SELFCARE INC, SB-2, 1997-01-16

SELFCARE INC
SB-2, 1997-01-16
LABORATORY ANALYTICAL INSTRUMENTS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 1997

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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SELFCARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
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DELAWARE 3826 04-3164127
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

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200 PROSPECT STREET
WALTHAM, MASSACHUSETTS 02154
(617) 647-3900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)

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RON ZWANZIGER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SELFCARE, INC.
200 PROSPECT STREET
WALTHAM, MASSACHUSETTS 02154
(617) 647-3900
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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COPIES TO:

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<S> <C>
MARTIN CARMICHAEL III, P.C. KENNETH J. NOVACK, ESQ.
GOODWIN, PROCTER & HOAR LLP MINTZ, LEVIN, COHN, FERRIS, GLOVSKY
EXCHANGE PLACE AND POPEO, P.C.
BOSTON, MASSACHUSETTS 02109 ONE FINANCIAL CENTER
(617) 570-1000 BOSTON, MASSACHUSETTS 02111
(617) 542-6000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]

CALCULATION OF REGISTRATION FEE

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PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED BE REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
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Common Stock, $.001 par value...... 2,300,000 Shares $12.63 $29,049,000.00 $8,802.73
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(1) Includes 300,000 shares of Common Stock which the underwriters have the
option to purchase from the Company to cover over-allotments, if any.

(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(a) under the Securities Act of 1933.
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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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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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.

SUBJECT TO COMPLETION, DATED JANUARY 16, 1997
PROSPECTUS

2,000,000 SHARES

[LOGO]

COMMON STOCK

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All of the shares of Common Stock offered hereby are being sold by
Selfcare, Inc. ("Selfcare" or the "Company"). The Common Stock of the Company is
traded on the American Stock Exchange (the "AMEX") under the symbol "SLF." On
January 15, 1997, the closing price of the Common Stock as reported on the AMEX
was $12.625 per share. See "Price Range of Common Stock and Dividend Policy."

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THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 8.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Underwriting
Price to Discounts Proceeds to
Public and Commissions(1) Company(2)
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Per Share...................... $ $ $
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Total(3)....................... $ $ $
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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $600,000 payable by the Company.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 300,000 additional shares of Common Stock on the same terms and
conditions as set forth above solely to cover over-allotments, if any. If
such option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to Company will be $ , $
and $ , respectively. See "Underwriting."
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The shares of Common Stock offered by this Prospectus are offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of certificates
for the shares of Common Stock will be made at the offices of Lehman Brothers
Inc., New York, New York, on or about , 1997.
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LEHMAN BROTHERS
DILLON, READ & CO. INC.
A.G. EDWARDS & SONS, INC.
, 1997
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[Description of Top Graphic: The graphic depicts the packaging of the Company's
Blood Glucose Test Strips for the ExacTech[Registered trademark] Card and Pen
Sensors, which includes a picture of the test strip. Accompanied by language
substantially similar to the following: "Selfcare's generic glucose test
strip for use with ExacTech[Registered trademark] Sensors currently on the
market. The Company has obtained FDA clearance for this product and intends to
commence marketing it in the U.S. in early 1997." The graphic also contains
reference to certain trademarks.]

[Description of Bottom Graphic: The graphic depicts the use of a prototype of
the Company's blood glucose monitoring system accompanied by text describing the
item depicted in the graphic as a prototype under development by the Company.]
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[GRAPHICS]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE, ON THE
OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

The Company intends to distribute to its stockholders annual reports
containing audited consolidated financial statements and will make available
copies of quarterly reports for the first three quarters of each fiscal year
containing unaudited consolidated financial information.

The Company has filed trademark applications in the United States and
Europe for the Company's "Little Man" logo and has filed trademark applications
in Europe for the name Selfcare. This Prospectus also includes trademarks of
companies other than Selfcare.
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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Investors should carefully consider the information set forth under the heading
"Risk Factors." Except as otherwise noted, all information in this Prospectus
assumes no exercise of the Underwriters' over-allotment option.

THE COMPANY

Selfcare is engaged in the development, manufacture and marketing of
self-test diagnostic products for the diabetes, women's health and infectious
disease markets. Self-test diagnostic products allow individuals to obtain
accurate information regarding various medical conditions on a confidential,
non-prescription basis, without the expense, inconvenience and delay associated
with physician visits or testing laboratories. This information gives
individuals greater control over their health and their lives, allowing them to
make informed decisions and take action to protect their health, alone or in
consultation with healthcare professionals. The Company's existing and planned
self-test products are targeted at the two largest existing markets for
self-care diagnostics, diabetes management and women's health, as well as the
emerging market for self tests for infectious diseases and agents, including
human immunodeficiency viruses ("HIV"). According to a 1996 study by Clinica
Reports, the worldwide market for home monitoring and diagnostic products was
estimated to be $2.2 billion in 1995, growing at an annual rate of 11%.

On January 14, 1997, the Company entered into an agreement to acquire the
U.S. rights to several nutritional supplement product lines (the "Nutritional
Supplement Lines Acquisition") including Stresstabs(R), Ferro-Sequels(R) and
Posture(R), which are targeted primarily at the women's health market. Selfcare
believes that this acquisition will enable it to expand into new product areas
which complement its self-test diagnostic products and utilize the Company's
significant retail sales and distribution capabilities. The Company believes
that these product lines will create new marketing opportunities through
increased shelf space and product visibility at the point of sale and will
provide potentially significant cross-marketing opportunities, particularly for
the women's health market.

The Company's objective is to become a leading international provider of
self-test diagnostic products, while expanding into complementary self-care
product lines and extending its retail distribution capabilities through the
addition of other self-care products targeted primarily at the Company's
principal markets. The Company is pursuing a business strategy which
incorporates the following principal elements:

- Focus on diabetes, women's health and infectious diseases to exploit
growth opportunities in these large and growing markets in the United
States and internationally

- Leverage the Company's technology base to develop new self-test
diagnostic products and to lower production costs

- Promote products used by physicians and laboratories to facilitate market
acceptance of new self tests

- Utilize the Company's broad retail distribution network and strong
customer relationships to launch new products rapidly

- Continue to pursue private label arrangements with major retailers to
increase market penetration

- Target value-conscious consumers with low-cost, high-quality products

- Seek and expand strategic alliances and other transactions to develop or
acquire technologies for new self-test diagnostic and other self-care
products

Selfcare believes that its most important near-term growth opportunities
lie in the market for self-test diagnostic products for the management of
diabetes and in continued expansion of its retail distribution of women's health
products.

As part of its strategy for addressing the diabetes management market, the
Company has entered into an exclusive worldwide alliance and distribution
agreement (the "LifeScan Alliance") with LifeScan, Inc., a subsidiary of Johnson
& Johnson ("LifeScan"). LifeScan has been a leading supplier of blood glucose
monitoring
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systems since the mid-1980s, and in 1995 accounted for over 40% of the market
for these products in the United States. The terms of the LifeScan Alliance
contemplate that Selfcare will manufacture and LifeScan will distribute
Selfcare's proprietary electrochemical blood glucose monitoring system for the
management of diabetes. Although LifeScan is the current leader in the home
blood glucose monitoring market, LifeScan does not currently offer an
electrochemical blood glucose monitoring system. The LifeScan Alliance will
allow LifeScan to add to its product line an electrochemical blood glucose
monitoring system incorporating state-of-the-art features. This system will
incorporate all of the significant features of the leading electrochemical
systems currently on the market, and will also provide several additional
features which the Company believes will make it easier to use. In September
1996, the Company received regulatory clearance from the U.S. Food and Drug
Administration (the "FDA") for the system. In conjunction with LifeScan, the
Company subsequently undertook certain enhancements to the user interface
features for the system. The underlying chemistry and function of the disposable
strips for the system, however, were not changed from those of the prior version
originally reviewed by the FDA. The Company plans to submit in early 1997 a
pre-market clearance notification (a "Section 510(k) Notification") to the FDA
pursuant to Section 510(k) of the Federal Food, Drug and Cosmetics Act, as
amended (the "FDC Act"), seeking permission from the FDA ("FDA Clearance") to
begin commercial distribution of the enhanced version of the system (hereafter
referred to as the "New System"). Selfcare currently believes that it can
complete development, receive FDA Clearance and commence shipments of the New
System as early as the first half of 1997 although there can be no assurance
that this will be the case. See "Risk Factors -- Risks Related to the LifeScan
Alliance."

In addition to supplying the New System to LifeScan, the Company plans to
commence commercial production and marketing of disposable generic test strips
which can be used in electrochemical blood glucose monitoring systems currently
sold by certain other leading manufacturers. On June 28, 1996, the Company
obtained FDA Clearance for its first generic test strip, which is compatible
with the ExacTech(TM) system sold by MediSense, Inc., a subsidiary of Abbott
Laboratories ("MediSense"). The Company has commenced marketing this product in
certain European countries and intends to commence marketing this product in the
United States in the first half of 1997. In addition, the Company is developing
generic test strips for use with other systems such as Bayer Corporation's
Glucometer Elite(TM) and Boehringer Mannheim Corporation's Accu-Chek(R)
Advantage(TM), as well as MediSense's Companion 2(TM). In addition, through a
wholly-owned subsidiary, Selfcare is party to an agreement with A. Menarini
Industrie Farmaceutical Riunite S.R.L. of Florence, Italy ("Menarini") which
provides that the Company will be a principal supplier to Menarini of blood
glucose test strips for blood glucose meters distributed by Menarini in selected
markets in Europe and certain countries in other parts of the world. Under the
agreement, Menarini is obligated to make certain minimum purchases of products
from Selfcare. Selfcare expects shipments under this agreement to commence in
the second half of 1997.

Selfcare has developed a sophisticated, but simplified, manufacturing
process for generic test strips which the Company believes is comprised of fewer
elements than those of the current manufacturers of branded test strips,
resulting in lower manufacturing costs. The Company also expects to realize a
cost advantage on its generic test strips because it intends to distribute such
strips through its existing, low-overhead distribution network, which the
Company currently utilizes to sell other self-test diagnostic products in the
United States and Europe. As a result, the Company believes that, in most cases,
it will be able to produce and sell high-quality generic electrochemical blood
glucose test strips at a cost which is as low as, or lower than, those of the
current manufacturers of branded test strips.

In the women's health market, Selfcare is currently marketing home
pregnancy and ovulation prediction tests under the Selfcare brand name and under
various private labels. Pregnancy products packaged and distributed by Selfcare
are currently available on a private label basis or under the Selfcare brand in
approximately 55% of U.S. pharmacy chain outlets, including CVS/pharmacy, Eckerd
Drug, Osco Drug, Revco Pharmacy and Target Stores. On January 14, 1997, pursuant
to the Nutritional Supplement Lines Acquisition, the Company agreed to acquire
from American Home Products Corporation ("AHP") the U.S. rights to several
nutritional supplement product lines (the "Nutritional Supplement Lines"), which
had domestic sales of approximately $24.0 million in 1996. Included in these
product lines are Stresstabs (a B-complex vitamin with folic acid), Stresstabs
plus iron, Ferro-Sequels (an iron supplement) and Posture (a calcium
supplement), which are targeted primarily at the women's health market. The
Stresstabs, Allbee(R) and Z-Bec(R) product lines included in the Nutritional
Supplement Lines Acquisition currently represent, according to industry sources,
approximately a 29% share of the B-complex vitamin category sold through U.S.
drug, food and mass merchandising retail chains. The Company will market the
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Nutritional Supplement Lines through its existing retail distribution channels,
and will seek to expand sales through trade allowances, increased advertising
and promotion, and cross-merchandising with other Selfcare products. The Company
also plans to reposition the brands which address specific women's nutritional
needs through redesigned packaging and increased emphasis on the products'
self-care benefits for women. The Company believes that several of the
Nutritional Supplement Lines enjoy a high level of consumer recognition,
particularly among women, and that this recognition will enhance Selfcare's
ability to market its existing and planned self-test diagnostic products. The
Company expects to continue to expand its women's health product line with
products supplied by or co-developed with third party manufacturers, as well as
products developed by the Company.

Through its wholly-owned Irish subsidiary, Cambridge Diagnostics Ireland
Ltd. ("Cambridge Diagnostics"), the Company is currently producing diagnostic
test kits primarily for detecting antibodies to HIV, which are associated with
Acquired Immune Deficiency Syndrome ("AIDS"). In addition, the Company is
actively pursuing development of a self-test version of its professional HIV
test which will be incorporated in a comprehensive, educational, counseling and
testing program to be called CarePlan(TM). Unlike currently available mail-in
HIV testing services, CarePlan is designed to provide immediate at-home test
results. The Company currently intends to introduce this HIV self test in
certain European countries in late 1997, subject to regulatory approval. The
Company also produces other tests for the detection of hepatitis and Lyme
disease infections.

The Company plans to expand its research, manufacturing and marketing
capabilities for infectious disease diagnostic products by acquiring the capital
stock of Orgenics Ltd. ("Orgenics"), an Israeli company (the "Orgenics
Acquisition"). Selfcare currently owns a 57.1% direct and indirect equity
interest in Orgenics and, upon completion of this offering, expects to acquire
direct and indirect ownership of the balance of the outstanding capital stock of
Orgenics. Orgenics develops, manufactures and markets self-contained diagnostic
test kits for the professional market which detect antibodies and/or infectious
disease agents, including those associated with AIDS and chlamydia (a sexually
transmitted disease which may impair fertility). The Company plans to use the
expertise and know-how of Orgenics to develop self-test versions of certain of
these products, including a chlamydia self test. The Company intends to
rationalize the operations of Orgenics and Cambridge Diagnostics to increase
production efficiency, as well as combine distribution operations in some global
regions. The Company also intends to develop or acquire additional self-test and
professional diagnostic products for infectious diseases, as well as for other
types of diseases and medical conditions.

In August 1996, the Company completed an initial public offering in which
it sold 1,495,000 shares of Common Stock (the "Initial Public Offering").

THE OFFERING

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Common Stock offered.......................... 2,000,000 shares
Common Stock to be outstanding after the
offering:
Actual...................................... 7,959,663 shares
Fully-diluted............................... 15,312,285 shares(1)
Use of proceeds............................... To fund a portion of the consideration payable
in the Orgenics Acquisition; for possible
repayment of certain indebtedness anticipated
to be incurred in connection with the
Nutritional Supplement Lines Acquisition; and
for working capital and other general
corporate purposes, including research and
development and possible additional
acquisitions.
American Stock Exchange symbol................ SLF
</TABLE>

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(1) Includes (i) 6,266,050 shares of Common Stock issuable pursuant to certain
rights and upon the exercise of outstanding stock options and warrants as of
January 1, 1997 with a weighted average exercise price of $3.35 per share,
(ii) 278,572 shares of Common Stock the Company expects to issue in the
future in connection with the LifeScan Alliance, (iii) 368,600 shares of
Common Stock representing the approximate number of shares the Company
anticipates issuing in connection with completion of the Orgenics
Acquisition, and (iv) 439,400 shares of Common Stock representing the number
of shares issuable upon conversion of the remaining 5,200 outstanding shares
of the Company's Series A Convertible Preferred Stock ("Series A Preferred
Shares"), assuming an average market price of $12.325 per share at the time
of conversion resulting in a conversion price of $12.00 per share. See
"Management -- Executive Compensation," "Business -- Strategic
Transactions -- LifeScan Alliance," " -- Orgenics Acquisition,"
" -- Cambridge Diagnostics Acquisition," "Description of Capital Stock" and
"Shares Eligible for Future Sale."
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SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

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<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
YEARS ENDED DECEMBER 31, ------------------------------------------------
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1995 1995 1996
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1994 ACTUAL PRO FORMA(1) ACTUAL PRO FORMA(1) ACTUAL PRO FORMA(1)
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STATEMENT OF OPERATIONS DATA:
Net sales.................................. $ 2,322 $ 7,239 $ 43,398 $ 4,807 $ 31,669 $ 9,098 $37,006
Gross profit............................... 762 1,674 26,169 1,008 19,321 2,621 21,572
Operating income (loss).................... (2,845) (5,560) 1,654 (3,485) 2,013 (11,966) (3,847)
Net loss................................... (2,785) (10,097) (16,841) (6,613) (15,521) (26,127) (5,783)
Net loss per common and common equivalent
share(2)................................. $ (0.52) $ (1.66) $ (1.55) $ (1.10) $ (1.43) $ (4.25) $ (0.54)
Weighted average number of common and
common equivalent shares
outstanding(2)........................... 5,379 6,072 10,878 6,026 10,832 6,147 10,692
</TABLE>

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<CAPTION>
SEPTEMBER 30, 1996
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PRO FORMA
ACTUAL AS ADJUSTED(3) AS ADJUSTED(3)(4)
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BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 14,553 $ 37,688 $ 27,966
Working capital.......................................... 11,856 34,991 21,170
Total assets............................................. 24,426 47,561 91,249
Deferred revenue, net of current portion................. 1,437 1,437 4,437
Long term debt, net of current portion................... 16,705 16,705 28,068
Total liabilities........................................ 24,875 24,875 47,524
Mandatorily redeemable preferred stock................... 1,725 1,725 1,725
Accumulated deficit...................................... (40,803) (40,803) (41,254)
Stockholders' equity (deficit)........................... (2,174) 20,961 41,848
</TABLE>

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(1) In October 1996, Selfcare acquired a 57.1% direct and indirect equity
interest in Orgenics, as a result of the conversion of a $1.0 million
debenture issued by Orgenics (the "Orgenics Debenture") and purchases of
outstanding shares of Orgenics and Orgenics International Holdings, B.V.
("Orgenics International"), a Dutch holding company whose only material
asset is its investment in Orgenics. Selfcare expects to complete the
Orgenics Acquisition upon completion of this offering, pursuant to the terms
of certain option agreements (the "Option Agreements") between the Company
and all the holders of the remaining shares in Orgenics and Orgenics
International. Pursuant to the Option Agreements, the Company has an option
to call the Orgenics and Orgenics International shares and, in certain
circumstances (including the completion of this offering), each Orgenics
stockholder has the option to put its Orgenics shares to Selfcare. To the
extent that the put options are not exercised, Selfcare intends to exercise
its call options upon completion of this offering. The Company has paid
approximately $7.0 million in cash and converted the Orgenics Debenture for
its existing ownership interest and estimates that it will pay additional
consideration totaling $9.3 million in cash and Common Stock for
substantially all of the remaining shares in Orgenics and Orgenics
International pursuant to the exercise of the Option Agreements. Each of the
Orgenics and Orgenics International stockholders may elect to receive the
purchase price entirely in cash, entirely in the Common Stock, or 50% in
cash and 50% in Common Stock. See "Business -- Strategic
Transactions -- Orgenics Acquisition." Assuming that all Orgenics and
Orgenics International stockholders were to elect to receive the
consideration in the form of 50% cash and 50% Common Stock, the Company
would pay approximately $4.7 million in cash and issue approximately 368,600
shares of Common Stock (based on a market price of $12.625 per share of
Common Stock and Orgenics' estimated revenues for the four fiscal quarters
ended December 31, 1996). In addition, the Company has granted options to
purchase up to 85,800 shares of Common Stock having a fair market value of
approximately $1.1 million, and will incur direct acquisition costs of
approximately $100,000.

