomedical Bioremediation Marine All Consolidated
Devices Paint Other
Products
<S> <C> <C> <C> <C> <C>

1998
Sales to external customers 1,028,484 45,382 40,835 31,267 1,145,968
Cost of products sold 483,388 33,061 32,777 38,595 587,821
Gross profit (Loss) 545,096 12,321 8,058 (7,328) 558,147
Identifiable assets 8,614,498 168,315 8,770 1,043,986 9,835,569
Capital expenditures 105,827 0 0 5,389 111,216
Depreciation & amortization 1,563,366 36,061 5,938 105,504 1,710,869

1997
Sales to external customers $ 880,919 $138,362 $136,624 $ 0 $ 1,155,905
Cost of product sold 445,843 88,178 107,310 0 641,331
Gross profit 435,076 50,184 29,314 0 514,574
Identifiable assets 11,122,314 602,460 56,860 999,666 12,981,300
Capital expenditures 661,095 4,460 8,680 526,933 1,000,051
Depreciation & amortization 720,150 33,976 2,751 93,925 850,802

1996
Sales to external customers 508,561 47,625 41,406 0 597,592
Cost of products sold 288,537 16,092 20,785 0 325,414
Gross profit 220,024 31,533 20,621 0 272,178
Identifiable assets 13,683,657 380,851 96,710 382,773 14,543,991
Capital expenditures 3,362,400 9,188 23,755 293,840 3,689,183
Depreciation & amortization 498,256 35,725 5,406 48,120 587,507

</TABLE>

NOTE G - LONG TERM DEBT

Long term debt consisted of the following as of:
Dec. 31, Dec. 31,
1998 1997

Note Payable to individuals with interest at $ 250,000 $ 0
prime plus 2%, collateralized by a
confession of judgement, payable in monthly
installments of $60,000 beginning on
February 10, 1999 with a final balloon
payment of all remaining principal and
interest on May 10, 1999.

Note Payable in connection with stock 2,900,000 0
purchase agreement for 58.4% interest in
International Chemical Technologies, Inc.
(ICTI). The note bears interest at a rate of
8% and is collateralized by the shares of
ICTI purchased in the transaction. The note
is payable in monthly installments as
follows: (I) on the first day of each
calendar month from April 1,1998 through and
including September 1, 1998 a principal
payment of $ 150,000 per month plus interest
(ii) on October 1, 1998, a principal
payment of $1,000,000 plus accrued interest
(iii) on the first day of each calendar
month from November 1, 1998 through and
including November 1, 1999 a principal
payment of $ 100,000 per month plus accrued
interest and (iv) on December 1, 1999 a
final payment equal to the remaining
outstanding principal balance plus all
accrued interest thereon. At December 31,
1998, the Company was, and continues to be,
in default on the terms of this loan.
Accordingly, the unpaid balance could be
declared immediately due and payable at the
option of the lender.

Note Payable by the Company's subsidiary, 1,191,667 0
International Chemical Technologies, Inc.
(ICTI) to, it's former shareholder. The
loan is guaranteed by the Company and
collateralized by all tangible and
intangible assets of ICTI, and assignment of
ICTI's interest in its lease for its
production facilities. Principle and
interest at 9.5% per annum are payable in
thirty-five equal monthly installments of
$36,111 each commencing on April 1,1998 with
a final payment of all remaining principal
and interest due on March 1, 2001. At
December 31, 1998, the Company was, and
continues to be in default on the terms of
this loan. Accordingly, the unpaid balance
could be declared immediately due and
payable at the option of the lender.

Commercial Premium Finance Agreement payable 53,296 0
in nine monthly installments of $7,818
including interest at 8% per annum beginning
November 1, 1998.

Note Payable due on January 5, 1999 with 150,000 0
interest at a rate of 8% per annum.
Collateralized by 5,444,644 shares of the
Company's common stock.

Note Payable to a bank in monthly payments
of $999 including interest at a rate of 7.35%. - 13,007
Collateralized by cash on deposit.

Note Payable in monthly payments of $374
including interest at a rate of 18.00%. 2,682 5,452
Collateralized by equipment.

Note Payable to a bank in monthly payments
of $433 including interest at a rate of 8.75%. 4,533 9,112
Collateralized by equipment.
---------- ---------
4,552,178 27,571

Current portion of long-term debt 4,552,178 18,765
---------- ---------
Long-term debt $ 0 $ 8,806
=========== =========

NOTE H - LEASES

Operating Leases

The Company is committed under a noncancelable operating
lease for its research and product development facility.
The lease between the Company and a group of investors
(lessor) which includes four of the Company's Executive
Officers and/or Directors is for a period of 240 months
beginning September 1, 1990. Monthly rental under the
terms of the lease is $8,810 for a period of 119 months to
August 1, 2000 when the monthly rental payments shall be
fixed at an amount equal to the fair rental value of the
property as determined by mutual agreement of lessor and
the Company for the balance of the lease. Total rent
expense was $ 105,720 in each of the years 1998, 1997 and
1996. Future minimum lease payments as of December 31,
1998 are $ 105,720 for 1999 and $61,670 for 2000 on which
date the rental payments shall be renegotiated.