On January 14, 1997, pursuant to the terms of the Nutritional Supplement
Lines Acquisition, the Company agreed to pay $36.0 million to acquire the
Nutritional Supplement Lines from AHP. The purchase price will be financed
with $25.0 million of long term bank debt, a $5.0 million bridge loan (the
"AHP Bridge Loan") and a $6 million one-year promissory note (the "AHP
Note") issued by the Company. The Company intends to apply $11.0 million
from the proceeds of this offering to pay the AHP Bridge Loan and the AHP
Note; however, the Company may elect to refinance the AHP Bridge Loan and/or
the AHP Note from other sources. See "Use of Proceeds."

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deferred financing costs associated with certain warrants granted to EN PLC,
(v) interest expense related to the issuance of certain warrants and cash
consideration to the holders of certain notes and warrants and (vi)
estimated incremental costs associated with the Nutritional Supplement Lines
Acquisition. The pro forma amounts do not give effect to (i) the expensing
of the estimated fair values of certain in process research and development
projects upon consummation of the Orgenics Acquisition and (ii) certain
nonrecurring charges related to certain options, the terms of which became
fixed upon consummation of the Initial Public Offering. The pro forma
statement of operations is not necessarily indicative of future results of
operations or what results would have been for the combined companies. In
addition, see Notes to the Pro Forma Combined Condensed Statement of
Operations for information as to the basis of computing the pro forma net
loss per common and common equivalent shares used in this computation.

(2) Computed on the basis described in Note 2g of Notes to Consolidated
Financial Statements.

(3) Adjusted to give effect to the sale of 2,000,000 shares of Common Stock
offered hereby (at an assumed public offering price of $12.625 per share and
after deducting the underwriting discounts and commissions and estimated
offering expenses) and the receipt of the net proceeds therefrom. See "Use
of Proceeds" and "Capitalization."

(4) Adjusted to give pro forma effect to significant events that have occurred
or are anticipated to occur subsequent to September 30, 1996, as follows:
(i) LifeScan's payment of a $7.0 million success fee to the Company, of
which the Company estimates it will recognize $4.0 million of revenue, (ii)
the conversion of an affiliate of LifeScan's previous advances to the
Company of approximately $13.7 million into 201,622 shares of Common Stock
and the right to receive, for no additional consideration, approximately
278,572 additional shares based on the number of shares of Common Stock
issued pursuant to the exercise of those options and warrants that were
outstanding as of November 10, 1995, (iii) the sales of 5,500 Series A
Preferred Shares to certain non-U.S. investors and the receipt of net
proceeds of approximately $5.2 million therefrom and the conversion of such
shares into an estimated 462,292 shares of Common Stock, based upon an
average market price of $12.325 resulting in a conversion price of $12.00
per share, (iv) the reversal of other nonrecurring non-cash charges relating
to certain warrants, the terms of which became fixed on December 31, 1996,
net of the non-cash charge relating to certain additional warrants issued at
that time, (v) payments of additional consideration of $137,500 to certain
noteholders, (vi) the purchase of 7,961,368 shares of Enviromed from EN PLC
in exchange for a promissory note and the purchase of an additional 300,000
shares for cash from unrelated parties, (vii) the recording of deferred
financing costs relating to certain additional warrants issued in connection
with the deferral of the promissory note issued to EN PLC, (viii) the
conversion of the Orgenics Debenture and the Company's existing and planned
purchases of the Orgenics and Orgenics International shares and (ix) the
purchase of the Nutritional Supplement Lines from AHP and the incurrence of
the related bank debt. See Note 2 above and Notes to Unaudited Pro Forma
Combined Condensed Balance Sheet for additional information regarding
purchase price adjustments in connection with the Orgenics Acquisition and
the Nutritional Supplement Lines Acquisition.

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

This Prospectus contains, in addition to historical information,
forward-looking statements that involve risks and uncertainty. The Company's
actual results could differ significantly from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed in "Risk Factors" as well as those discussed
elsewhere in this Prospectus.
- ------------------------------------------------------------------------------

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RISK FACTORS

The following risk factors should be considered carefully in addition to
the other information contained in this Prospectus before purchasing the Common
Stock offered hereby.

RISKS RELATED TO THE LIFESCAN ALLIANCE

The Company's future results of operations depend to a substantial degree
on the successful completion of the receipt of FDA Clearance for, the
commencement of shipments of, and LifeScan's ability to market and sell the New
System. No assurance can be given that these events will occur or will not be
delayed. A material delay in or the non-occurrence of any of these events would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "-- No Assurance of FDA Clearance,"
"-- Comprehensive Government Regulation," "-- Dependence on Patents and
Proprietary Technology" and "Business -- Strategic Transactions -- LifeScan
Alliance."

RISKS RELATED TO THE NUTRITIONAL SUPPLEMENT LINES ACQUISITION

The Company has agreed to pay $36.0 million to acquire the Nutritional
Supplement Lines from AHP. As part of its plans for maintaining and expanding
sales of these products, the Company expects to incur substantial marketing and
promotional expenses and allowances in 1997 and thereafter. There can be no
assurance that these expenditures and allowances will allow the Company to
increase or maintain the existing revenue levels from the Nutritional Supplement
Lines. The Company's product focus to date has been on diagnostic tests of
various kinds and the Company has not previously marketed nutritional
supplements, nor has the Company conducted a national advertising campaign of
the scope or magnitude of that which it plans for the Nutritional Supplement
Lines. In addition, the Company will seek to close the acquisition (the
"Acquisition Closing") prior to completion of this offering. However, the
Company may determine to complete this offering prior to such closing, but will
do so only if: (i) the Company has obtained a commitment letter for bank
financing on acceptable terms, (ii) the parties have obtained all necessary
government consents and approvals, including the expiration or termination of
any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") and (3) the AHP Board of Directors has
approved the acquisition. There can be no assurance that the Nutritional
Supplement Lines Acquisition will be completed prior to the completion of this
offering or that all of the conditions to the Acquisition Closing will be
satisfied so as to enable the acquisition to be completed. If the acquisition
should not occur, the Company would record an estimated $350,000 of costs as a
charge against earnings. The Company believes that the failure of the
acquisition to occur would not have a material adverse effect on the ongoing
business of the Company as currently conducted. However, if the acquisition were
not completed, the Company would not have the benefit of revenues associated
with the Nutritional Supplement Lines and would not realize the potential new
marketing and other opportunities afforded by the addition of the Nutritional
Supplement Lines. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview, and -- Liquidity and Capital
Resources," and "Business -- Strategic Transactions -- Nutritional Supplement
Lines Acquisition."

MANAGING AND MAINTAINING GROWTH

The Company is currently experiencing a period of rapid growth and
expansion, which is expected to accelerate further upon the consummation of the
Nutritional Supplement Lines Acquisition. This growth and expansion has placed,
and could continue to place, a significant strain on the Company's management,
customer service and support, operations, sales and administrative personnel and
other resources. In order to serve the needs of its existing and future
customers, the Company has increased and will continue to increase its
workforce, which requires the Company to attract, train, motivate and manage
qualified employees. The Company's ability to manage its planned growth depends
upon the Company's success in continuing to expand its operating, management,
information and financial systems, which may significantly increase its
operating expenses. If the Company fails to achieve its growth as planned or is
unsuccessful in managing its anticipated growth, there could be a material
adverse effect on the Company. See "Business -- Strategic Transactions."

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RISKS RELATED TO NEW PRODUCT DEVELOPMENT

The Company is at an early stage in its development. With the exception of
certain professional diagnostic products for infectious diseases, its women's
health products produced by third-party manufacturers, and (upon completion of
the Nutritional Supplement Lines Acquisition) the Nutritional Supplement Lines,
all of the Company's products are in various stages of research and development,
and the Company has generated no revenue from the commercialization of these
products under development. Many of the Company's products will require
substantial additional development, pre-clinical and clinical testing and
investment prior to their commercialization. There can be no assurance that the
Company's research and development efforts will be successful, that any of the
Company's products under development will prove to be safe or effective in
clinical trials, that the Company will be able to obtain regulatory approval to
market any of its products, that any of its products can be manufactured at
acceptable cost and with appropriate quality, or that any of its products, if
and when approved, can be successfully marketed.

NO ASSURANCE OF FDA CLEARANCE

The Company plans to submit in early 1997 a Section 510(k) Notification
with the FDA with respect to the New System. Following submission of a Section
510(k) Notification, a manufacturer may not place the device into commercial
distribution until an order is issued by the FDA. The FDA has no specific time
limit within which it must respond to a Section 510(k) Notification. After
review of a Section 510(k) Notification, the FDA will either agree with the
manufacturer that the proposed device is "substantially equivalent" to another
legally marketed device and allow the device to be marketed in the United
States, or determine that the proposed device is not substantially equivalent
and not allow such marketing. The FDA may also require that further information,
such as additional clinical test data or analysis or test results, be submitted
before the FDA is able to make a determination regarding substantial
equivalence. Although the Company has received FDA Clearance for the prior
version of the New System, there can be no assurance that the Company will
receive FDA Clearance for the New System. Failure to obtain FDA Clearance for
the New System would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, delays in obtaining
FDA Clearance for the New System could have a material adverse effect on the
Company's business, financial condition and results of operations.

COMPREHENSIVE GOVERNMENT REGULATION

Self-Test Products

The Company's research, development and clinical programs, as well as its
manufacturing and marketing operations, are subject to extensive regulation by
numerous governmental authorities in the United States and other countries. Most
of the Company's self-test products, including those licensed by the Company
from third parties, require governmental approvals for commercialization that
have not yet been obtained and are not expected to be obtained for several
years. Pre-clinical and clinical trials and manufacturing and marketing of many
of the Company's products will be subject to the rigorous testing and approval
process of the FDA and corresponding foreign regulatory authorities. The
regulatory process, which includes pre-clinical and clinical testing of many of
the Company's products to establish their safety and efficacy, can take many
years and require the expenditure of substantial financial and other resources.
Data obtained from pre-clinical and clinical activities are susceptible to
varying interpretations that could delay, limit or prevent regulatory approval.
In addition, delays or rejection may be encountered based upon changes in, or
additions to, regulatory policies for device marketing authorization during the
period of product development and regulatory review. Delays in obtaining such
approvals could adversely affect the marketing of products developed by the
Company and the Company's ability to generate commercial product revenues.

The Company is developing an HIV home-test program and plans to develop
other infectious disease self tests in the future. Although the FDA has recently
authorized a number of home collection and mail-in HIV testing and telephone
counseling services, the program being developed by the Company differs in
significant respects from these services. See "Business -- Products and
Technologies -- Infectious Disease Products -- HIV Tests." There can be no
assurance that the FDA will grant clearance for commercialization of the

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<PAGE> 12

Company's HIV home test in a timely manner, or at all. There also can be no
assurance that requisite regulatory approvals for the Company's other products
will be obtained within a reasonable period of time, if at all. Moreover, if
regulatory approval of a product is granted, such approval may impose
limitations on the indicated uses, or methods of use, for which such product may
be marketed. Further, even if such regulatory approval is obtained, a marketed
product, its manufacturer and its manufacturing facilities are subject to
continual review and periodic inspections, and later discovery of previously
unknown problems with a product, manufacturer or facility may result in
restrictions on such product or manufacturer, including withdrawal of the
product from the market. Failure to comply with the applicable regulatory
requirements can result in, among other things, fines, suspensions of regulatory
approvals, product recalls, operating restrictions and criminal prosecution.

In addition, the Company is required to meet regulatory requirements in
countries outside the United States, which can change rapidly with relatively
short notice, resulting in the Company's products being banned in certain
countries with consequent loss of revenues and income. Foreign regulatory
agencies could also introduce test format changes which, if not quickly
addressed by the Company, could result in restrictions on sales of the Company's
products. Such changes are not uncommon due to advances in basic research and
the nature of certain infectious diseases and agents such as HIV, which is a
mutating virus capable of producing new strains and subtypes. In July 1993, the
French Ministry of Health prohibited the sale in France of certain diagnostic
tests for HIV, due to a concern that the tests did not meet required sensitivity
levels. The Ministry of Health has subsequently imposed a separate ban on a
single HIV test manufactured and sold due to the failure of such test to
identify a newly discovered HIV subtype. There can be no assurance that there
will not be similar actions in the future. See "Business -- Governmental
Regulation -- Self-Test Products."

Nutritional Supplements

The manufacturing, processing, formulation, packaging, labeling and
advertising of nutritional supplements such as the Nutritional Supplement Lines
are subject to regulation by one or more federal agencies, including the FDA,
the Federal Trade Commission ("FTC") and the Consumer Product Safety Commission.
These activities are also regulated by various agencies of the states,
localities and foreign countries in which Nutritional Supplement Lines are now
sold or may be sold in the future. In particular, the FDA regulates the safety,
manufacturing, labeling and distribution of dietary supplements, including
vitamins, minerals and herbs, food additives, over-the-counter ("OTC") and
prescription drugs and cosmetics. The regulations that are promulgated by the
FDA relating to the manufacturing process are known as Current Good
Manufacturing Practices ("CGMPs"), and are different for drug and food products.
In addition, the FTC has overlapping jurisdiction with the FDA to regulate the
promotion and advertising of dietary supplements, OTC drugs, cosmetics and
foods.

The Dietary Supplement Health and Education Act of 1994 ("DSHEA") which
amends the FDA Act by defining dietary supplements as a new category of food
separate from conventional food, was enacted on October 25, 1994. The FDA has
proposed but not finalized regulations to implement DSHEA, including those
relating to nutritional labeling requirements. The Company cannot determine what
effect such regulations, when promulgated, will have on its business in the
future. Such regulations are likely to require expanded or different labeling
for the Nutritional Supplement Lines and could, among other things, require the
recall, reformulation or discontinuance of certain products, additional record
keeping, warnings, notification procedures and expanded documentation of the
properties of certain products and scientific substantiation regarding
ingredients, product claims, safety or efficacy. Failure to comply with
applicable FDA requirements could result in sanctions being imposed on the
Company or the manufacturers of its products, including warning letters, product
recalls and seizures, injunctions or criminal prosecution. The Company
anticipates that the FDA will promulgate specific CGMPs to regulate dietary
supplements which are more rigorous than the current CGMPs for food. The Company
believes that the manufacture of the Nutritional Supplement Lines is currently
in compliance with applicable CGMPs for food, but changes may be required in
order for the manufacture of the Nutritional Supplement Lines to comply with the
more rigorous anticipated CGMPs for dietary supplements. See
"Business -- Governmental Regulations -- Nutritional Supplements."

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<PAGE> 13

LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT;
UNCERTAIN PROFITABILITY

The Company has incurred operating losses since its inception. As of
September 30, 1996, the Company's accumulated deficit totaled approximately
$40.8 million. For the nine months ended September 30, 1996, the Company had
revenues of approximately $9.1 million and a net loss of approximately $26.1
million. The continued development of the Company's products will require the
commitment of substantial resources to conduct research and pre-clinical and
clinical development programs, and to establish manufacturing facilities, sales
and marketing capabilities, and additional quality control and regulatory and
administrative capabilities. The Company may incur substantial and increasing
operating losses over the next several years as its product programs expand and
various clinical trials commence. The amount of net losses and the time required
by the Company to reach sustained profitability are highly uncertain since
achieving profitability requires the Company to, among other things,
successfully complete development of its products, obtain regulatory approvals
and establish manufacturing and marketing capabilities. There can be no
assurance that the Company will be able to achieve profitability on a sustained
basis, or at all.

DEPENDENCE ON PATENTS AND PROPRIETARY TECHNOLOGY; TRADEMARKS

Self-Test Products

The medical products industry, including the diagnostic testing industry,
places considerable importance on obtaining patent and trade secret protection
for new technologies, products and processes, and the Company's success will
depend, in part, on its ability to obtain patent protection for its products and
manufacturing processes, to preserve its trade secrets and to operate without
infringing the proprietary rights of third parties.

The Company holds certain patent rights, has certain patent applications
pending, and expects to seek additional patents in the future, but there can be
no assurance as to its success or timeliness in obtaining any such patents or as
to the breadth or degree of protection that any such patents will afford the
Company. The patent position of medical products and diagnostic testing firms is
often highly uncertain and usually involves complex legal and factual questions.
There is a substantial backlog of patents at the U.S. Patent and Trademark
Office. No consistent policy has emerged regarding the breadth of claims covered
in medical products patents. Accordingly, there can be no assurance that patent
applications relating to the Company's products or technology will result in
patents being issued or that, if issued, such patents will afford adequate
protection to the Company's products or, if patents are issued to the Company,
that its competitors will not be able to design around such patents. In
addition, the medical products industry, including the diagnostic testing
industry, has been characterized by extensive litigation regarding patents,
licenses and other intellectual property rights. The Company could incur
substantial costs in defending itself against patent infringement claims or in
asserting such claims against others. If the outcome of any such litigation is
adverse to the Company, the Company's business could be materially adversely
affected. To determine the priority of inventions, the Company may also have to
participate in interference proceedings declared by the U.S. Patent and
Trademark Office, which could also result in substantial costs to the Company.
See "-- Risks Related to Certain Licensing Arrangements."

In addition, the Company may be required to obtain licenses to patents or
other proprietary rights of third parties to market its products. No assurance
can be given that licenses required under any such patents or proprietary rights
would be made available on terms acceptable to the Company, if at all. If the
Company does not obtain such licenses, it could encounter delays in product
market introductions while it attempts to design around such patents or other
rights, or be unable to develop, manufacture or sell such products in certain
countries or at all. Under the distribution agreement entered into pursuant to
the LifeScan Alliance, Selfcare has agreed to indemnify LifeScan for any claims
that the New System infringes any patents. See "Business -- Strategic
Transactions -- LifeScan Alliance."

The Company also seeks to protect its proprietary technology, including
technology that may not be patented nor patentable, in part through
confidentiality agreements and, if applicable, inventors' rights agreements with
its collaborators, advisors, employees and consultants. There can be no
assurance that these agreements will not be breached, that the Company will have
adequate remedies for any breach, or that the

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<PAGE> 14

Company's trade secrets will not otherwise be disclosed to, or discovered by,
competitors. Moreover, the Company may from time to time conduct research
through academic advisors and collaborators who are prohibited by their academic
institutions from entering into confidentiality or inventors' rights agreements.
See "Business -- Patents and Proprietary Rights" and "Business -- Legal
Proceedings."

Nutritional Supplements

In connection with the Nutritional Supplement Lines Acquisition, the
Company will acquire certain trademarks which, the Company believes, are
valuable assets and are very important to the marketing of the Nutritional
Supplement Lines. Substantially all of these trademarks have been registered
with the U.S. Patent and Trademark Office. There can be no assurance, however,
that such registrations will afford adequate protection to the Company and not
be challenged as unenforceable or invalid, or not be infringed. In addition, the
Company could incur substantial costs in defending suits brought against it or
in prosecuting suits in which the Company asserted rights under such
registrations. If the outcome of such litigation were adverse to the Company,
the Company's business and results of operations could be materially adversely
affected.

COMPETITION; RISK OF TECHNOLOGICAL OBSOLESCENCE

Self-Test Products

The medical products industry, including the diagnostic testing industry,
is rapidly evolving and developments are expected to continue at a rapid pace.
Competition in this industry is intense and expected to increase as new products
and technologies become available and new competitors enter the market. The
Company's competitors in the United States and abroad are numerous and include,
among others, diagnostic testing and medical products companies, universities
and other research institutions. The Company's success depends upon developing
and maintaining a competitive position in the development of products and
technologies in its area of focus. The Company's competitors may also succeed in
developing technologies and products that are more effective than any that have
been or are being developed by the Company or that render the Company's
technologies or products obsolete or noncompetitive. The Company's competitors
may also succeed in obtaining patent protection or other intellectual property
rights that would prevent the Company from developing its potential products, or
in obtaining regulatory approval for the commercialization of their products
more rapidly or effectively than the Company. Finally, many of the Company's
existing or potential competitors have or may have substantially greater
research and development capabilities, clinical, manufacturing, regulatory and
marketing experience and financial and managerial resources than the Company.

The Company is seeking to develop and market generic test strips which are
compatible with other manufacturers' electrochemical blood glucose monitoring
systems. If the Company succeeds in these efforts, others may attempt to enter
this market with similar products. In addition, the introduction of lower-priced
generic test strips could lead the manufacturers of the systems with which such
test strips are compatible to lower their own test strip prices, thereby
reducing or eliminating the price advantage enjoyed by the generic test strip
producers. On June 28, 1996, the Company obtained FDA Clearance for its first
generic test strip, to be sold under the name "Excel(TM)", which is compatible
with the ExacTech system sold by MediSense. The Company intends to commence
marketing this product in the United States in the first half of 1997. Although
the Company believes that its Excel generic test strip will be priced lower than
the strips produced by MediSense for the ExacTech System and therefore will
compete effectively with the MediSense product, there can be no assurance that
MediSense will not institute price cuts and thereby reduce or eliminate any
price advantage which the Company's product may enjoy.

The Company is also aware of several of its competitors who are attempting
to develop a non-invasive blood glucose monitoring technology. Non-invasive
blood glucose monitoring involves methods for measuring blood glucose levels
without the need to draw blood and, in certain proposed configurations, without
the need to utilize disposable components, such as test strips. The Company
believes that manufacturers are pursuing a number of different technological
approaches to non-invasive blood glucose monitoring. These include near-infrared
spectroscopy, which involves shining a beam of nearinfrared light to penetrate
the skin and determine

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<PAGE> 15

the amount of glucose in the blood, and reverse iontophoresis, which utilizes a
"patch" system to extract glucose through the skin for measurement by an
external meter. In addition, several manufacturers are pursuing minimally
invasive approaches to blood glucose monitoring, such as using a fine needle to
withdraw a small sample of interstitial fluid which is analyzed by use of
mid-infrared spectroscopy. The development and successful introduction of any
such products could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Competition."

Nutritional Supplements

The market for the sale of vitamins and nutritional supplements such as the
Nutritional Supplement Lines is highly competitive. Competition is based
principally upon price, quality of products, customer service and marketing
support. There are numerous companies in the vitamin and nutritional supplement
industry selling products to retailers such as mass merchandisers, drug store
chains, independent drug stores, supermarkets and health food stores. Most of
these companies are privately held and the Company is unable to precisely assess
the size of such competitors. However, a number of the Company's competitors,
particularly manufacturers of nationally advertised brand name products, are
substantially larger than the Company and have greater financial resources. See
"Business -- Competition."

DEPENDENCE ON THIRD-PARTY DISTRIBUTION NETWORK

The Company markets and distributes its products primarily through
independent retail brokers and distributors. The Company generally has written
agreements with such brokers and distributors, although it also has a limited
number of oral arrangements. In general, these brokers and distributors are not
subject to minimum purchase requirements and may discontinue marketing the
Company's products with little or no notice. Certain of the Company's retail
brokers and distributors also market products which compete with the Company's
products and which may, from time to time, offer greater sales incentives than
the Company's products. The loss of, or a significant reduction in sales volume
through, one or more of the Company's retail brokers or distributors could have
a material adverse effect on the Company's business, financial condition or
results of operations. See "Business -- Marketing and Sales."

DEPENDENCE ON CERTAIN SUPPLIERS

The Company currently has no facilities to manufacture the Nutritional
Supplement Lines. Upon the Acquisition Closing, the Company will enter into
supply agreements with AHP pursuant to which AHP will supply the products for
the Nutritional Supplement Lines for a period of up to one year after the
Acquisition Closing. Thereafter the Company will be required to enter into new
arrangements for the supply of these products. If the Company were unable to
contract for a sufficient supply of such products, or if it should encounter
delays or other difficulties in the supply of such products from third parties,
including AHP, these interruptions could have a material adverse effect on the
Company's result of operations and result in significant quarter-to-quarter
fluctuations. In addition, contract manufacturers that the Company may use to
supply products for the Nutritional Supplement Lines must adhere to CGMP
regulations. Failure to do so could result in the withdrawal of FDA approval of
such manufacturers and consequent interruptions in the supply of products to the
Company. Upon the Acquisition Closing, the Company will become responsible for
all marketing and sales functions for the Nutritional Supplement Lines as well
as substantially all administrative functions, including order receipt, billing,
customer service and collection. The Company will also become responsible for
distribution of all the products three months after the Acquisition Closing.
Assumption of these activities could place a significant strain on the Company's
resources and personnel, and will require the Company to devote significant
additional resources and personnel to these areas. Failure by the Company to
successfully assume these services could have an adverse impact on the Company's
ability to support the Nutritional Supplement Lines and could have a material
adverse affect on the Company's results of operations.

The Company has entered into a manufacturing agreement with Nova Biomedical
Corporation ("Nova") to supply Selfcare with electrochemical blood glucose
meters. The meters manufactured by Nova, together with the Company's test
strips, will form the New System. The Company's ability to ship the New

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<PAGE> 16

System on time and in accordance with LifeScan's requirements is highly
dependent upon receipt of an adequate supply of electrochemical blood glucose
meters. There can be no assurance that the Company's supply of electrochemical
blood glucose meters will not be interrupted, or that if such supply were
interrupted, that the Company would be able to contract with another supplier on
a timely or satisfactory basis. If such supply were interrupted, the Company
could incur set-up costs and delays in manufacturing the New System which could
have a material adverse effect on the Company's business, financial condition
and results of operations. If any such delay were to occur, and were to result
in the Company being unable to supply LifeScan with certain required amounts of
meters for the New System under the LifeScan Alliance, LifeScan would
automatically receive a license to manufacture, or to have manufactured on its
behalf, the New System, subject to payment of a royalty to the Company. In such
event, the Company could begin supplying the New System to LifeScan again at any
time, but would be required to reimburse LifeScan for certain expenses incurred
by LifeScan to produce the New System. See "Business -- Strategic
Transactions -- LifeScan Alliance."

RISKS RELATED TO CERTAIN LICENSING ARRANGEMENTS

Selfcare acquired Cambridge Diagnostics (formerly known as Cambridge
Biotech Limited) in November 1994 from Cambridge Biotech Corporation ("Cambridge
Biotech"), which at that time was operating in Massachusetts under Chapter 11 of
the U.S. Bankruptcy Code. Prior to the acquisition (the "Cambridge Diagnostics
Acquisition"), Cambridge Biotech licensed from Pasteur Sanofi Diagnostics
(formerly known as Diagnostics Pasteur), certain HIV 1/2 immunoassay
technologies relating to patents and proprietary rights held by Institut Pasteur
(the "Pasteur HIV Technologies"), and required for production of HIV test kits,
including the Selfcare HIV test kits manufactured by Cambridge Diagnostics.
Under the terms of Cambridge Biotech's license agreements with Pasteur Sanofi
Diagnostics, Cambridge Biotech could not assign or sublicense its rights with
respect to the Pasteur HIV Technologies to Selfcare or to Cambridge Diagnostics.
In order to allow Selfcare and Cambridge Diagnostics to have access to such
technologies, Selfcare and Cambridge Biotech formed Cambridge Affiliate
Corporation ("Cambridge Affiliate"), 51% owned by Cambridge Biotech, and 49%
owned by Selfcare, but managed by Cambridge Diagnostics. The establishment of
Cambridge Affiliate and the terms of the arrangements relating thereto were
considered and approved by both U.S. and Irish bankruptcy courts in connection
with the approval of the sale of Cambridge Diagnostics by such courts. Cambridge
Affiliate maintains its own accounts and records and makes payments of royalties
due under the Pasteur Sanofi Diagnostics licenses to Cambridge Biotech.

The licenses of the Pasteur HIV Technologies to Cambridge Biotech are
non-exclusive and cover diagnostic test kits in finished form embodying the
Pasteur HIV Technologies. The territorial scope of the licenses is worldwide,
with the exception of exclusive rights which Pasteur Sanofi Diagnostics asserted
to have granted in the Pasteur HIV Technologies to Genetic Systems Corporation
("Genetic Systems") in the United States, Canada, Mexico, Australia, New Zealand
and India (the "Excluded Countries"). However, the licenses provide that, to the
extent that Pasteur Sanofi Diagnostics recovers the right to practice the
patents underlying the Pasteur HIV Technologies in the Excluded Countries,
Cambridge Biotech is entitled to non-exclusive rights in such technology in such
countries. In 1990, Pasteur Sanofi Diagnostics acquired ownership of Genetic
Systems, whereupon Cambridge Biotech commenced selling products incorporating
the Pasteur HIV Technologies in the United States. These activities were
challenged in a patent infringement lawsuit filed in bankruptcy court in March
1995 by Institut Pasteur, the minority stockholders of Pasteur Sanofi
Diagnostics and Genetic Systems. In September 1995, the bankruptcy court ruled
in favor of Cambridge Biotech on this issue, and Institut Pasteur and Genetic
Systems Corporation subsequently filed an appeal in district court. The date for
the appeal hearing is unknown. If the bankruptcy court decision were reversed on
appeal, the territories to which Cambridge Affiliate could sell HIV-related
products would be limited and this could have a material adverse effect on the
Company. See "Business -- Patents and Proprietary Rights."

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Pasteur Sanofi Diagnostics. Syva and Pasteur Sanofi Diagnostics objected to
confirmation of a plan that would permit Cambridge Biotech to assume or transfer
control of its rights as licensee with respect to their patents. On July 18,
1996, the Bankruptcy Court confirmed Cambridge Biotech's Chapter 11 plan over
all objections, specifically upholding Cambridge Biotech's right to assume the
Syva and Pasteur Sanofi Diagnostics licenses. Syva and Pasteur Sanofi
Diagnostics immediately appealed the Bankruptcy Court's order. The Syva appeal
was subsequently settled. Pasteur Sanofi Diagnostics, however, obtained orders
staying the Bankruptcy Court's plan-confirmation order and the proposed sale of
stock to bioMerieux pending determination of its appeal. On September 27, 1996,
the United States District Court affirmed the plan-confirmation order, including
Cambridge Biotech's right to assume the licenses extended to the Cambridge
Affiliate. Pasteur Sanofi Diagnostics then appealed to the Court of Appeals for
the First Circuit. On October 9, 1996, the First Circuit lifted the stay of the
plan-confirmation order, and scheduled Pasteur Sanofi Diagnostics' appeal for
expedited determination. Though the question of Cambridge Biotech's right to
assume the Pasteur Sanofi Diagnostics licenses has not been decided by the First
Circuit, Cambridge Biotech and bioMerieux consummated the sale in October 1996.
On November 5, 1996, a three-judge panel of the First Circuit Court of Appeals
heard oral arguments with respect to Pasteur Sanofi Diagnostics' appeal. If the
First Circuit rules that Cambridge Biotech cannot assume its license agreements
with Pasteur Sanofi Diagnostics, then it will be unclear whether Cambridge
Biotech may continue to extend the license to Cambridge Affiliate. The failure
of the Company to retain such license could have a material adverse effect on
the Company. See "Business -- Strategic Transactions -- Cambridge Diagnostics
Acquisition."