The Company and its related subsidiaries also lease other
office facilities, various equipment and automobiles under
operating leases expiring in various years through 2002.
Total lease expense related to these leases was $173,609,
$295,809, and $239,096 in the years ended December 31,
1998, 1997 and 1996, respectively.

During 1996, the Company leased two manufacturing
buildings under capital leases expiring in various years
through 2011. The assets and liabilities under capital
leases are recorded at the lower of the present value of
the minimum lease payments or the fair value of the asset.
The assets are depreciated over the lower of their related
lease terms or their estimated productive lives.
Depreciation of assets under capital leases is included in
depreciation expense.

During 1998, the Company terminated the lease of one of
its two manufacturing buildings in response to the filing
of a judgement for nonpayment under the terms of the
lease. The company recognized a loss of $387,321 based
upon the difference between the remaining lease obligation
and the property relinquished.

The following is a summary of property held under capital
leases:

Dec. 31, Dec. 31,
1998 1997

Building $ 1,207,610 $ 1,207,610
Construction in Progress 0 1,465,152
Land 133,750 246,250
Equipment 289,531 297,828
----------- ---------
Sub Total 1,630,891 3,216,840

Less: Accumulated Depreciation 277,069 159,129
----------- ---------
Total Property under Capital Leases $ 1,353,822 $ 3,057,711
=========== ===========

Minimum future lease payments to related and unrelated
parties are as follows:

Related Unrelated
Parties Parties Total

1999 105,720 423,314 529,034
2000 61,670 360,586 422,256
2001 0 337,893 337,893
2002 0 268,724 268,724
2003 0 252,720 252,720
Thereafter 0 1,630,566 1,630,566
-------- --------- ---------
Future minimum lease
payments 167,390 3,273,803 3,441,193
======== ========= =========

NOTE I - SUBORDINATED CONVERTIBLE DEBENTURE

During 1998, 1997 and 1996 the Company issued subordinated
4% convertible debentures totaling $10,720,000,
$20,230,000 and $6,600,000, respectively. Such
convertible debentures were issued pursuant to Regulation
S, Regulation D, and/or Section 4(2) and have a one-year
mandatory maturity and are not saleable or convertible for
a minimum of 45 to 90 days from issuance. At December 31,
1998 and 1997, the subordinated convertible debentures
totaled $2,825,000 and $3,301,280, respectively.

As of December 31, 1998, and 1997, the conversion price of
the debentures would have been approximately $.059 and
$.146 per share, respectively, based upon a formula which
applies a discount to the average market price for the
previous week and determined by the length of the holding
period. As of December 31, 1998, and 1997, the number of
shares issuable upon conversion of all outstanding
debentures was approximately 60.1 million and 23.9 million
shares, respectively, which would have reflected discounts
of approximately 23% and 18%, respectively.

NOTE J - STOCKHOLDERS' EQUITY

The Board of Directors of the Company may issue preferred
stock in series, which would have rights as determined by
the Board.

During 1996, 2,730 shares of the Series I preferred stock
were converted to common stock, 790 shares were redeemed
for cash and an escrow payable of $2,700 was established
for the redemption of the remaining 270 shares.

During 1996, 20,000 shares of the Series A convertible
preferred stock were sold and converted.

During 1997 22,000 shares of the Series B convertible
preferred stock were sold and converted.

Common Stock Warrants

During 1998, warrants ranging from $.05 to $2.00 per share
to purchase 2,670,000 shares of common stock were granted
at exercise prices which were equal to or above the
current quoted market price of the stock on the date
issued. Warrants to purchase 7,831,662 shares of common
stock were exercisable at December 31, 1998. The per
share exercise prices of these warrants are as follows:

Shares Exercise
Price
20,000 $.05
20,000 $.06
400,000 $.13
10,000 $.22
1,226,700 $.25
80,000 $.33
50,000 $.38
1,482 $.45
350,000 $.50
3,484,000 $1.00
200,000 $1.25
150,000 $1.48
2,000 $1.69
1,425,000 $2.00
2,000 $2.09
94,000 $2.125
2,000 $2.13
69,480 $2.25
50,000 $2.41
105,000 $2.75
25,000 $3.00
25,000 $3.20
5,000 $3.31
25,000 $3.50
10,000 $4.03
----------
Total 7,831,662
==========

The fiscal year in which common stock warrants were
granted and the various expiration dates by fiscal year
are as follows:

Fiscal Warrants Warrants Expire During Fiscal Year
Year Granted 1999 2000 2001 2002 2003
Granted

1990 406,700 - - 226,700 - 180,000

1991 1,251,482 351,482 - 900,000 - -

1992 25,000 - 25,000 - - -

1993 154,000 - - 144,000 - 10,000

1994 130,000 130,000 - - - -

1995 21,000 - 21,000 - - -

1996 609,480 59,480 - 550,000 - -

1997 2,544,000 200,000 - 1,400,000 944,000 -

1998 2,690,000 - - - 1,200,000 1,490,000
--------- ------- ------- ------ --------- ---------
7,831,662 740,962 46,000 3,220,700 2,144,000 1,680,000
========= ========= ======= ========= ========= =========
The following is a summary of warrant transactions during
1998:

Outstanding beginning of period: 5,346,662
Granted during the twelve-month period: 2,690,000
Canceled during the twelve-month period: 205,000
Exercised during the twelve-month period: 0
----------
Outstanding and eligible for exercise: 7,831,662
==========

Common Stock Reserve

At December 31, 1998 the Company has reserved unissued
common stock as follows:

Warrants 7,831,662
Convertible debentures 63,422,600
Loan Security 5,444,644
----------
Total 76,698,906
==========

Warrant Extensions

During 1998, the Company extended the exercise date of
warrants to purchase 1,510,180 shares of common stock to
certain officers, employees and consultants. The warrant
shares were originally granted at exercise prices ranging
from $.25 to $3.20, and were extended at the original
grant price. No expense was charged to operations since
the market price was less than the original warrant price.

During 1997, the Company extended the exercise date of
warrants to purchase 177,800 shares of common stock to
certain officers and consultants. The warrant shares were
originally granted at exercise prices ranging from $.25 to
$3.50, and were extended at the original grant price. No
expense was charged to operations since the market price
was less than the original warrant price.

During 1996, the Company extended the exercise date of
warrants to purchase 351,482 shares of common stock to
certain officers and consultants. The warrant shares were
originally granted at exercise prices ranging from $.45 to
$.50, and were extended at the original grant price. The
Company recorded a $604,342 expense for the difference
between the fair market value on the date the warrants
were extended and the warrant exercise prices.

Diasensor.com, Inc. Common Stock

At December 31, 1998, warrants to purchase 6,674,113
shares of Diasensor.com, Inc. common stock were
exercisable. The per share exercise price for 3,255,000
shares is $.50, for 2,286,763 shares is $1.00 and for
1,132,350 shares is $3.50. The warrants expire at various
dates through 2003. To the extent that all the warrants
are exercised, the Company's proportionate ownership would
be diluted from 52% at December 31, 1998 to 40.3%.

Diasensor.com, Inc. Warrant Extensions

During 1998, Diasensor.com, Inc. extended the exercise
date of warrants to purchase 825,000 shares of common
stock to certain officers, directors, employees and
consultants. The warrant shares were originally granted
at an exercise price of $.50 and extended at the same
price. No expense was charged to operations since the
market price was less than the original warrant price.

During 1997, Diasensor.com, Inc. extended the exercise
date of warrants to purchase 2,236,550 shares of common
stock to certain officers, directors, employees and
consultants. The warrant shares were originally granted
at an exercise price of $1.00, and extended at the same
price. Diasensor.com, Inc. recorded a $4,046,875 expense
for the difference between the assumed value on the date
the warrants were extended and the warrants' exercise
prices.

During 1996, Diasensor.com, Inc. extended the exercise
date of warrants to purchase 2,970,013 shares of common
stock to certain officers, directors, employees and
consultants. The warrant shares were originally granted
at exercise prices ranging from $.50 to $1.00, and
extended at the same price. Diasensor.com, Inc. recorded
a $8,571,033 expense for the difference between the
assumed value on the date the warrants were extended and
the warrants' exercise prices.

Petrol Rem Common Stock

At December 31, 1998 warrants to purchase 4,140,000 shares
of Petrol Rem common stock were exercisable. The per
share exercise price for 3,940,000 is $.10 and for
2,000,000 is $1.00. The warrants expire at various dates
through 2003. To the extent that if all the warrants were
exercised, the Company's proportionate ownership would be
diluted from 75% at December 31, 1998 to 62.1%.

IDT Common Stock

At December 31, 1998 warrants to purchase 4,330,000 shares
of IDT common stock were exercisable. The per share
exercise price for 4,135,000 shares is $.10 and for
175,000 shares is $1.00 and for 20,000 shares is $2.00.
The warrants expire at various dates through 2003. To the
extent that if all the warrants were exercised, the
Company's proportionate ownership would be diluted from
99.1% at December 31, 1998 to 69.3%.

NOTE K - INCOME TAXES

As of December 31, 1998, the company and its subsidiaries, except
Diasensor.com, Inc. and Petrol Rem, have available approximately
$83,220,000 of net operating loss carryforwards for federal income tax
purposes. These carryforwards are available, subject to limitations,
to offset future taxable income, and expire in tax years 1998 through
2019. The Company also has research and development credit carryforwards
available to offset federal income taxes of approximately $1,100,000
subject to limitations, expiring in tax years 2005 through 2019.

As of September 30, 1998, the end of its fiscal year,
Diasensor.com, Inc. had available approximately
$24,700,000 of net operating loss carryforwards for
federal income tax purposes. These carryforwards, which
expire during the years 2005 through 2019, are available,
subject to limitations, to offset future taxable income.
Diasensor.com, Inc. also has research and development
credit carryforwards available for federal income tax
purposes of approximately $700,000, subject to
limitations, expiring in the years 2005 through 2012.

As of December 31, 1998, Petrol Rem had available
approximately $10,150,000 of net operating loss
carryforwards for federal income tax purposes. These
carryforwards, which expire during the years 2008 through
2019, are available, subject to limitations, to offset
future taxable income. Petrol Rem also has research and
development credit carryforwards available for federal
income tax purposes of approximately $15,000.