DEBT FINANCING

The Company will be subject to risks normally associated with debt
financing, including the risk that the Company's cash flow will be insufficient
to meet required payments of principal and interest. On a pro forma basis after
giving effect to certain events including the consummation of the Nutritional
Supplement Lines Acquisition and the consummation of this offering (and assuming
the application of $11.0 million of the proceeds of this offering to repay
certain indebtedness incurred in connection with such acquisition), the Company
would have approximately $34.2 million of outstanding debt, including a $25.0
million bank term loan that would be used to pay part of the cash portion of the
consideration payable to AHP under the terms of Nutritional Supplement Lines
Acquisition. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources." This outstanding
indebtedness, together with restrictions in the Company's financing instruments,
may limit the Company's ability to obtain additional debt financing in the
future and to respond to changing business and economic conditions and could
adversely affect its ability to effect its business strategies. In addition,
because certain of the Company's debt, including the $25.0 million term loan for
the Nutritional Supplement Lines Acquisition, will bear interest at floating
rates, an increase in interest rates could adversely affect the Company's
ability to meet its debt service obligations. See "Business -- Strategic
Transactions -- Nutritional Supplement Lines Acquisition."

RISK OF INADEQUATE FUNDING; FUTURE CAPITAL NEEDS

The Company currently anticipates that its existing capital resources,
including the net proceeds of this offering, together with funds expected to be
generated from operations, will be adequate to satisfy its capital requirements
for at least 12 months. No assurance can be given that additional financing will
be available, or, if available, that it will be available on acceptable terms.
If additional funds are raised by issuing equity securities, further dilution to
then existing stockholders will result. If adequate funds are not available, the
Company may be required to significantly curtail one or more of its research and
development programs, or obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies or products which the Company would otherwise pursue on its
own. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

RISKS RELATED TO THE INTEGRATION OF ORGENICS' OPERATIONS

Upon completion of the Orgenics Acquisition, the Company intends to
integrate Orgenics' operations with the Company's current organization in order
to avoid redundancy and to make the most efficient use of Orgenics' assets. No
assurance can be given that such integration will be successful or that the
Company will

15
<PAGE> 18

not incur significant costs associated with such integration, such as costs
associated with the diversion of management resources to integration issues. See
"Business -- Strategic Transactions -- Orgenics Acquisition."

DEPENDENCE UPON KEY PERSONNEL

The Company is highly dependent on the services of Ron Zwanziger, its
Chairman, President and Chief Executive Officer, and certain other members of
its management and scientific staff, and the loss of Mr. Zwanziger or one or
more of such employees could have a material adverse effect on the Company. In
addition, the Company believes that its future success will depend in large part
upon its ability to attract and retain highly skilled scientific, managerial and
marketing personnel, particularly as the Company expands its activities,
including product development and regulatory affairs, research and development
and sales and manufacturing. The Company faces significant competition for such
personnel from other companies, research and academic institutions, government
entities and other organizations. There can be no assurance that the Company
will be successful in hiring or retaining the personnel it requires for
continued growth. The failure to hire and retain such personnel could materially
and adversely affect the Company's prospects. See "Management."

DEPENDENCE ON THIRD-PARTY REIMBURSEMENT

In both the United States and elsewhere, sales of some of the Company's
products will be dependent in part on the availability of reimbursement from
third party payors, such as government and private insurance plans. Third party
payors are increasingly challenging the prices charged for medical products and
services. If the Company succeeds in bringing one or more of such products to
market, there can be no assurance that these products will be considered
cost-effective, that reimbursement will be available or, if available, that the
level of reimbursement will be sufficient to allow the Company to sell its
products on a profitable basis. See "Business -- Third-Party Reimbursement."

PRODUCT LIABILITY; LIMITED INSURANCE COVERAGE

The testing, manufacturing and marketing of medical diagnostic devices,
such as the Company's blood glucose monitoring systems and HIV self tests
currently under development, including a home collection and mail-in HIV test
under development by a third party which the Company plans to market under a
license arrangement (see "Business -- Strategic Transactions -- Agreement with
ChemTrak"), entail an inherent risk of product liability claims. In addition,
the marketing of the Nutritional Supplement Lines may cause the Company to be
subjected to various product liability claims, including, among others, that the
Nutritional Supplement Lines have inadequate warnings concerning side effects
and interactions with other substances. Potential product liability claims may
exceed the amount of the Company's insurance coverage or may be excluded from
coverage under the terms of the policy. There can be no assurance that the
Company's existing insurance can be renewed at a cost and level of coverage
comparable to that presently in effect, if at all. In the event that the Company
is held liable for a claim against which it is not indemnified or for damages
exceeding the limits of its insurance coverage, such claim could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Product Liability" and "-- Product and
Technologies -- Infectious Disease Products -- HIV Tests."

EFFECT OF ADVERSE PUBLICITY; SCIENTIFIC RESEARCH

The Nutritional Supplement Lines contain vitamin, minerals, herbs and other
ingredients that the Company generally regards as safe when taken as directed
and that various scientific studies have suggested may offer certain health
benefits. However, because the Company is highly dependent upon consumers'
perception of safety and quality of the Nutritional Supplement Lines as well as
similar products distributed by competitors, the Company could be adversely
affected in the event any of the Nutritional Supplement Lines or similar
products should be asserted or prove to be harmful to consumers. In addition,
the Company believes that the recent growth of the nutritional supplements
market is based on recent scientific research suggesting potential health
benefits from regular consumption of certain vitamins and other nutritional
products and the

16
<PAGE> 19

attention focused on such benefits by the media. The scientific research to date
is preliminary and there can be no assurance of future favorable scientific
results and media attention or of the absence of unfavorable or inconsistent
findings.

RISKS RELATED TO INTERNATIONAL SALES AND OPERATIONS

The Company has manufacturing facilities in Galway, Ireland (the "Galway
Facility") and Inverness, Scotland (the "Inverness Facility") and markets and
sells its products in several international markets. In 1995, approximately 26%
and 15% of the Company's net sales were to customers in Europe and the Middle
East, respectively. If the Company's revenues generated by foreign activities
are not adequate to offset the expense of establishing and maintaining these
foreign activities, the Company's business, financial condition and results of
operations could be materially adversely affected. In addition, there are
certain risks inherent in doing business internationally, such as changes in
applicable laws and regulatory requirements, export and import restrictions,
export controls relating to technology, tariffs and other trade barriers, less
favorable intellectual property laws, difficulties in staffing and managing
foreign operations, longer payment cycles, difficulties in collecting accounts
receivable, political instability, fluctuations in currency exchange rates,
expatriation controls and potential adverse tax consequences, which could
adversely impact the success of the Company's international activities. There
can be no assurance that one or more of such factors will not have a material
adverse effect on the Company's future international activities and,
consequently, on the Company's business, financial condition and results of
operations. See "Business -- Manufacturing" and "Business -- Facilities."

The executive offices and production facilities of Orgenics are located in
the State of Israel, and Orgenics is directly affected by political, economic
and military conditions in that country. On many occasions since December 1987,
Israel has experienced severe civil unrest, primarily in the areas that have
been under its control since 1967. No assurance can be given that hostilities or
other political, economic and military conditions in Israel will not have a
material adverse effect on the business and operations of Orgenics. Any such
effect could have a material adverse effect on the business, operations or
financial condition of the Company.

FLUCTUATIONS IN RESULTS OF OPERATIONS

The Company's annual and quarterly operating results may fluctuate due to
factors such as the timing of new product announcements and introductions by the
Company and its competitors, market acceptance of new or enhanced versions of
the Company's products, changes in manufacturing costs or other expenses,
competitive pricing pressures, the gain or loss of significant distribution
outlets or customers, increased research and development expenses and general
economic conditions. In addition, it is possible that in some future periods the
Company's results of operations will be below the expectations of the public
market. In any such event, the market price of the Common Stock could be
materially and adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

POSSIBLE VOLATILITY OF SHARE PRICE

The market price of the Common Stock may be highly volatile. Quarterly
operating results of the Company, changes in general conditions in the economy,
the financial markets, or the healthcare industry, or other developments
affecting the Company or its competitors, could cause the market price of the
Common Stock to fluctuate substantially. In particular, the stock market may
experience significant price and volume fluctuations which may affect the market
price of the Common Stock for reasons unrelated to the Company's operating
performance.

Sales of substantial amounts of Common Stock, or the perception that such
sales could occur, could adversely affect the prevailing market price for the
Common Stock. In October 1996, the Company sold Series A Preferred Shares to
certain non-U.S. investors yielding net proceeds to the Company of approximately
$5.2 million. Pursuant to a conversion formula contained in their subscription
agreements with the Company, the holders of such shares, among other things, are
entitled to convert their Series A Preferred

17
<PAGE> 20

Shares into shares of Common Stock in five equal installments over a 120-day
period beginning in December 1996. Any Series A Preferred Shares not previously
converted will automatically convert into shares of Common Stock on October 15,
1998. Accordingly, based on an assumed average market price of $12.325 per share
of Common Stock resulting in a conversion price of $12.00, 439,400 shares of
Common Stock will be freely tradeable without restriction or registration under
the Securities Act of 1933, as amended (the "Securities Act"), as a result of
the conversion of the remaining Series A Preferred Shares. See "-- Shares
Eligible for Future Sale" and "Description of Capital Stock -- Authorized and
Outstanding Capital Stock -- Series A Preferred Shares."

CONTROL BY CERTAIN STOCKHOLDERS

Upon completion of this offering, and without giving effect to the issuance
of any additional shares of Common Stock which may be issued in connection with
the Orgenics Acquisition, the executive officers and directors of the Company
will collectively hold approximately 18.1% of the outstanding shares of Common
Stock (rights to receive, and excluding options and warrants to purchase, up to
an additional 4,284,599 shares of Common Stock representing approximately 28.0%
of the Common Stock on a fully-diluted basis and excluding any shares purchased
in this offering). Accordingly, these persons may have the ability to control
the Company's Board of Directors, and, therefore, the business, policies and
affairs of the Company. In addition, certain stockholders of the Company,
including Mr. Zwanziger, who will collectively hold approximately 14.1% of the
outstanding shares of Common Stock upon completion of this offering, are parties
to a voting agreement pursuant to which such stockholders have agreed to vote
their shares in accordance with the recommendation of the Company's Board of
Directors through December 31, 1997. See "Principal Stockholders" and
"Description of Capital Stock."

ANTI-TAKEOVER EFFECT OF CERTIFICATE OF INCORPORATION AND BY-LAW PROVISIONS AND
DELAWARE LAW

The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") and Amended and Restated By-laws (the "By-laws")
contain certain provisions relating to corporate governance and the rights of
stockholders. These provisions may be deemed to have a potential "anti-takeover"
effect since such provisions may delay, defer or prevent a change in control of
the Company. The Certificate of Incorporation provides for the Board of
Directors to be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of the Board of Directors
will be elected each year. In addition, the Certificate of Incorporation
provides that stockholders may remove a director only for cause and only by the
vote of the holders of two-thirds of the Common Stock of the Company. This
provision, when coupled with the provision of the Certificate of Incorporation
authorizing only the Board of Directors to fill vacant directorships, will
preclude stockholders from removing incumbent directors without cause and
simultaneously gaining control of the Board of Directors by filling the
vacancies created by such removal with their own nominees, and will make more
difficult, and therefore may discourage, a proxy contest to change control of
the Company. These provisions of the Certificate of Incorporation may be changed
only by the affirmative vote of the holders of eighty percent of the Common
Stock of the Company entitled to vote on such matters at a meeting duly called
for such purpose. The Certificate of Incorporation also provides that
stockholder actions may not be taken by written consents.

The By-laws provide that special meetings of stockholders of the Company
may be called only by the Board of Directors. The By-laws also provide that
stockholders seeking to bring business before an annual or special meeting of
stockholders, or to nominate candidates for election as directors at an annual
or special meeting of stockholders, must provide prior written notice thereof,
as set forth in the By-laws. The By-laws may only be amended by the stockholders
by the affirmative vote of at least two-thirds of the votes eligible to be cast,
unless the Board of Directors has approved such amendment, in which case the
affirmative vote of at least a majority of the votes eligible to be cast is
required. See "Description of Capital Stock."

EFFECT OF ISSUANCE OF PREFERRED STOCK

The Company's Board of Directors is currently authorized to issue up to
4,990,000 shares of preferred stock in the future without further stockholder
approval and upon such terms and conditions, and having such rights, privileges
and preferences, as the Board of Directors may determine. The rights of the
holders of

18
<PAGE> 21

Common Stock will be subject to, and may be adversely affected by, the rights of
the holders of any preferred stock that may be issued in the future. In
addition, the issuance of preferred stock could have the effect of making it
more difficult for a third party to acquire control of, or of discouraging
acquisition bids for, the Company. This could limit the price that certain
investors might be willing to pay in the future for shares of Common Stock. In
October 1996, the Board of Directors adopted a resolution authorizing the Series
A Preferred Shares, and the Company subsequently sold 5,500 Series A Preferred
Shares to certain non-U.S. investors. See "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, and without giving effect to the issuance
of any additional shares of Common Stock which may be issued in connection with
the Orgenics Acquisition, the Company will have a total of 7,959,663 shares of
Common Stock outstanding. Of these shares, the 2,000,000 shares of Common Stock
offered hereby (2,300,000 shares if the Underwriters' over-allotment option is
exercised in full) and the 1,495,000 shares issued in the Initial Public
Offering will be freely tradable without restriction or registration under the
Securities Act by persons other than "affiliates" of the Company, as that term
is defined in Rule 144 promulgated under the Securities Act ("Affiliates"). In
addition, in October 1996 the Company sold 5,500 Series A Preferred Shares to
certain non-U.S. investors. The holders of such shares, among other things, are
entitled to convert their Series A Preferred Shares into shares of Common Stock
in five equal installments over a 120-day period beginning in December 1996.
Series A Preferred Shares are convertible at a discount of 14.5% from the
average closing bid price per share of the Common Stock for the five trading
days prior to their conversion. Upon the election of a holder of Series A
Preferred Shares, the Company issued 22,892 shares of Common Stock on December
20, 1996, all of which are freely tradeable without restriction or registration.
Upon conversion of the remaining Series A Preferred Shares into shares of Common
Stock, based on an average market price of $12.325 per share resulting in a
conversion price of $12.00, an additional 439,400 shares of Common Stock will be
freely tradeable without restriction or registration under the Securities Act.
The remaining 4,441,771 shares of Common Stock currently outstanding will be
"restricted securities" as that term is defined by Rule 144. These restricted
securities (the "Restricted Securities") were issued and sold by the Company in
private transactions in reliance upon exemptions from registration under the
Securities Act.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least two years, including persons who may be deemed Affiliates of the
Company, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the number of shares of Common
Stock then outstanding (approximately 79,597 shares upon completion of this
offering) or the average weekly trading volume of the Common Stock during the
four calendar weeks preceding the filing of a Form 144 with respect to such
sale. Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements, and to the availability of current public information
about the Company. In addition, a person who is not deemed to have been an
affiliate of the Company at any time during the 90 days preceding a sale, and
who has beneficially owned the shares proposed to be sold for at least three
years, would be entitled to sell such shares under Rule 144(k) without regard to
the requirements described above.

Under Rule 144 (and subject to the conditions thereof), 3,760,757
Restricted Securities will be eligible for sale after completion of this
offering. The Company, its directors, executive officers and certain other
stockholders have agreed not to offer, sell or otherwise dispose of any shares
of Common Stock (or any securities convertible into or exercisable for Common
Stock), with certain limited exceptions, without the prior written consent of
Lehman Brothers Inc. on behalf of the Representatives. The remaining Restricted
Securities will become eligible for resale in accordance with Rule 144.

In addition, the Company has granted certain registration rights with
respect to shares of Common Stock which are currently outstanding or which are
issuable in the future, pursuant to which the Company may be required to
register such shares for sale under the Securities Act. See "Shares Eligible for
Future Sale."

19
<PAGE> 22

MANAGEMENT DISCRETION OVER UNALLOCATED PROCEEDS

The Company has not yet identified specific uses for a portion of the
expected net proceeds of this offering. See "Use of Proceeds." Management of the
Company will have broad discretion over the manner in which these funds are
applied. Pending their use for specific business purposes, the proceeds of this
offering will be invested primarily in government securities or cash
equivalents. Such investment may result in the Company obtaining lower yields on
the funds than might be available in the securities markets generally.

DILUTION

Purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value per share of
the Common Stock from the public offering price. See "Dilution."

DIVIDENDS

The Company has never paid any dividends to holders of shares of Common
Stock. The Company is not currently generating income from operations and
expects that it will retain its earnings, if any, to finance its operations. The
Company thus does not expect to pay dividends to holders of shares of Common
Stock for the foreseeable future. Holders of Series A Preferred Shares are
generally entitled to receive cumulative quarterly dividends at a rate of 6% per
annum. See "Price Range of Common Stock and Dividend Policy."