Certain items of income and expense are recognized in
different periods for financial and income tax reporting
purposes.

The Company has not reflected any future income tax
benefits for these temporary differences or for net
operating loss and credit carryforwards because of the
uncertainty as to realization. Accordingly, the adoption
of FAS 109 had no effect on the financial statements of
the Company.

The following is a summary of the composition of the
Company's deferred tax asset and associated valuation
allowance at December 31, 1998, December 31, 1997 and
December 31, 1996:

Dec. 31,1998 Dec. 31,1997 Dec. 31, 1996

Net Operating Loss $28,294,800 $ 21,508,400 $ 15,330,642
Warrant Expense 2,741,397 2,741,397 2,741,397
Tax Credit
Carryforward 1,100,000 580,000 520,000
----------- ------------ -----------
32,136,197 24,829,797 18,592,039
Valuation Allowance (32,136,197) (24,829,797) (18,592,039)
----------- ------------ -----------
Net Deferred Tax
Asset $ 0 $ 0 $ 0
=========== ============ ===========

The deferred tax benefit and the associated increase in
the valuation allowance are summarized in the following
schedule:

Increase
in
Deferred Valuation
Tax Allowance Net
Benefit

Year-ended December 31, 1998 ($ 7,306,400) $ 7,306,400 $ 0
Year-ended December 31, 1997 ($ 6,237,758) $ 6,237,758 $ 0
Year-ended December 31, 1996 ($ 4,702,742) $ 4,702,742 $ 0
From March 20,1972(inception) ------------- ----------- ---
through December 31, 1998 ($32,136,197) $32,136,197 $ 0

NOTE L - RELATED PARTY TRANSACTIONS

Research and Development Activities

The Company is currently performing research and
development activities related to the non-invasive glucose
sensor (the Sensor) under a Research and Development
Agreement with Diasensor.com, Inc.. If successfully
developed, the Sensor will enable users to measure blood
glucose levels without taking blood samples.
Diasensor.com, Inc. acquired the rights to the Sensor,
including one United States patent from BICO for
$2,000,000 on November 18, 1991. Such patent covers the
process of measuring blood glucose levels non-invasively.
Approval to market the Sensor is subject to federal
regulations including the Food and Drug Administration (FDA).
The Sensor is subject to clinical testing and regulatory
approvals by the FDA. BICO is responsible for substantially
all activities in connection with the development, clinical
testing, FDA approval and manufacturing of the Sensor. As
discussed in Note B, BICO finances its operations from
the sales of stock and issuance of debt and was reimbursed
for costs incurred under the terms and conditions of the
Research and Development Agreement for the research and
development of the Sensor by Diasensor.com, Inc.. If BICO
is unable to perform under the Research and Development
or Manufacturing Agreements, Diasensor.com, Inc. would
need to rely on other arrangements to develop and manufacture
the Sensor or perform these efforts itself.

BICO and Diasensor.com, Inc. have entered into a series of
agreements related to the development, manufacturing and
marketing of the Sensor. BICO is to develop the Sensor
and carry out all steps necessary to bring the Sensor to
market including 1) developing and fabricating the
prototypes necessary for clinical testing; 2) performing
the clinical investigations leading to FDA approval for
marketing; 3) submitting all applications to the FDA for
marketing approval; and 4) developing a manufacturable and
marketable product. Diasensor.com, Inc. is to conduct the
marketing of the Sensor. The following is a brief
description of the agreements:

Manufacturing Agreement

The manufacturing agreement between BICO and
Diasensor.com, Inc. was entered into on January 20, 1992.
BICO is to act as the exclusive manufacturer of production
units of the Sensor upon the completion of the Research
and Development Agreement and sell the units to
Diasensor.com, Inc. at a price determined by the
agreement. The term of the agreement is fifteen years.

Research and Development Agreement

Under a January 1992 agreement between BICO and
Diasensor.com, Inc., beginning in April 1992, BICO
received $100,000 per month, plus all direct costs for the
research and development activities of the Sensor. This
agreement replaced a previous agreement dated May 14,
1991. The term of the new agreement is fifteen years.
Under the terms of this agreement, the Company billed
Diasensor.com, Inc. $2,955,863 in research and development
and general and administrative expenses for the year
ending December 31, 1995. In July 1995, BICO and
Diasensor.com, Inc. agreed to suspend
billings, accruals of amounts due and payments pursuant to
the research and development agreement pending the FDA's
review of the Sensor.

Purchase Agreement

In November 1991, BICO entered into a Purchase Agreement
with Diasensor.com, Inc. under which Diasensor.com, Inc.
acquired BICO's rights to the Sensor for a cash payment of
$2,000,000. This agreement permits BICO to use Sensor
technology for the manufacture and sale by BICO of a
proposed implantable closed loop system. BICO will pay
Diasensor.com, Inc. a royalty equal to five percent of the
net sales of such implantable closed loop system.