20
<PAGE> 23

THE COMPANY

Selfcare was incorporated in Delaware on August 25, 1992 and acquired its
predecessor company, Superior Sensors, Inc. by merger on September 15, 1992. The
Company's principal executive offices are located at 200 Prospect Street,
Waltham, Massachusetts 02154, and its telephone number is (617) 647-3900.

As used in this Prospectus, the terms "Selfcare" and the "Company" refer to
Selfcare, Inc. and its subsidiaries and predecessors, unless the context
otherwise requires.

USE OF PROCEEDS

The net proceeds to Selfcare from the sale of the 2,000,000 shares of
Common Stock offered hereby are estimated to be $23.1 million ($26.7 million if
the Underwriters' over-allotment option is exercised in full) after deducting
the underwriting discounts and commissions and estimated offering expenses
payable by the Company and based on an assumed public offering price of $12.625
per share.

The Company estimates that it will use approximately $4.7 million of the
net proceeds to pay the cash portion of the consideration payable under
agreements relating to the Orgenics Acquisition. The actual amount may be less
or more (but not in excess of $9.3 million) depending upon elections made by the
other parties to those agreements. See "Business -- Strategic
Transactions -- Orgenics Acquisition." Provided that the Acquisition Closing
occurs, the Company intends to apply approximately $11.0 million of the net
proceeds of this offering to repay the AHP Note and the AHP Bridge Loan used to
fund a portion of the purchase price payable upon such closing. The remaining
$25.0 million of the purchase price will be funded with a $25.0 million bank
term loan (the "AHP Term Loan"). See "Business -- Strategic Transactions --
Nutritional Supplement Lines Acquisition." However, the Company may instead
elect, either prior to or after the completion of this offering, to refinance
the AHP Note and/or the AHP Bridge Loan from other sources, including the
proceeds of a possible private placement of subordinated debt. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Overview, and -- Liquidity and Capital Resources."

The Company currently intends to reserve the balance of the net proceeds of
this offering (including an additional approximately $3.6 million if the
Underwriters' over-allotment option is exercised in full) primarily for working
capital and other general corporate purposes, including expansion of the
Company's product research and development and sales and marketing efforts, and
potential acquisitions.

Based on the foregoing, the Company's expected uses of the net proceeds of
this offering are as follows:

<TABLE>
<CAPTION>
PERCENT OF TOTAL
USE OF PROCEEDS AMOUNT(1) NET PROCEEDS
-------------------------------------------------- ----------- ----------------
<S> <C> <C>
To fund a portion of the consideration payable in
the Orgenics Acquisition........................ $ 4,700,000(2) 20%
For possible repayment of certain short term debt
anticipated to be incurred in connection with
the Nutritional Supplement Lines Acquisition.... $11,000,000 48%
Working capital and other general purposes........ $ 7,400,000 32%
----------- ---
Total................................... $23,100,000 100%
</TABLE>

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

(1) Does not include additional proceeds of approximately $3.6 million which
will be received by the Company if the Underwriters' over-allotment option
is exercised in full.

(2) Estimated amount assuming that all Orgenics and Orgenics International
stockholders were to elect to receive the purchase price of their Orgenics
shares in the form of 50% cash and 50% Common Stock and based on a market
price of $12.625 per share of Common Stock and Orgenics' estimated revenues
for the four fiscal quarters ended December 31, 1996. Actual amount may be
less or more (but not in excess of $9.3 million), depending upon elections
made by the Orgenics and Orgenics International stockholders

21
<PAGE> 24

pursuant to the Option Agreements and the market price of the Common Stock. See
"Business -- Strategic Transactions -- Orgenics Acquisition."

The amounts actually expended by the Company for working capital purposes
will vary significantly depending upon a number of factors, including future
revenue growth, the amount of cash generated by the Company's operations and the
progress of the Company's product research and development efforts. In addition,
the Company may make one or more acquisitions of complementary technologies,
products or businesses which broaden or enhance the Company's current product
offerings. However, the Company has no specific agreements or commitments, and
is not currently engaged in any material negotiations with respect to any such
acquisition. Pending the uses described above, the net proceeds will be invested
in short-term, interest-bearing, investment-grade securities.

Based upon its current operating plan, the Company believes that its
existing capital resources, together with the proceeds of this offering and the
interest earned thereon, will be adequate to satisfy its capital requirements
for at least 12 months. See "Risk Factors -- Risk of Inadequate Funding; Future
Capital Needs" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock is traded on the AMEX under the symbol "SLF."
The following table sets forth, for the periods indicated, the high and low sale
prices of the Common Stock on the AMEX. The Initial Public Offering of the
Common Stock at $8.50 per share was completed on August 6, 1996.

<TABLE>
<CAPTION>
PRICE RANGE
-------------------
HIGH LOW
------- -------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996
3rd Quarter (commencing August 7, 1996)................................ $17.750 $ 8.500
4th Quarter............................................................ 18.000 11.500

YEAR ENDED DECEMBER 31, 1997
1st Quarter (through January 15, 1997)................................. $12.625 $12.125
</TABLE>

On January 15, 1997, the last reported sale price per share of the Common
Stock on the AMEX was $12.625 per share. At January 1, 1997, there were
approximately 151 holders of record of Common Stock.

The Company has never declared or paid any cash dividends on its Common
Stock. The Company currently intends to retain earnings, if any, to support its
growth strategy and does not anticipate paying cash dividends in the foreseeable
future. Payment of future dividends, if any, on the Common Stock will be at the
discretion of the Company's Board of Directors after taking into account various
factors, including the Company's financial condition, operating results, current
and anticipated cash needs and plans for expansion. Holders of Series A
Preferred Shares are generally entitled to receive cumulative quarterly
dividends payable in cash at the rate of 6% per annum. See "Description of
Capital Stock -- Authorized and Outstanding Capital Stock -- Series A
Convertible Preferred Stock."

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<PAGE> 25

CAPITALIZATION

The following table sets forth as of September 30, 1996: (i) the actual
capitalization of the Company, (ii) the capitalization of the Company as
adjusted to reflect the issuance and sale of 2,000,000 shares of Common Stock
offered hereby at an assumed public offering price of $12.625 per share and
receipt and application of the net proceeds therefrom, after deducting the
underwriting discounts and commissions and estimated offering expenses and (iii)
on a pro forma basis to give effect to the events described in Note (2) below.
The debt presented below does not reflect actual current liabilities of
$6,732,242 or pro forma as adjusted current liabilities of $15,018,832, nor does
it reflect actual and pro forma as adjusted deferred revenue net of current
portion of $1,437,110 and $4,437,110, respectively. See "Use of Proceeds." This
table should be read in conjunction with the Company's Consolidated Financial
Statements and the Pro Forma Combined Condensed Financial Statements and the
Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------------- PRO FORMA
ACTUAL AS ADJUSTED(1) AS ADJUSTED(2)
------------ -------------- --------------
<S> <C> <C> <C>
Long term debt, net of current portion............... $ 3,011,796 $ 3,011,796 $ 28,067,758
Convertible advance.................................. 13,693,548 13,693,548 --
Mandatorily redeemable preferred stock of a
subsidiary......................................... 1,724,768 1,724,768 1,724,768
Stockholder's equity (deficit):
Common stock, $.001 par value --
Authorized -- 40,000,000 shares
Issued -- 5,688,345 shares actual, 7,688,345 shares
as adjusted and 8,999,431 shares pro forma as
adjusted(3)..................................... 5,688 7,688 8,999
Additional paid-in capital........................... 38,508,574 61,641,574 82,978,473
Deferred compensation................................ (10,740) (10,740) (10,740)
Less -- Treasury stock, at cost, 15,600 shares in
1996............................................... (15,200) (15,200) (15,200)
Accumulated deficit.................................. (40,802,947) (40,802,947) (41,253,805)
Cumulative translation adjustment.................... 140,765 140,765 140,765
------------ ------------ ------------
Total stockholders' equity (deficit)....... $ (2,173,860) $ 20,961,140 $ 41,848,492
------------ ------------ ------------
Total capitalization....................... $ 16,256,252 $ 39,391,252 $ 71,641,018
============ ============ ============
</TABLE>

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

(1) Adjusted to give effect to the sale of 2,000,000 shares of Common Stock
offered hereby (at an assumed public offering price of $12.625 per share and
after deducting the underwriting discounts and commissions and estimated
offering expenses) and the receipt of the net proceeds therefrom.

(2) Adjusted to give pro forma effect to significant events that have occurred
or are anticipated to occur subsequent to September 30, 1996, as follows:
(i) LifeScan's payment of a $7.0 million success fee to the Company, of
which the Company estimates it will recognize $4.0 million of revenue, (ii)
the conversion of an affiliate of LifeScan's previous advances to the
Company of approximately $13.7 million into 201,622 shares of Common Stock
and the right to receive, for no additional consideration, approximately
278,572 additional shares based on the number of shares of Common Stock
issued pursuant to the exercise of those options and warrants that were
outstanding as of November 10, 1995, (iii) the sales of 5,500 Series A
Preferred Shares to certain non-U.S. investors and the receipt of net
proceeds of approximately $5.2 million therefrom and the conversion of such
shares into an estimated 462,292 shares of Common Stock, based upon an
average market price of $12.325 resulting in a conversion price of $12.00
per share, (iv) the reversal of other nonrecurring non-cash charges relating
to certain warrants, the terms of which became fixed on December 31, 1996,
net of the non-cash charge relating to certain additional warrants issued at
that time, (v) payments of additional consideration of $137,500 to certain
noteholders, (vi) the purchase of 7,961,368 shares of Enviromed from EN PLC
in exchange for a promissory note and the purchase of an additional 300,000
shares for cash from unrelated parties, (vii) the recording of deferred
financing costs relating to certain additional warrants issued in connection
with the deferral of the promissory note issued to EN PLC, (viii) the
conversion of the Orgenics

23
<PAGE> 26

Debenture and the Company's existing and planned purchases of the Orgenics
and Orgenics International shares and (ix) the purchase of the Nutritional
Supplement Lines from AHP and the incurrence of the related bank debt. See
Note 2 above and Notes to Unaudited Pro Forma Combined Condensed Balance
Sheet for additional information regarding purchase price adjustments in
connection with the Orgenics Acquisition and the Nutritional Supplement
Lines Acquisition.

(3) Excludes an aggregate of 6,266,050 shares of Common Stock issuable pursuant
to certain rights and upon exercise of options and warrants outstanding as
of January 1, 1997.

24
<PAGE> 27

DILUTION

The net tangible book value of the Company as of September 30, 1996, was
$(3,283,140) or $(0.58) per share of Common Stock. "Net tangible book value"
represents the amount of the Company's total tangible assets reduced by the
amount of its total liabilities and divided by the total number of shares of
Common Stock outstanding. Without taking into account any other changes in such
net tangible book value after September 30, 1996, other than to give effect to
the receipt by the Company of the net proceeds from the sale of the 2,000,000
shares of Common Stock offered hereby after deducting the underwriting discounts
and commissions and estimated offering expenses, the net tangible book value of
the Company as of September 30, 1996 would have been $19,851,860, or $2.59 per
share. This represents an immediate increase in net tangible book value of $3.17
per share to existing stockholders and an immediate dilution in net tangible
book value of $10.04 per share to new investors purchasing Common Stock in this
offering. The following table illustrates this per-share dilution:

<TABLE>
<S> <C>
Assumed price to public............................................. $12.63
Net tangible book value per share at September 30, 1996............. (.58)
Increase per share attributable to new investors.................... 3.17
------
Net tangible book value per share after this offering............... 2.59
------
Dilution per share to new investors................................. $10.04
======
</TABLE>

The foregoing computations assume no exercise of stock options or warrants
or issuance of shares of Common Stock after September 30, 1996. As of such date,
there were 5,623,455 shares of Common Stock issuable upon the exercise of
outstanding options and warrants at a weighted average exercise price of $2.04
per share. In addition, effective upon the closing of this offering, there will
be 169,000 shares of Common Stock reserved for future issuance under the
Company's stock option plans. In the event that any shares available for
issuance upon exercise of outstanding warrants or options are issued, there will
be further dilution to investors in this offering. See "Capitalization,"
"Management -- Executive Compensation," "Certain Transactions" and "Description
of Capital Stock." The calculations described above also do not give effect to
significant events that have occurred or are anticipated to occur subsequent to
September 30, 1996, including: (i) LifeScan's payment of a $7.0 million success
fee to the Company, of which the Company estimates it will recognize $4.0
million of revenue, (ii) the conversion of an affiliate of LifeScan's previous
advances to the Company of approximately $13.7 million into 201,622 shares of
Common Stock and the right to receive, for no additional consideration,
approximately 278,572 additional shares based on the number of shares of Common
Stock issued pursuant to the exercise of those options and warrants that were
outstanding as of November 10, 1995, (iii) the sales of 5,500 Series A Preferred
Shares to certain non-U.S. investors and the receipt of net proceeds of
approximately $5.2 million therefrom and the conversion of such shares into an
estimated 462,292 shares of Common Stock, based upon an average market price of
$12.325 resulting in a conversion price of $12.00 per share, (iv) the reversal
of other nonrecurring non-cash charges relating to certain warrants, the terms
of which became fixed on December 31, 1996, net of the non-cash charge relating
to certain additional warrants issued at that time, (v) payments of additional
consideration of $137,500 to certain noteholders, (vi) the purchase of 7,961,368
shares of Enviromed from EN PLC in exchange for a promissory note and the
purchase of an additional 300,000 shares for cash from unrelated parties, (vii)
the recording of deferred financing costs relating to certain additional
warrants issued in connection with the deferral of the promissory note issued to
EN PLC, (viii) the conversion of the Orgenics Debenture and the Company's
existing and planned purchases of the Orgenics and Orgenics International shares
and (ix) the purchase of the Nutritional Supplement Lines from AHP and the
incurrence of the related bank debt. See Note 2 above and Notes to Unaudited Pro
Forma Combined Condensed Balance Sheet for additional information regarding
purchase price adjustments in connection with the Orgenics Acquisition and the
Nutritional Supplement Lines Acquisition. See Note 2 above and Notes to
Unaudited Pro Forma Combined Condensed Balance Sheet for additional information
regarding purchase price adjustments in connection with the Orgenics Acquisition
and the Nutritional Supplement Lines Acquisition. After giving effect to the
events described above, pro forma net tangible book value after the offering
would be ($6,814,233), or ($.75) per share and dilution per share to new
investors would be $13.38.

25
<PAGE> 28

SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected financial data presented below as of December 31, 1994 and
1995, and for each of the two years in the period ended December 31, 1995, and
as of and for the nine months ended September 30, 1996 are derived from the
Company's Consolidated Financial Statements, included elsewhere in this
Prospectus, and have been audited by Arthur Andersen LLP, independent public
accountants. The consolidated statement of operations data for the nine months
ended September 30, 1995 are derived from the Company's unaudited Consolidated
Financial Statements that are included elsewhere in this Prospectus and include,
in the opinion of management, all adjustments, consisting only of normal
recurring adjustments, with the exception of the non-cash compensation and
interest charges as described in Note 7 of the Notes to the Consolidated
Financial Statements, necessary for a fair presentation of the information set
forth therein. The results of operations for the nine months ended September 30,
1996 are not necessarily indicative of future results.