Real Estate Activities

Four of the Company's Executives and/or Directors are
members of an eight-member partnership which in July 1990
purchased the Company's real estate in Indiana,
Pennsylvania, and each has personally guaranteed the
payment of lease obligations to the bank providing the
funding. For their personal guarantees, the four
individuals each received warrants to purchase 100,000
shares of the Company's common stock at an exercise price
of $.33 per share until June 29, 1998.

Amounts due from Officers

At December 31, 1998 and 1997, Mr. Cooper owed the Company
$8,500 related to a 12 percent simple interest demand
loan. At December 31, 1998 and 1997, Mr. Cooper owed the
Company $82,400, related to a 10 percent simple interest
demand loan. At December 31, 1998, Mr. Cooper owed the
Company $458,000, (including a $25,000 note for common
stock purchased in 1997), related to 8.25 percent simple
interest demand loans. The accrued interest owed by Mr.
Cooper on all demand notes at December 31, 1998 and 1997
was $ 109,599 and $67,092, respectively.

At December 31, 1998 and 1997, the Company had a demand
loan of $5,000 with 10 percent simple interest with Glenn
Keeling, a Director. At December 31, 1998 and 1997 the
Company had a demand loan of $50,000 with 8.25 percent
interest with Mr. Keeling. At December 31, 1998 and 1997,
the Company had a demand loan of $20,000 with 8.25 percent
interest with Mr. Keeling. At December 31, 1998 the
Company had a demand loan of $190,000 with 8.25 percent
interest with Mr. Keeling. The accrued interest owed by
Mr. Keeling on all demand notes at December 31, 1998 and
1997 was $ 27,810 and $7,664, respectively.

At December 31, 1998 and 1997, the Company had a demand
loan of $50,000 with 8.25 percent simple interest with
T.J. Feola, a Director. At December 31, 1998 the Company
had a demand loan of $185,000 with 8.25 percent simple
interest with Mr. Feola. The accrued interest owed by Mr.
Feola on the demand note at December 31, 1998 and 1997 was
$ 18,219 and $588, respectively.

At December 31, 1997, the Company had a note receivable of
$35,000 with 8.25 percent simple interest with Dave Purdy,
Fred Cooper, T.J. Feola and Glenn Keeling, all Directors
who are jointly liable. As of December 31, 1998, this
loan had been repaid in full.

At December 31, 1997, the Company had extended a one year
judgment note payable September 1, 1997, for $250,000,
with an interest rate of prime plus one percent, with
Joseph Kondisko, Allegheny Food Services, Inc. of which
Joseph Kondisko, a former director, is principal owner.
As of December 31, 1998, this loan had been reduced to
$200,000, and restructured to require monthly installments
of $3,630, including interest of 9.25% with a final
balloon payment on April 1, 2001.

Advances to Officers

During the periods 1998 and 1997, the Company and its
subsidiaries made advances to Mr. Cooper. At December 31,
1998 and 1997, these advances accumulated to $90,779 and
$34,732, respectively.

Employment Contracts

The Company's employment contracts with four officers and
two employees commenced November 1, 1994 and end October
31, 1999. These employment contracts set forth annual
basic salaries aggregating $1,500,000 in 1997 and expiring
in periods beginning October 1999 through 2002, which are
subject to review and adjustment. The contracts may be
extended for two to three year periods. In the event of
change in control in the Company and termination of
employment, continuation of annual salaries at 100%
decreasing to 25% are payable in addition to the issuing
of shares of common stock as defined in the contracts.
The contracts also provide for severance, disability
benefits and issuances of BICO common stock under certain
circumstances.

NOTE M - COMMITMENTS AND CONTINGENCIES

Litigation

Several class action lawsuits have been filed against the
company and its subsidiary Diasensor.com, Inc. as well as
certain of their directors, all of which have been
consolidated into a single action. The suit alleges
various violations of federal securities laws on behalf of
a class of plaintiffs who purchased common stock of the
Company between April 25, 1995 and February 26, 1996, at
which time the value of the Company's stock dropped as a
result of an unfavorable recommendation of a Panel Review
convened by the United States Food and Drug Administration
with respect to a certain medical device owned by
Diasensor.com, Inc. and manufactured by the Company. To
date, a complaint has been filed in the action, to which
the defendants have filed a Motion to Dismiss. The
Company has engaged in voluntary mediation in order to
explore whether settlement is an option. As a result of
the mediation, the plaintiffs agreed to a "standstill"
period, which has now expired; however, no further
activity has been conducted by the plaintiffs to move the
case forward. Management believes that no federal
securities violation has occurred, and they intend to
strongly defend the action. At this time it is not
possible to predict the outcome of the litigation or to
estimate the potential damages arising from the claims,
since the number of class members, and the volume and
pricing of shares traded, are unknown.

Pennsylvania Securities Commission

The Pennsylvania Securities Commission is conducting a
private investigation of the Company and its subsidiary,
Diasensor.com, Inc., Inc. in connection with the sale of
securities. The Companies have cooperated with and
provided information to the Pennsylvania Securities
Commission in connection with the private investigation.
As the Commission's investigation is not yet complete,
there can be no estimate or evaluation of the likelihood
of an unfavorable outcome in this matter or the range of
possible loss, if any.