NINE MONTHS NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
--------------------------------- ---------------------- -----------------------
1995 1995 1996
----------------------- ---------------------- -----------------------
1994 ACTUAL PRO FORMA(1) ACTUAL PRO FORMA(1) ACTUAL PRO FORMA(1)
------- -------- ------------ ------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net product sales.......................... $ 2,089 $ 6,723 $ 42,882 $ 4,582 $ 31,444 $ 7,857 $35,765
Grants and other revenue................... 233 516 516 225 225 1,241 1,241
------- -------- -------- ------- -------- -------- -------
Net revenues............................... 2,322 7,239 43,398 4,807 31,669 9,098 37,006
Cost of sales.............................. 1,560 5,564 17,228 3,799 12,348 6,477 15,434
------- -------- -------- ------- -------- -------- -------
Gross profit............................... 762 1,674 26,169 1,008 19,321 2,621 21,572
Operating expenses Research and
development.............................. 584 1,532 2,733 868 1,709 4,161 5,136
Selling, general and administrative...... 2,963 5,650 21,730 3,626 15,599 6,241 19,338
Non-cash compensation...................... 60 52 52 -- -- 4,185 945
------- -------- -------- ------- -------- -------- -------
Total operating expenses............... 3,607 7,234 24,516 4,494 17,308 14,587 25,419
------- -------- -------- ------- -------- -------- -------
Operating income (loss).................... (2,845) (5,560) 1,654 (3,485) 2,013 (11,967) (3,847)
Other (expense) income, net................ -- -- (185) 37 (609) 270 232
Interest income (expense), net............. (7) (4,481) (18,132) (3,133) (16,811) (14,349) (1,963)
------- -------- -------- ------- -------- -------- -------
Loss before minority interest in
subsidiary's loss and dividends and
accretion on preferred stock of a
subsidiary and income taxes.............. (2,852) (10,041) (16,663) (6,581) (15,407) (26,046) (5,578)
Minority interest in subsidiary's income
(loss)................................... 67 -- (60) -- (45) -- (81)
Dividends and accretion on mandatorily
redeemable preferred stock of a
subsidiary............................... -- (56) (56) (32) (32) (81) (81)
------- -------- -------- ------- -------- -------- ------
Loss before provision for income taxes..... (2,785) (10,097) (16,779) (6,613) (15,483) (26,127) (5,741)
Provision for income taxes................. -- -- 62 -- 38 -- 42
------- -------- -------- ------- -------- -------- -------
Net loss............................... $(2,785) $(10,097) $(16,841) $(6,613) $(15,521) $(26,127) $(5,783)
======= ======== ======== ======= ======== ======== =======
Net loss per common and common equivalent
share(2)................................. $ (0.52) $ (1.66) $ (1.55) $ (1.10) $ (1.43) $ (4.25) $ (0.54)
======= ======== ======== ======= ======== ======== =======
Weighted average number of common and
common equivalent shares
outstanding(2)........................... 5,379 6,072 10,878 6,026 10,832 6,147 10,692
======= ======== ======== ======= ======== ======== =======
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
DECEMBER 31, --------------------------------------------
------------------ AS PRO FORMA
1994 1995 ACTUAL ADJUSTED(3) AS ADJUSTED(3)(4)
------- ------- -------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 1,762 $ 7,395 $ 14,553 $ 37,688 $ 27,966
Working capital (deficit)................................ (221) 4,318 11,856 34,991 21,170
Total assets............................................. 5,331 13,692 24,426 47,561 91,249
Deferred revenue net of current portion.................. 1,424 3,350 1,437 1,437 4,437
Long-term debt, net of current portion................... -- 8,167 16,705 16,705 28,068
Total liabilities........................................ 5,248 17,279 24,875 24,875 47,524
Mandatorily redeemable preferred stock................... -- 1,644 1,725 1,725 1,725
Accumulated deficit...................................... (4,579) 14,676 (40,803) (40,803) (41,254)
Stockholders' equity (deficit)........................... 83 (5,230) (2,174) 20,961 41,848
</TABLE>

26
<PAGE> 29

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

(1) In October 1996, Selfcare acquired a 57.1% direct and indirect equity
interest in Orgenics, as a result of the conversion of a $1.0 million
debenture issued by Orgenics (the "Orgenics Debenture") and purchases of
outstanding shares of Orgenics and Orgenics International Holdings, B.V.
("Orgenics International"), a Dutch holding company whose only material
asset is its investment in Orgenics. Selfcare expects to complete the
Orgenics Acquisition upon completion of this offering, pursuant to the terms
of certain option agreements (the "Option Agreements") between the Company
and all the holders of the remaining shares in Orgenics and Orgenics
International. Pursuant to the Option Agreements, the Company has an option
to call the Orgenics and Orgenics International shares and, in certain
circumstances (including the completion of this offering), each Orgenics
stockholder has the option to put its Orgenics shares to Selfcare. To the
extent that the put options are not exercised, Selfcare intends to exercise
its call options upon completion of this offering. The Company has paid
approximately $7.0 million in cash and converted the Orgenics Debenture for
its existing ownership interest and estimates that it will pay additional
consideration totaling $9.3 million in cash and Common Stock for
substantially all of the remaining shares in Orgenics and Orgenics
International pursuant to the exercise of the Option Agreements. Each of the
Orgenics and Orgenics International stockholders may elect to receive the
purchase price entirely in cash, entirely in the Common Stock, or 50% in
cash and 50% in Common Stock. See "Business -- Strategic
Transactions -- Orgenics Acquisition." Assuming that all Orgenics and
Orgenics International shareholders were to elect to receive the
consideration in the form of 50% cash and 50% Common Stock, the Company
would pay approximately $4.7 million in cash and issue approximately 368,600
shares of Common Stock (based on a market price of $12.625 per share of
Common Stock and Orgenics' estimated revenues for the four fiscal quarters
ended December 31, 1996). In addition, the Company has granted options to
purchase up to 85,800 shares of Common Stock having a fair market value of
approximately $1.1 million, and will incur direct acquisition costs of
approximately $100,000.

The pro forma statement of operations data reflects the combined results of
the Company, Orgenics and the Nutritional Supplement Lines as if the Initial
Public Offering, this offering, the Orgenics Acquisition, and the
Nutritional Supplement Lines Acquisition had occurred on January 1, 1995.
The pro forma amounts give effect to (i) amortization expenses relating to
certain intangible assets (ii) interest expense related to the issuance of
notes payable to EN PLC Limited Partnership ("EN PLC") in connection with
the Company's investment in Enviromed, plc ("Enviromed"), (iii) interest
expense related to the bank debt associated with the Nutritional Supplement
Lines Acquisition, (iv) amortization expense related to deferred financing
costs associated with certain warrants granted to EN PLC, (v) interest
expense related to the issuance of certain warrants and cash consideration
to the holders of certain notes and warrants and (vi) estimated incremental
costs associated with the Nutritional Supplement Lines Acquisition. The pro
forma amounts do not give effect to (i) the expensing of the estimated fair
values of certain in process research and development projects upon
consummation of the Orgenics Acquisition and (ii) certain nonrecurring
charges related to certain options, the terms of which became fixed upon
consummation of the Initial Public Offering. The pro forma statement of
operations is not necessarily indicative of future results of operations or
what results would have been for the combined companies. In addition, see
Notes to the Pro Forma Combined Condensed Statement of Operations for
information as to the basis of computing the pro forma net loss per common
and common equivalent shares used in this computation.

(2) Computed on the basis described in Note 2g of Notes to Consolidated
Financial Statements.

27
<PAGE> 30

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Selfcare is engaged in the development, manufacture, and marketing of
self-test diagnostic products for the diabetes, women's health and infectious
disease markets. During 1995 and for the nine months ended September 30, 1996,
the Company derived approximately 35% and 52%, respectively, of its revenues
from the sale of home pregnancy and ovulation prediction tests. The balance of
the Company's revenues during these periods were from the sale of diagnostic
tests for the professional markets and the amortization of deferred revenue,
principally related to grants received by the Company. The Company expects that,
as a result of the Orgenics Acquisition, the Company's revenues derived from
professional test products will increase. Orgenics had $10.2 million in sales in
1995 and estimated sales of $12.4 million in 1996. See "Business -- Strategic
Transactions -- Orgenics Acquisition." Based on its strategic focus, the Company
expects sales of self-test diagnostic products to become the largest source of
its revenues. Although no assurances can be given as to whether regulatory
authorizations necessary to enable the Company to commercialize new self tests
will be obtained, the Company anticipates that significantly increased
expenditures on research and development, manufacturing, sales and marketing
will be required to support such commercialization.

The Company's existing and planned products are targeted at the two largest
existing markets for self-care diagnostics, diabetes management and women's
health, as well as the emerging market for self tests for infectious diseases
and agents, including HIV. An important part of the Company's business strategy
is to enter into strategic alliances, joint ventures and licensing arrangements
with third parties, primarily medical products companies, for the development,
manufacture, and distribution of certain products. The Company is also pursuing
a strategy of selective acquisitions of companies, assets and technologies which
it believes will enhance its ability to deliver innovative diagnostic products
to the marketplace at a low cost. The Company has completed two such
transactions, the acquisition of Cambridge Diagnostics and the Company's
investment in Inverness Medical Ltd.

In October 1996, Selfcare and LifeScan entered into the Distribution
Agreement with respect to the New System. As contemplated by November 10, 1995
agreements between Selfcare and LifeScan, LifeScan paid Selfcare a $7.0 million
success fee, and Johnson & Johnson Development Corporation ("JJDC"), an
affiliate of LifeScan, converted its previous cash advances to Selfcare of
approximately $13.7 million into 201,622 shares of Common Stock upon the
consummation of the Distribution Agreement. In addition, JJDC will also receive,
for no additional consideration, shares of Common Stock equal to 5% of all
Common Stock issued by the Company pursuant to options and warrants that were
outstanding as of November 10, 1995. The Company estimates that JJDC will
ultimately receive approximately an additional 278,572 shares of Common Stock.
The Company plans to submit in early 1997 a Section 510(k) Notification to the
FDA seeking permission to begin commercial distribution of the New System.
Selfcare currently believes that it can complete development, receive FDA
Clearance and commence shipments of the New System as early as the first half of
1997. However, no assurance can be given that these events will occur or will
not be delayed. A material delay in or the non-occurrence of any of these events
would have a material adverse effect on the Company's business, financial
condition and results of operations.

The Company also plans to expand its research, manufacturing, and marketing
capabilities for infectious disease diagnostic products by acquiring the capital
stock of Orgenics. In October 1996, Selfcare acquired a 57.1% direct and
indirect equity interest in Orgenics, as a result of the conversion of the
Orgenics Debenture and purchases of outstanding shares of Orgenics and Orgenics
International. Selfcare expects to complete the Orgenics Acquisition upon
completion of this offering, pursuant to the terms of the Option Agreements
between the Company and substantially all the holders of the remaining shares in
Orgenics and Orgenics

28
<PAGE> 31

International. Pursuant to the Option Agreements, the Company has an option to
call the Orgenics and Orgenics International shares and, in certain
circumstances (including the completion of this offering), each Orgenics
stockholder has the option to put its Orgenics shares to Selfcare. To the extent
that the put options are not exercised, Selfcare intends to exercise its call
options upon completion of this offering. The Company's interests in Orgenics
and Orgenics International were acquired for a total of approximately $7.0
million in cash, plus the conversion of the Orgenics Debenture, and the Company
estimates that it will pay consideration totaling $9.3 million in cash and
Common Stock for substantially all the remaining shares in Orgenics and Orgenics
International pursuant to the exercise of the Option Agreements. Each of the
Orgenics and Orgenics International stockholders may elect to receive the
purchase price entirely in cash, entirely in Common Stock, or 50% in cash and
50% in Common Stock. See "Business -- Strategic Transactions -- Orgenics
Acquisition." Assuming that all Orgenics and Orgenics International stockholders
were to elect to receive the consideration in the form of 50% cash and 50%
Common Stock, the Company would pay approximately $4.7 million in cash and issue
approximately 368,600 shares of Common Stock (based on a market price of $12.625
per share of Common Stock and Orgenics' estimated revenues for the four fiscal
quarters ended December 31, 1996). In addition, the Company has granted options
to purchase up to 85,800 shares of Common Stock having a fair market value of
approximately $1.1 million, and will incur direct acquisition costs of
approximately $100,000.

The Company's results of operations for the nine months ended September 30,
1996 include certain significant noncash charges which became final upon the
consummation of the Initial Public Offering. For the nine months ended September
30, 1996, the total non-cash charge for compensation relating to options granted
to the Company's Chief Executive Officer was $3.2 million. The Company has
recorded approximately $14.1 million of non-cash interest expense relating to
warrants granted to noteholders in connection with the acquisition of Cambridge
Diagnostics. On December 31, 1996, the terms of the warrants became fixed and
the Company reversed approximately $3.5 million of such non-cash charges, net of
the non-cash charge of additional warrants issued at that time. The reversal
relates to the reduction in fair market value of the underlying Common Stock
from September 30, 1996 to December 31, 1996. All non-cash charges were computed
as being the difference between the fair market value of the Common Stock and
the exercise price of the security, less charges previously recorded.

RECENT DEVELOPMENT -- NUTRITIONAL SUPPLEMENT LINES ACQUISITION

On January 14, 1997, pursuant to the terms of the Nutritional Supplement
Lines Acquisition, the Company agreed to pay $36.0 million to acquire the
Nutritional Supplement Lines from AHP. The purchase price will be financed with
the AHP Term Loan, the AHP Bridge Loan and the AHP Note. As part of its plans
for maintaining and expanding sales of these products, the Company expects to
incur substantial marketing expenses in 1997 and thereafter. These initiatives
are expected to result in significant increases in the Company's selling,
general and administrative expense. In addition, the Company's efforts to
increase the sales of the Nutritional Supplement Lines may result in lower
margins than experienced by AHP for these products. See "Risk
Factors -- Nutritional Supplement Lines Acquisition,""-- Liquidity and Capital
Resources," and "Business -- Strategic Transactions -- Nutritional Supplement
Lines Acquisition."

29
<PAGE> 32

RESULTS OF OPERATIONS

<TABLE>
The following table presents, for the periods indicated, the percentage
relationship that certain statement of operations items bear to net revenues.

<CAPTION>
PERCENTAGE OF NET REVENUES FOR
-------------------------------
NINE MONTHS
YEARS ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------- -------------
1994 1995 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net product sales........................................... 90% 93% 95% 86%

Grants and other revenues................................... 10 7 5 14
Net revenues.............................................. 100 100 100 100

Gross profit................................................ 33 23 21 29

Research and development expense............................ 28 21 18 46

Selling, general and administrative expense................. 127 78 76 68

Non-cash compensation expense............................... 3 1 -- 46

Total operating expense..................................... 155 100 94 160

Interest income (expense)................................... -- (62) (65) (155)

Minority interest in subsidiary's income.................... 2 -- -- --

Dividends and accretion on
preferred stock of a subsidiary........................... -- -- -- (1)

Net loss.................................................... (120) (139) (138) (287)
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995

Net Revenues. Net revenues for the nine months ended September 30, 1996
increased $4.3 million or 89% to $9.1 million from $4.8 million in the
corresponding period in 1995. The increase was primarily due to increased demand
in the United States for the Company's pregnancy and ovulation prediction
products. Revenues for the Company's U.S. operations for the nine months ended
September 30, 1996 were $4.4 million, an increase of $2.8 million or 182% from
net revenues of $1.6 million in the nine months ended September 30, 1995.
International revenues (sales by the Company's foreign subsidiaries) for the
nine months ended September 30, 1996 were $4.7 million, an increase of
approximately $1.4 million or 45% from net revenues of $3.3 million for the nine
months ended September 30, 1995. Approximately $1.0 million of the international
revenues for the nine months ended September 30, 1996 was attributable to the
amortization of deferred revenue associated with certain development and capital
grants relating to the Inverness Facility. There was no revenue recognized in
connection with these grants for the nine months ended September 30, 1995.

Gross Profit. Gross profit for the nine months ended September 30, 1996
increased $1.6 million or 160% to $2.6 million from $1.0 million in the nine
months ended September 30, 1995. Gross profit as a percentage of net revenues
increased to 29% for the nine months ended September 30, 1996 from 21% in the
same period a year ago. The increase in gross profit was primarily due to
revenue attributable to the amortization of deferred revenue of certain
development and capital grants relating to the Inverness Facility. Gross profit
on product sales increased slightly to 18% for the nine months ended September
30, 1996 from 17% for the nine months ended September 30, 1995.

Research and Development Expense. Research and development expense for the
nine months ended September 30, 1996 increased $3.3 million or 379% to $4.2
million from $868,000 in the corresponding period in 1995. The increase was
primarily due to expenses incurred in connection with the development of the
Company's New System and generic electrochemical blood glucose test strips.
These development activities accounted for $2.8 million of the increase in the
nine month period ended September 30, 1996. In addition, the Company continues
to allocate research and development resources to the areas of women's health
products and infectious diseases, principally those related to the detection of
HIV. The Company expects to continue to spend significant amounts on research
and development throughout 1996 and 1997.

30
<PAGE> 33

Selling, General and Administrative Expense. Selling, general and
administrative expense for the nine months ended September 30, 1996 increased
$2.6 million or 72% to $6.2 million from $3.6 million in the corresponding
period in 1995. The increase was primarily attributable to expansion of the
Company's marketing efforts in the United States and Europe and the hiring of
additional staff to support the Company's operations. Selling, general and
administrative expense, as a percentage of net revenues, decreased during 1996
as compared to the same period in 1995. Selling, general and administrative
expense were 68% of net revenues for the nine month period ended September 30,
1996 compared to 76% for the nine month period ended September 30, 1995.

Non-Cash Compensation Expense. Substantially all of the non-cash
compensation expense for the nine months ended September 30, 1996 related to
certain stock options granted to certain employees of the Company. For the nine
months ended September 30, 1996 the non-cash compensation expense related to a
stock option granted to the Company's Chief Executive Officer in August 1995 was
$3.2 million. Non-cash compensation expense of $680,000 for the nine month
period ended September 30, 1996 related to stock options granted to certain
employees that were contingent on certain goals which have now been met. In
accordance with SFAS No. 123, Accounting for Stock Based Compensation, the
Company recorded non-cash compensation expense of $77,000 for stock options
granted to outside consultants. The remaining $188,000 of non-cash compensation
expense for the nine months ended September 30, 1996 relates to the amortization
of deferred compensation pertaining to the grant of certain stock options to
employees.

Interest and Other Income (Expense). In the nine months ended September 30,
1996, the Company recognized $14.1 million of non-cash interest expense relating
to the Cambridge Diagnostics Warrants. The charge relates to the increase in the
fair market value of the underlying Common Stock at September 30, 1996 as
compared to the estimated fair market value at December 31, 1995. Excluding the
non-cash interest expense relating to the warrants, interest expense was
$253,000 for the nine month period ended September 30, 1996 as compared to
$232,000 for the nine month period ended September 30, 1995. Interest income
increased by $233,000 for the nine months ended September 30, 1996 as compared
to the same period last year, primarily due to larger cash balances. The
Company's subsidiary in Inverness, Scotland accrued $81,000 for the nine months
ended September 30, 1996, representing a 6% dividend payable on its outstanding
cumulative redeemable preference shares, as compared to $32,000 for the nine
months ended September 30, 1995.

Foreign Currency Transactions. Fluctuations in foreign currency did not
significantly impact revenue performance measured in U.S. dollars for the nine
months ended September 30, 1996. Substantially all sales are paid in the
functional currency of the selling entity.

Net Loss. Net loss for the nine months ended September 30, 1996 was
approximately $26.1 million or ($4.25) per common and common equivalent share as
compared to $6.6 million or ($1.10) per common and common equivalent share in
the nine months ended September 30, 1995. Excluding the previously described
non-cash interest expense of $14.1 million and non-cash compensation expense of
$4.2 million in the nine months ended September 30, 1996 and non-cash interest
expense of $2.9 million in the nine months ended September 30, 1995, results in
a net loss of $7.8 million or ($1.28) per common and common equivalent share in
the nine months ended September 30, 1996 as compared to $3.7 million or ($0.62)
per common and common equivalent share for the nine months ended September 30,
1995. These losses reflect increased spending on research and development as
well as expansion of the Company's sales and marketing efforts and the hiring of
additional staff to support the Company's operations.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Net Revenues. Net revenues increased $4.9 million, or 213%, to $7.2 million
in 1995 from $2.3 million in 1994. Approximately $3.7 million of the increase in
net revenues was contributed by Cambridge Diagnostics which was acquired by the
Company in November 1994. Approximately $500,000 of the increase in net revenues
was due to net sales generated by Selfcare Europe Ltd. and Selfcare
International GmbH, neither of which had net sales in 1994. An additional
$216,000 of the income was attributable to the amortization of deferred revenue
relating to certain development grants relating to the Inverness Facility. The
remaining

31
<PAGE> 34

increase in net revenues in 1995 was attributable to the introduction of new
private label products and increased sales of the Company's pregnancy and
ovulation prediction products in the United States.

Gross Profit. Gross profit increased $912,000, or 120%, to $1.67 million in
1995 from $762,000 in 1994. Gross profit as a percentage of net sales decreased
from 33% in 1994 to 23% in 1995. The decrease in gross profit as a percentage of
net sales was primarily due to higher overhead costs associated with the
Company's acquisition of Cambridge Diagnostics. The Company manufactures
infectious disease tests at Cambridge Diagnostics which require more extensive
quality control than the Company's other products. In addition, the Company's
Galway Facility is not currently used at full capacity. This excess capacity
will allow production of an HIV self test if and when such a test is approved by
the FDA or foreign regulatory agencies, as well as the manufacture of certain
generic test strips at the Galway Facility. The excess capacity at Cambridge
Diagnostics contributed to the increase in the Company's overhead costs and
consequent decrease in gross profit.

Research and Development Expense. Research and development expense
increased $948,000, or 162%, to $1.5 million in 1995 from $584,000 in 1994, but
decreased as a percentage of net sales to 21% in 1995 from 25% in 1994 as a
result of increased net sales. The Company's primary research and development
activities relate to the development of the New System and generic
electrochemical blood glucose test strips. In addition, the Company continues to
apply research and development resources to the development of infectious
disease products, principally those relating to the detection of HIV, and to
pregnancy and ovulation prediction products.

Selling, General and Administrative Expense. Selling, general and
administrative expense increased $2.7 million, or 91%, to $5.7 million in 1995
from $3.0 million in 1994, but decreased as a percentage of net sales to 78% in
1995 from 127% in 1994 as a result of increased net sales. The increase in
selling, general and administrative expense was primarily attributable to
expansion of the Company's sales and marketing efforts in Europe and to the
Company's investment in administrative infrastructure to support operations at
the Galway Facility and the Inverness Facility.

Non-Cash Compensation Expense. Non-cash compensation expense in 1995 was
$52,000 and was related to the amortization of deferred compensation pertaining
to the grant of certain stock options to employees. Non-cash compensation
expense in 1994 was $60,000 and was related to the issuance of Common Stock in
connection with certain consulting agreements.

Interest Income (Expense). Interest income increased from zero in 1994 to
$38,000 in 1995, resulting from interest earned on higher cash balances.
Interest expense increased to $4.5 million in 1995 from $7,000 in 1994. This
increase was attributable to interest expense associated with bonds and warrants
issued by the Company to refinance a portion of the acquisition of Cambridge
Diagnostics. Approximately $4.2 million of the interest expense relates to a
non-cash charge relating to the grant of warrants and represents the difference
between the fair market value of the underlying Common Stock and the exercise
price of the warrants. The Company has recognized an additional $8.1 million of
non-cash interest expense in 1996 relating to these warrants through March 31,
1996, and expects to reverse charges of $2.6 million of such non-cash expense
through completion of this offering, at which time the terms of the warrants and
the related charges will become fixed. The reversal relates to reduction in fair
market value of the related equity compared to the initial public offering
price.

Foreign Currency Transactions. Fluctuations in foreign currency did not
significantly impact the Company's financial performance in 1995 because 1995
was the first year in which the Company generated significant net sales from its
foreign operations. Substantially all sales of the Company's products were
invoiced and paid in the functional currency of the selling entity.

Net Loss. The net loss for 1995 was approximately $10.1 million or ($1.66)
per common and common equivalent share. The loss increased by approximately $7.3
million or ($1.16) per share from the 1994 loss of approximately $2.8 million or
($.52) per common and common equivalent share. In addition to the previously
described non-cash interest expense of approximately $4.2 million, this loss
reflects increased spending on research and development as well as expansion of
the Company's sales and marketing efforts in Europe and

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the Company's investment in administrative infrastructure to support operations
at the Galway Facility and the Inverness Facility.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations primarily through the funds it has
received in connection with the Initial Public Offering, funds received in
connection with the LifeScan Alliance, private placements of debt and equity
securities, a bank line of credit, capital lease obligations, cash from product
sales and grants from government development agencies.

In connection with the Initial Public Offering, on August 6, 1996, the
Common Stock began trading on the AMEX. The proceeds from the Initial Public
Offering were approximately $11.8 million after deducting the underwriters'
commission. The Company incurred approximately $1.5 million of expenses relating
to the Initial Public Offering. Therefore, the total net proceeds from the
Initial Public Offering were approximately $10.4 million.

In November 1995, in connection with the closing of an investment agreement
between JJDC and the Company, Selfcare received an advance of $7.0 million from
JJDC. The Company received an additional $6.7 million advance in May 1996 in
connection with the Company's filing of a Section 510(k) Notification with
respect to the prior version of the New System and the acceptance for the filing
by the FDA on May 21, 1996 of such notification. In September 1996, the Company
received FDA Clearance for the prior version of the New System. In conjunction
with LifeScan, the Company subsequently undertook certain enhancements to the
user interface features for the prior version of the New System. The underlying
chemistry and function of the disposable strips of the New System, however, were
not changed form those of the prior version of the New System. On October 22,
1996 the Company announced that it had entered into the Distribution Agreement
with LifeScan pursuant to which LifeScan will distribute the New System. The
Company intends to file in early 1997 a Section 510(k) Notification with the FDA
with respect to the New System. The New System must receive FDA Clearance before
sales of the product can commence in the United States. As contemplated by
November 10, 1995 agreements between Selfcare and LifeScan, LifeScan paid
Selfcare in October 1996 a $7.0 million success fee and JJDC converted its
previous cash advances to Selfcare of approximately $13.7 million into 201,622
shares of Common Stock upon the consummation of the distribution agreement with
the Company. In addition, JJDC will also receive, for no additional
consideration, additional shares of Common Stock equal to 5% of all Common Stock
issued by the Company pursuant to options and warrants that were outstanding as
of November 10, 1995. The Company estimates that JJDC will ultimately receive
approximately an additional 278,572 shares of Common Stock.

The Company financed a portion of the acquisition of Cambridge Diagnostics
in 1994 by utilizing a bank line of credit. In 1995, the Company paid the
outstanding balance on the line of credit in full with a portion of the proceeds
of the issuance of $3.0 million of promissory notes (the "Cambridge Diagnostics
Notes") and warrants (the "Cambridge Diagnostics Warrants") to purchase Common
Stock. In order for the Company to obtain approval for listing of the Common
Stock on the AMEX in connection with the Initial Public Offering, the Company
entered into agreements with holders of $2.75 million in principal amount of the
Cambridge Diagnostics Notes. Pursuant to such agreements, the principal amount
of the notes were to be automatically converted into shares of Common Stock if
the Company's stockholders' equity as of November 30, 1996 were determined to be
less than $4.0 million. The Company stockholders' equity as of such date was
$17.3 million; as a result, the Company became obligated to repay such notes on
or about December 31, 1996. On December 31, 1996, the Company entered into
agreements with holders of substantially all of the Cambridge Diagnostics Notes
pursuant to which such holders agreed to defer repayment of the principal amount
of their notes until January 15, 1998. In consideration of this postponement,
the Company agreed to issue warrants to purchase an aggregate of 54,545 shares
of Common Stock to such holders.

The Company received $1.6 million in June 1995 from an investment by
Highlands and Islands Enterprise ("HIE"), a development agency funded by the
government of the United Kingdom, in redeemable preferred stock of Inverness
Medical Ltd. to finance a portion of the start-up costs relating to the facility
in Inverness, Scotland. In addition, the Company has received $2.7 million in
deferred grants from HIE.

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<PAGE> 36

In March 1996, the Company entered into an agreement with Princeton
BioMeditech Corporation ("Princeton"), pursuant to which the Company provided
$500,000 to finance the purchase of equipment which will remain the property of
the Company, to be used in Princeton's production of certain products. The
Company will purchase certain minimum amounts of those products over the course
of three years. The Company paid $250,000 of the above mentioned $500,000
financing in August 1996 and the balance in the fourth quarter of 1996. The
aggregate minimum amount of such purchases over the course of the three-year
period will be $6.9 million.

At December 31, 1995, the Company had cash and cash equivalents of $7.4
million, a $5.6 million increase from December 31, 1994. This was primarily due
to the aforementioned advance from JJDC. Cash used in operating activities in
1995 was $4.8 million, due largely to net losses of $10.1 million in 1995.
However, the operating loss for 1995 consisted of $4.4 million of non-cash
items. The largest non-cash expense was an interest charge of $4.2 million
related to warrants issued to the holders of the Cambridge Diagnostics Notes in
connection with the Cambridge Diagnostics Acquisition. The Company recognized
$506,000 of deferred revenue in 1995. Of this amount, $227,000 related to the
amortization of revenue relating to the 1993 sale of the Company's core
immunoassay technology to USB '93 Technology Associates Limited Partnership. The
remaining $279,000 related to deferred revenue relating to certain grants (see
Note 4 and 9(b) to the Consolidated Financial Statements). The Company incurred
$576,000 of depreciation and amortization expense, primarily related to property
and equipment. The other non-cash expenses consisted of $52,000 of compensation
expense related to the issuance of certain common stock options and dividends
and accretion on mandatorily redeemable preferred stock of a subsidiary of the
Company in the amount of $56,000. Other uses of cash in operating activities
included an increased funding of accounts receivable of $477,000 reflecting the
Company's increase in sales. The Company also used $164,000 of cash to increase
inventories to support increased demand for the Company's products. Prepaid and
other current assets increased $230,000, due mostly to Inverness Medical's
receivable for grants and value added taxes. Cash was provided for operations in
part by an increase in accounts payable, accrued expenses, and other current
liabilities of $1.7 million.

During 1995, the Company used $1.7 million for investment activities. The
Company purchased property and equipment for $1.3 million. Approximately $1.1
million of the purchased property and equipment was for the Inverness Facility.
In addition, the Company paid $500,000 as part of its investment in Orgenics.

Financing activities provided approximately $12.1 million in 1995. The most
significant financing activities were the $7 million advance from JJDC, the
issuance of the Cambridge Diagnostic Notes, and additional working capital.
Selfcare also received approximately $1.6 million from HIE to help build the
Inverness Facility for the future manufacture of glucose strips. HIE's
investment of $1.6 million is classified as preferred stock of a subsidiary. The
Company also received additional deferred grants of $2.4 million from HIE.
Approximately $213,000 was provided from net proceeds from the issuance of
Common Stock. The Company used $2.2 million to repay money borrowed from a line
of credit.

At September 30, 1996, the Company had cash and cash equivalents of $14.6
million, a $7.2 million increase from December 31, 1995. This was primarily due
to the net proceeds of approximately $10.4 million from the Initial Public
Offering and the aforementioned $6.7 million advance from JJDC. Cash used for
operations in the nine months ended September 30, 1996 was $7.3 million due
largely to net losses of $26.1 million in the nine months ended September 30,
1996. However, the net loss for the nine months ended September 30, 1996
included $18.4 million of non-cash items. The largest non-cash expenses were the
interest charge of $14.1 million related to the Cambridge Diagnostics Warrants
and compensation expense of $4.2 million related to certain stock options
granted to the Company's Chief Executive Officer, certain employees and outside
consultants. Other uses of cash in operating activities included an increased
funding of accounts receivable of $906,000 reflecting the Company's increase in
sales. The Company also used $176,000 of cash to increase inventories to support
increased demand for the Company's products. Prepaid and other current assets
increased $51,000 due primarily to an increase in value added taxes (VAT)
receivable. Cash was provided for operations in part by an increase in accounts
payable, accrued expenses, and other current liabilities of $2.2 million.

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<PAGE> 37

During the nine months ended September 30, 1996, the Company used $2.8
million to purchase property and equipment. Approximately $2.2 million of the
purchased property and equipment was for the Inverness Facility.

Financing activities provided approximately $17.3 million in the nine
months ended September 30, 1996. The most significant financing activities were
the Initial Public Offering of 1,495,000 shares at $8.50 per share, for which
the net proceeds after deducting offering costs were $10.4 million, and the $6.7
million advance from JJDC. In October 1996, the Company received net proceeds of
approximately $5.2 million from the private placement of 5,500 Series A
Preferred Shares to certain non-U.S. investors.

The Company intends to invest substantially in development, property and
equipment at the Inverness Facility so that it can manufacture glucose strips
for the diabetes market in connection with the LifeScan Alliance and the
Company's supply agreement with Menarini. The Company believes that funds
received to date in connection with the LifeScan Alliance and the net proceeds
from the Initial Public Offering will be sufficient to provide adequate working
capital and funds necessary for anticipated capital expenditures for at least
the next 12 months. The Company currently plans to continue its research and
development of new technologies and pursue the acquisition of new products and
technologies, whether through licensing arrangements, business acquisitions, or
otherwise. The Company anticipates that it will be required to raise substantial
additional funds for such projects or strategies. There can be no assurance that
any such additional capital will be available on terms acceptable to the
Company, or at all.

As of September 30, 1996, the Company had approximately $31.5 million and
$19.1 million of domestic and foreign net operating loss carryforwards,
respectively, and approximately $72,000 of research and development tax credit
carryforwards, which expire at various dates through 2010. The Tax Reform Act of
1986 contains provisions which may limit the amount of federal net operating
loss and credit carryforwards the Company may utilize in any one year in the
event of certain cumulative changes in ownership over a three-year period in
excess of 50%, as defined. The Company has recorded a 100% valuation allowance
against these deferred tax assets, as the realization of such assets is
uncertain.