Additional Legal Proceedings

During April 1998, the Company and its affiliates were
served with subpoenas by the U.S. Attorneys' office for
the U.S. District Court for the Western District of
Pennsylvania. The subpoenas requested certain corporate,
financial and scientific documents and the Company has
provided documents in response to such requests.

License Agreement

Under terms of a license agreement with a shareholder of
Petrol Rem for the marketing rights with respect to
certain inventions Petrol Rem is to make minimum royalty
payments of $50,000 per year for each year starting in
1999 through 2001.

NOTE N - EMPLOYEE BENEFIT PLAN

The Company has a defined contribution plan with 401k
provisions which covers all employees meeting certain age
and period of service requirements. Employer
contributions are discretionary as determined by the Board
of Directors. There have been no employer contributions
to the plan through December 31, 1998.

NOTE O - SUBSEQUENT EVENTS

Public Offering

Subsequent to December 31, 1998, and through March 19,
1999, the Company raised funds totaling $4,290,000
pursuant to its public offering.

Common Stock

Subsequent to December 31, 1998 and through March 19,
1999, the Company issued a total additional 143,455,285
shares of common stock bringing total outstanding common
stock at March 19, 1999, to 564,228,854.

NOTE P -STOCK PURCHASE AGREEMENT

Effective March 4, 1998, pursuant to a Stock Purchase
Agreement dated February 20, 1998, the Company acquired
58.4% of International Chemical Technologies, Inc. (ICTI)
a development stage corporation. ICTI commenced
operations in May 1997 and plans to engage in the business
of manufacturing and marketing, and licensing rights with
respect to certain corrosion/wear-resistant metal alloy
coating compositions.

Consideration for the purchase of the 58.4% interest in ICTI
included a cash payment of $1,030,000; a promissory note for
$3,350,000 at 8%; 2,000,000 shares of Biocontrol common stock
(fair market value of $250,000), a warrant to purchase
1,000,000 shares of Biocontrol stock for $2 per share anytime
through March 4, 2003; and the guarantee by Biocontrol of a
promissory note for $1,300,000 payable by ICTI to the seller.

The pro forma results listed below are unaudited and reflect
purchase price accounting adjustments assuming the
acquisition occurred at January 1, 1997. The pro forma
results are not necessarily indicative of what actually would
have occurred if the acquisition had been in effect for the
entire period presented. In addition, they are not intended
to be a projection of future results and do not reflect any
efficiencies that might be achieved from the combined
operation.

Revenue $ 1,434,953
Net loss $(32,404,191)
Loss per share $ (0.45)

NOTE Q - YEAR 2000 ISSUE

The Company is currently working to resolve the potential
impact of the Year 2000 on the processing of date-sensitive
information. The Year 2000 Issue is the result of computer
programs being written using two digits (rather than four) to
define the applicable year. Programs which are susceptible
to problems after December 31,1999 are those which recognize
a date using "00" as the year 1900 rather than the year 2000,
which could result in miscalculations or system failures.
Based upon a review of its own internal programs and
software, the Company currently believes that the Year 2000
will not pose significant operational problems to its
information systems, because such systems are already
compliant or will be made compliant with minor adjustments.
In addition, ChaseMellon Shareholder Services, the Company's
transfer agent, has disclosed that it will be Year 2000
compliant and that no interruptions in service will occur.
The Company is also conducting an investigation of its major
suppliers, vendors and other parties to determine their
respective plans for the Year 2000 compliance. The Company's
common stock currently trades on the Nasdaq electronic
bulletin board; Nasdaq and its parent, the NASD, have
analyzed its products and systems; are addressing their Year
2000 issues; and are implementing a plan to test their
systems and to remediate any Year 2000 problems. As of this
date, Nasdaq has not made a definitive statement regarding
when it will be compliant, but has stated that it is making
all necessary changes to its trading systems. The Company's
current estimates indicate that the costs of addressing
potential problems are not expected to have a material impact
upon the Company's financial position, results of operations
or cash flows in future periods. There can be no assurance,
however, that modifications to information systems which
impact the Company and which are required to remediate year
2000 issues will be made on a timely basis and that they will
not adversely affect the Company's systems or operations.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS
EXPENSES OF ISSUANCE AND DISTRIBUTION

The following sets forth the Company's estimated expenses
incurred in connection with the issuance and distribution of the
securities described in the Prospectus other than underwriting
discounts and commissions:

Printing and Copying $ 2,500.00
Legal Fees 15,000.00
SEC Registration Fees 4,100.00
State Filing Fees 2,500.00
Accounting Fees
7,900.00
Total 32,000.00

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Except as set forth herein, the Company has no provisions for
the indemnification of its officers, directors or control persons.
David L. Purdy, Fred E. Cooper, Anthony J. Feola and Glenn Keeling
have employment contracts which include indemnification provisions
which indemnify them to the extent permitted by law. The Company
and its affiliates Diasensor.com, Inc., Coraflex, Inc., Petrol
Rem, Inc., and IDT, Inc. are incorporated under the Business
Corporation Law of the Commonwealth of Pennsylvania. Section
1741, et seq. of said law, in general, provides that an officer or
director shall be indemnified against reasonable and necessary
expenses incurred in a successful defense to any action by reason
of the fact that he serves as a representative of the corporation,
and may be indemnified in other cases if he acted in good faith
and in a manner he reasonably believed was in, or not opposed to,
the best interests of the corporation, and if he had no reason to
believe that his conduct was unlawful, except that no
indemnification is permitted when such person has been adjudged
liable for recklessness or misconduct in the performance of his
duty to the corporation, unless otherwise permitted by a court of
competent jurisdiction.

Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions,
the registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as
expressed in the 1933 Act and is therefore unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer, or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.

RECENT SALES OF UNREGISTERED SECURITIES

The Company recently completed sales of unregistered
securities as summarized below. Unless otherwise indicated, all
offers and sales were made pursuant to the "private offering"
exemption under Section 4(2) of the 1933 Act. Accordingly,
because the shares sold constitute "restricted securities" within
the meaning of Rule 144 under the 1933 Act, stop-transfer
instructions were given to the transfer agent, and the stock
certificates evidencing the shares bear a restrictive legend.

In January through March of 1997, the Company sold an aggregate of
22,000 shares of Series B Convertible Preferred Stock pursuant to
Regulation S. All of such preferred stock was converted pursuant
to its terms, on various dates no earlier than ninety days from
the sale of the preferred stock, into common stock during 1997,
with total proceeds tot he Company of $2,027,000. Proceeds were
used primarily to continue to fund the Company=s research and
development projects and to provide working capital for the
Company.

During 1997, the Company sold an aggregate of $20.2 million in
Subordinated Convertible Debentures pursuant to Regulation S. All
such debentures were converted pursuant to their terms, on various
dates no earlier than ninety days, and no later than one year from
the sale of the debenture, into common stock. The debentures had
a mandatory conversion feature, which required conversion prior to
their expiration. The debentures resulted in total net proceeds
to the Company of approximately $18 million. Proceeds were used
primarily to fund the Company=s research and development projects
and to provide working capital for the Company.

During the first two quarters of 1998, the Company sold an
aggregate of approximately $7 million in Subordinated Convertible
Debentures pursuant to Regulation S. All such debentures were
converted pursuant to their terms, on various dates no earlier
than forty-five to ninety days from issuance, into shares of
common stock; all such debentures had been converted as of the
date of this filing. The net proceeds to the Company of
approximately $6.3 million. Proceeds were used to fund the
Company=s research and development projects, the acquisition of
ICTI, and to provide working capital for the Company.

In August 1998, the Company sold an aggregate of $3,125,000 in
convertible subordinated debentures which are due between August
14, 1999 and August 31, 1999. The debentures are convertible
beginning ninety days from issuance into shares of common stock.
The convertible debentures were sold pursuant to Section 4(2) and
/or Regulation D, bear a 4% interest rate, are redeemable by the
Company at 115% of face value, and are subject to mandatory
conversion prior to or upon one year from issuance. Proceeds from
the sale of the securities were used for general working capital
expenses and to contunue the Company=s research and development
projects.

UNDERTAKINGS

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:

(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in
the information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement;

(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

The undersigned registrant hereby undertakes to supplement
the prospectus, after the expiration of the subscription period,
to set forth the results of the subscription offer and the terms
of any subsequent reoffering thereof. If any public offering is
to be made on terms differing from those set forth on the cover
page of the prospectus, a post-effective amendment will be filed
to set forth the terms of such offering.

EXHIBIT TABLE
Exhibit Sequential Page No.

3.1 (4) Articles of Incorporation as filed March 20, 1972
N/A

3.2 (4) Amendment to Articles filed May 8, 1972
N/A

3.3 (4) Restated Articles filed June 19, 1975
N/A

3.4 (4) Amendment to Articles filed February 4, 1980
N/A

3.5 (4) Amendment to Articles filed March 17, 1981
N/A

3.6 (4) Amendment to Articles filed January 27, 1982
N/A

3.7 (4) Amendment to Articles filed November 22, 1982
N/A

3.8 (4) Amendment to Articles filed October 30, 1985
N/A

3.9 (4) Amendment to Articles filed October 30, 1986
N/A

3.10(4) By-Laws N/A

3.11(5) Amendment to Articles filed December 28, 1992
N/A

5.1 Legal Opinion of Sweeney & Associates P.C 82

10.1(1) Manufacturing Agreement N/A

10.2(1) Research and Development Agreement N/A

10.3(1) Termination Agreement N/A

10.4(1) Purchase Agreement N/A

10.5(2) Sublicensing Agreement and Amendments thereto
N/A

10.6(3) Lease Agreement with 300 Indian Springs Partnership
N/A

10.7(4) Lease Agreement with Indiana County
N/A

10.8(5) First Amendment to Purchase Agreement dated
December 8, 1992 N/A

10.9(6) Fred E. Cooper Employment Agreement dated 11/1/94
N/A

10.10(6) David L. Purdy Employment Agreement dated 11/1/94
N/A

10.11(6) Anthony J. Feola Employment Agreement dated 11/1/94
N/A

10.12(6) Glenn Keeling Employment Agreement dated 11/1/94
N/A

16.1(7) Disclosure and Letter Regarding Change in
Certifying Accountants dated 1/25/95 N/A

24.1 Consents of Thompson Dugan, Independent Certified
Public Accountants 84

24.2 Consent of Counsel (Included in Exhibit 5.1 above)
82

25.1 Power of Attorney of Fred E. Cooper 81
(included under "Signatures")

(1) Incorporated by reference from Exhibit with this title filed
with the Company's Form 10-K for the year ended December 31,
1991

(2) Incorporated by reference from Exhibit with this title to
Form 8-K dated May 3, 1991

(3) Incorporated by reference from Exhibit with this title to
Form 10-K for the year ended December 31, 1990

(4) Incorporated by reference from Exhibits with this title to
Registration Statement on Form S-1 filed on December 1, 1992

(5) Incorporated by reference from Exhibits with this title to
Amendment No. 1 to Registration Statement on Form S-1 filed
on February 8, 1993

(6) Incorporated by reference from Exhibit with this title to
Form 10-K for the year ended December 31, 1994

(7) Incorporated by reference from Exhibit with this title to
Form 8-K dated January 25, 1995

Exhibit 25.1
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned on April 14, 1999.

BIOCONTROL TECHNOLOGY, INC.

By: /s/ Fred E. Cooper
Fred. E. Cooper, Director, CEO,
(principal executive officer,
principal financial officer, and
principal accounting officer)

POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Fred E. Cooper
his true and lawful attorney-in-fact and agent with full power of
substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-
effective amendments) to this Registration Statement, and to file
the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent,
or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities indicated on the dates indicated.

Signature Title Date
/s/ David L. Purdy President, April 14,
1999
David L. Purdy Treasurer, Director
/s/ Anthony J. Feola Senior Vice President,
April 14, 1999
Anthony J. Feola Director
/s/ Glenn Keeling Director April
14, 1999
Glenn Keeling
/s/ Stan Cottrell Director April
14, 1999
Stann Cottrell
/s/ Paul W. Stagg Director April 14,
1999
Paul W. Stagg

SWEENEY & ASSOCIATES P.C. Exhibit 5.1
ATTORNEYS AT LAW

7300 PENN AVENUE TELEPHONE (412) 731-1000
PITTSBURGH, PA 15208 FACSIMILE (412) 731-9190

April 14, 1999
To the Board of Directors
Biocontrol Technology, Inc.
2275 Swallow Hill Road
Building 2500; 2nd Floor
Pittsburgh, PA 15220

Gentlemen:

We have examined the corporate records and proceedings of
Biocontrol Technology, Inc, a Pennsylvania corporation (the
"Company"), with respect to:
1.65
The organization of the Company;

2. The legal sufficiency of all corporate proceedings of
the Company taken in connection with the creation,
issuance, the form and validity, and full payment and
non-assessability, of all the present outstanding and
issued common stock of the Company; and
3. The legal sufficiency of all corporate proceedings of
the Company, taken in connection with the creation,
issuance, the form and validity, and full payment and
non-assessability, when issued, of shares of the
Company's common stock (the "Shares"), to be issued by
the Company covered by the registration statement
(hereinafter referred to as the "Registration
Statement") filed with the Securities and Exchange
Commission December 30, 1998, file number 333-63193 (in
connection with which Registration Statement this
opinion is rendered.)
We have also examined such other documents and such
questions of law as we have deemed to be necessary and
appropriate, and on the basis of such examinations, we are of the
opinion:
(a) That the Company is duly organized and validly existing
under the laws of the Commonwealth of Pennsylvania;
(b) That the Company is authorized to have outstanding
975,000,000 shares of common stock of which 420,773,569
shares of common stock were outstanding as of December
31, 1998;
(c) That the Company has taken all necessary and
required corporate proceedings in connection with the
creation and issuance of the said presently issued and
outstanding shares of common stock and that all of said
stock so issued and outstanding has been validly
issued, is fully paid and non-assessable, and is in
proper form and valid;
(d) That when the Registration Statement shall have been
declared effective by order of the Securities and
Exchange Commission, after a request for acceleration
by the Company, and the Shares shall have been issued
and sold upon the terms and conditions set forth in the
Registration Statement, then the Shares will be validly
authorized and legally issued, fully paid and non-
assessable.
We hereby consent (1) to be named in the Registration
Statement, and in the Prospectus which constitutes a part
thereof, as the attorneys who will pass upon legal matters in
connection with the sale of the Shares, and (2) to the filing of
this opinion as Exhibit 5.1 of the Registration Statement.
Sincerely,
SWEENEY & ASSOCIATES P.C.

Exhibit 24.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS

We have issued our report dated March 30, 1996, accompanying
the consolidated financial statements of Biocontrol
Technology, Inc. and subsidiaries appearing in the 1998 Annual
Report on Form 10-K for the year ended December 31, 1998. We
consent to the inclusion in the Registration Statement of the
aforementioned report and to the use of our name as it appears
under the caption AEXPERTS@. Our reports on the financial
statements referred to above include explanatory paragraphs
which discuss going concern considerations as to Biocontrol
Technology, Inc.

/s/ Thompson Dugan
Pittsburgh, Pennsylvania

April 14, 1999