In October 1996, Selfcare acquired a 57.1% direct and indirect equity
interest in Orgenics, as a result of the conversion of the Orgenics Debenture
and purchases of outstanding shares of Orgenics and Orgenics International.
Selfcare expects to complete the Orgenics Acquisition upon completion of this
offering, pursuant to the terms of the Option Agreements between the Company and
substantially all the holders of the remaining shares in Orgenics and Orgenics
International. Pursuant to the Option Agreements, the Company has an option to
call the Orgenics and Orgenics International shares and, in certain
circumstances (including the completion of this offering), each Orgenics
stockholder has the option to put its Orgenics shares to Selfcare. To the extent
that the put options are not exercised, Selfcare intends to exercise its call
options upon completion of this offering. The Company has paid approximately
$7.0 million in cash and converted the Orgenics Debenture for its existing
ownership interest and estimates that it will pay consideration totaling $9.3
million in cash and Common Stock for substantially all the remaining shares in
Orgenics and Orgenics International pursuant to the exercise of the Option
Agreements. Each of the Orgenics and Orgenics International stockholders may
elect to receive the purchase price entirely in cash, entirely in Common Stock,
or 50% in cash and 50% in Common Stock. See "Business -- Strategic
Transactions -- Orgenics Acquisition." Assuming that all Orgenics and Orgenics
International stockholders were to elect to receive the consideration in the
form of 50% cash and 50% Common Stock, the Company would pay approximately $4.7
million in cash and issue approximately 368,600 shares of Common Stock (based on
a market price of $12.625 per share of Common Stock and Orgenics' estimated
revenues for the four fiscal quarters ended December 31, 1996). In addition, the
Company has granted options to purchase up to 85,800 shares of Common Stock
having a fair market value of approximately $1.1 million, and will incur direct
acquisition costs of approximately $100,000.

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Company will fund the cash portion of purchase price with the AHP Term Loan and
AHP Bridge Loan. The AHP Note will be due on the first anniversary of the
Acquisition Closing, and will bear interest payable quarterly at the rate of
7.0% per annum. The Company may prepay the AHP Note at any time. The Company
currently intends to prepay the AHP Note and the AHP Bridge Loan with proceeds
from this offering; however, the Company may elect to refinance the AHP Note
and/or the AHP Bridge Loan from other sources. See "Use of Proceeds." The
Company has received a non-binding Summary of Proposed Terms and Conditions from
Fleet National Bank ("Fleet") which outlines the proposed terms of the AHP Term
Loan and the AHP Bridge Loan to be made to the Acquisition Subsidiary and
guaranteed by the Company (collectively, the "Proposed Acquisition Facility").
The Company has paid Fleet an initial fee of $50,000 in connection with
receiving Fleet's non-binding proposal and Fleet's agreement to proceed with its
approval process. The AHP Term Loan would have a five-year term, with quarterly
amortization of principal, and would bear interest at the annual rate of LIBOR
plus two percent, or Fleet's Prime Rate. The Proposed Acquisition Facility would
impose certain financial covenants on the Acquisition Subsidiary, including (i)
requirements to maintain certain ratios of total indebtedness to EBITDA, (ii)
limits on capital expenditures, and (iii) a requirement of a positive net income
for any fiscal year. The Acquisition Subsidiary would also agree to restrictions
on (i) acquisitions without Fleet's consent, (ii) material asset sales and other
payments, and (iii) dividends and distributions. Further, the Company, as
guarantor of the Acquisition Subsidiary's debt under the Proposed Acquisition
Facility, will be subject to certain covenants and will be limited in its
ability to receive dividends and distributions from the Acquisition Subsidiary.
Subject to completion of its review and approval process, Fleet will prepare a
commitment letter which will further detail the terms of and conditions of the
Proposed Acquisition Facility. If such commitment letter is acceptable to the
Company, Fleet and the Company will proceed to complete definitive agreements
for the Acquisition Facility. See "Use of Proceeds."

The Acquisition Closing is conditioned on the satisfaction or waiver of
certain conditions, including: (i) the Company's obtaining financing sufficient
to enable it to pay the cash portion of the consideration for the acquisition,
(ii) the parties' obtaining all necessary government consents and approvals,
including the expiration or termination of any applicable waiting periods under
the HSR Act, (iii) approval by the Board of Directors of AHP ("AHP Board
Approval"), and (iv) other conditions which the Company considers customary for
a transaction of this kind. The Acquisition Closing is to occur on the later of
February 10, 1997 or the third business day after all of the conditions to the
transaction (other than those contemplated to be satisfied at the Acquisition
Closing) shall have been satisfied or waived. AHP has agreed that its Board of
Directors will consider whether or not to grant the AHP Board Approval during
its meeting scheduled for February 6, 1997, provided the commitment letter for
the Proposed Acquisition Facility has been issued. Otherwise, the Board of
Directors of AHP will consider whether or not to grant the AHP Board Approval on
February 26, 1997, provided such commitment letter has been issued by such date.

The Company will seek to complete the Acquisition Closing prior to
completion of this offering. However, the Company may determine to complete this
offering prior to the Acquisition Closing, but will do so only if: (i) the
Company has obtained a commitment letter for financing on terms substantially
comparable to those of the Proposed Acquisition Facility described above from
Fleet or another financial institution having at least $5.0 billion of assets,
(ii) all applicable waiting periods under the HSR Act have expired or
terminated, and any other necessary government consents and approvals have been
obtained, and (iii) the AHP Board Approval has been obtained. There can be no
assurance that the Nutritional Supplement Lines Acquisition will be completed
prior to the completion of this offering or that all of the conditions to the
Acquisition Closing will be satisfied so as to enable the acquisition to be
completed. If the acquisition were not to occur, the Company would record an
estimated $350,000 of costs associated with the Nutritional Supplement Lines
Acquisition as a charge against earnings. The Company believes that the failure
of the acquisition to occur would not have a material adverse effect on the
ongoing business of the Company as currently conducted. However, if the
acquisition were not completed, the Company would not have the benefit of
revenues associated with the Nutritional Supplement Lines and would not realize
the potential new marketing and other opportunities afforded by the addition of
the Nutritional Supplement Lines. See "Risk Factors -- Nutritional Supplement
Lines Acquisition."

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BUSINESS

Selfcare is engaged in the development, manufacture and marketing of
self-test diagnostic products for the diabetes, women's health and infectious
disease markets. Self-test diagnostic products allow individuals to obtain
accurate medical diagnoses on a confidential, non-prescription basis, without
the expense, inconvenience and delay associated with physician visits or testing
laboratories. This information gives individuals greater control over their
health and their lives, allowing them to make informed decisions and take
action, alone or in consultation with healthcare professionals. The Company's
existing and planned self-test products are targeted at the two largest existing
markets for self-care diagnostics, diabetes management and women's health, as
well as the emerging market for self-tests for infectious diseases and agents,
including HIV. According to a 1996 study by Clinica Reports, the worldwide
market for home monitoring and diagnostic products was estimated to be $2.2
billion in 1995, and growing at an annual rate of 11%.

BUSINESS STRATEGY

- Focus on diabetes, women's health and infectious diseases to exploit
growth opportunities in these large and growing markets in both the
United States and internationally. The Company is focusing its research
and development efforts on self-test products that serve the needs of
consumers in the diabetes, women's health and infectious disease markets.
The Company believes that the markets for self-test products addressing
diabetes and women's health will continue to grow, and that significant
opportunities exist to capture market share in these areas with products
which (i) incorporate innovative technologies, (ii) are aggressively
priced due to reduced production costs and (iii) incorporate features
which improve the convenience and reliability of the product for the
consumer. The Company also believes that the market for self tests for
infectious diseases, particularly HIV, will begin to expand rapidly in
the next several years as healthcare professionals become more familiar
with such tests and required regulatory approvals are obtained.

- Leverage the Company's technology base to develop new self-test products
and to lower production costs. The Company is developing new products by
leveraging its proprietary products and manufacturing technologies to
meet identified opportunities in its target markets. The Company also
seeks to apply its expertise to reduce the cost of manufacturing
non-proprietary consumer products (such as pregnancy tests and generic
blood glucose test strips) below that of its competitors.

- Promote products used by physicians and laboratories to facilitate market
acceptance of new self tests. The Company believes that a critical factor
in obtaining regulatory approval and consumer market acceptance of new
self-test products is overcoming the concerns of physicians and other
healthcare professionals about the ease-of-use and reliability of these
products. The Company believes that this acceptance was a necessary
initial step in obtaining regulatory approval for the self-test blood
glucose monitoring systems and pregnancy and ovulation prediction self
tests currently on the market. Accordingly, part of the Company's
strategy for expanding the scope of its product offerings, particularly
in the area of infectious diseases, is to provide simple-to-use and
highly reliable tests for

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use in the professional and public health markets as a prelude to
converting these tests to over-the-counter consumer products.

- Utilize the Company's broad retail distribution network and strong
customer relationships to launch new products rapidly. The Company has
devoted substantial time and resources to the development of its retail
distribution network. The Company believes that it has developed an
experienced, well-established group of retail brokers and field sales
personnel, as well as strong customer relationships, and that these will
enable the Company to quickly introduce new products and thereby increase
the likelihood of rapid market acceptance of such products. The Company
plans to use this distribution network and its customer relationships to
expand sales of the Nutritional Supplement Lines.

- Continue to pursue private label arrangements with major retailers to
increase market penetration. The Company's historical revenues have been
derived from packaging and distributing pregnancy products under the
private labels of drug store chains such as CVS/pharmacy and Eckerd Drug,
as well as under the private labels of mass merchandisers such as Target
Stores. The Company intends to leverage its private label merchandising
expertise in marketing new products, including generic blood glucose test
strips and other healthcare products.

- Target value-conscious consumers with low-cost, high-quality
products. Selfcare has established a distribution network for its private
label and branded products which is focused on consumer mass markets and
uses aggressive pricing to reach value-conscious consumers. Selfcare
believes that increased consumer demand for value brands, those which
provide low cost and comparable quality to that of name brands, will play
an increasing role in persuading retailers to offer increased shelf space
and promotion to such brands.

- Seek and expand strategic alliances and other transactions to develop or
acquire technologies for new self-test diagnostic and other self-care
products. An important part of Selfcare's business strategy is to enter
into strategic alliances, joint ventures and licensing arrangements with
third parties, for the development, manufacture and distribution of
certain products. The Company is also pursuing a strategy of selective
acquisitions of companies, assets and technologies which it believes will
enhance its ability to deliver innovative self-test diagnostic products
to the marketplace at low cost. The Company has completed two such
transactions, its 1994 acquisition of Cambridge Diagnostics Ireland Ltd.
("Cambridge Diagnostics") and the Company's investment in Inverness
Medical Limited ("Inverness"). In addition, the Company and LifeScan,
Inc., a subsidiary of Johnson & Johnson ("LifeScan") are currently
engaged in the first phase of an exclusive worldwide alliance (the
"LifeScan Alliance"). The Company also anticipates it will complete the
acquisition (the "Orgenics Acquisition") of substantially all of the
capital stock of Orgenics Ltd. ("Orgenics") upon completion of this
offering and complete the Nutritional Supplement Lines Acquisition in
February, 1997. See "-- Strategic Transactions."

OVERVIEW OF MARKETS

Selfcare has targeted three principal markets for its self-test and
professional diagnostic products: diabetes (blood glucose monitoring systems and
generic test strips compatible with such systems), women's health (principally
pregnancy and ovulation prediction self tests) and infectious diseases
(including self tests for HIV, Strep-A and chlamydia).

Diabetes

Diabetes is a serious chronic disease for which there is no known cure,
and, according to a 1996 Frost & Sullivan report, is the fourth leading cause of
death by disease in the United States. Diabetes is a disease in which the body
is unable to control the levels of insulin and glucose. The consequences of
untreated diabetes include cardiovascular disease, stroke, high blood pressure,
blindness, kidney failure, neuropathies which can lead to amputation, dental
disease, and, in mothers with untreated, pre-existing diabetes, malformations in
children as well as deaths in newborns. There are two types of diabetes. Type I,
or insulin-dependent diabetes, is hereditary. Patients with Type I diabetes must
constantly test their blood glucose level and are dependent on

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injections of insulin. Type II, or noninsulin-dependent diabetes, is associated
with a sedentary life style and a diet rich in sugars and fats. The prevalence
of diabetes varies by race, but increases with age in all cultures, leading to
an inevitable increase in the prevalence of the disease as populations age and
as average lifespans increase. The reported prevalence of diabetes is also
expected to increase in the future with improvements in global access to
healthcare, better diagnosis of both Type I and Type II diabetes and uniform
methods for global reporting of the disease.

The Centers for Disease Control and Prevention reports that in the United
States, eight million people have been diagnosed with diabetes, and there are
approximately 1,700 new diagnoses made daily, resulting in approximately 625,000
new diagnoses annually. However, it is estimated that twice the total diagnosed
number, approximately 16 million people, or approximately 6% of the U.S.
population, are currently afflicted with diabetes. Of this number, approximately
14.5 million have Type II diabetes and the remaining 1.5 million have Type I
diabetes. According to a 1996 Frost & Sullivan report, the total cost of
diagnosing and treating the disease in the United States was estimated to be $92
billion in 1996, but according to a 1995 Frost & Sullivan report, the
comprehensive U.S. national cost of diabetes in 1995 was $132 billion, including
direct medical costs and indirect costs such as disability, work loss and
premature mortality. Worldwide, the number of people afflicted with diabetes is
between 100 and 150 million, according to a 1995 estimate by the Juvenile
Diabetes Foundation International and Diabetes Research Foundation.

According to the Diabetes Control and Complications Trial (the "DCCT"),
which was sponsored by the National Institutes of Health and completed in 1993,
the health impact of diabetes can be minimized by the patient. The DCCT, a
ten-year study involving 1,441 volunteers with Type I diabetes, found that if
blood glucose levels are managed and controlled to remain near normal levels,
then the onset and progression of the complications due to diabetes can be
largely delayed. Management of blood glucose levels can be accomplished through
a combination of lifestyle changes and the use of glucose or insulin to bring
blood glucose levels within acceptable levels. The American Diabetes Association
("ADA") recommends that blood glucose levels be monitored at least four times a
day in order to maximize the effectiveness of this therapy. The Company believes
that the DCCT will continue to increase awareness among diabetics of the
benefits of frequent testing and may, therefore, increase demand for blood
glucose monitoring systems. The Company estimates that diabetics, on average,
test their blood glucose levels approximately once per day. Although the DCCT
included only Type I diabetics, the ADA has stated that most Type II diabetics
could also benefit from better control of blood glucose levels.

Blood Glucose Monitoring

Beginning in the late 1970s, the availability of compact, easy-to-use
monitoring systems that provided fast and accurate blood glucose measurements
gave diabetics a tool to manage the disease more effectively and to improve the
quality of care. Worldwide sales of home blood glucose monitoring systems have
increased dramatically since that time. According to a 1996 Frost & Sullivan
report, the market for home blood glucose monitoring products (blood glucose
meters and test strips) in the United States grew from approximately $331
million in 1992 to approximately $483 million in 1995.

Diabetics adjust their treatment in accordance with the results of their
blood glucose tests. They carry the supplies needed for such tests in a small
kit containing lancets, alcohol swabs, an electronic meter and disposable strips
used with the meter. In practice, a patient uses a lancet to prick his or her
finger. A drop of blood is then applied to a disposable strip which is inserted
in and automatically read by the meter. The results of the test are displayed by
the meter in approximately 20 to 60 seconds, depending on the system. After
completion of the test, the strip is discarded. Most meters are capable of
storing a number of test results which patients or their physicians can retrieve
and review.

The test strips use an enzyme, typically glucose oxidase, along with other
reagents, which react with the glucose in the blood. Traditionally,
color-forming reagents have been used to monitor this reaction, and thus
determine the glucose level. When color-forming reagents are used, photometric
detection is employed. Photometric systems represent the majority of existing
blood glucose monitoring systems. More recently, systems have been introduced
which use an electroactive reagent allowing the reaction to be monitored by

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utilizing electrochemical techniques. Electrochemical systems are generally
considered superior to photometric systems in both performance and ease-of-use,
as they typically produce results more rapidly, require smaller blood samples
and employ smaller meters.

Although blood glucose monitoring systems based on photometric detection
still occupy a dominant market share, electrochemical systems are the fastest
growing segment of the home blood glucose monitoring market. Currently, three of
the four major competitors in the blood glucose monitoring field manufacture and
market electrochemical systems: Boehringer Mannheim Corporation ("Boehringer
Mannheim"), Bayer Corporation ("Bayer") and MediSense, Inc. ("MediSense").
However, LifeScan, which is the market leader for blood glucose monitoring
systems in the United States, does not yet offer an electrochemical system.

Women's Health

Self-Test Products. Women's health self-test products currently provide a
means for women to determine if they are pregnant (pregnancy self tests), and
when ovulation is likely to occur (ovulation prediction self tests). There are
numerous pregnancy self tests currently on the market. These urine-based tests
are able to provide results in less than five minutes and are sensitive enough
to indicate pregnancy within one or two days of a missed menstrual period.
Pregnancy self testing has achieved widespread consumer awareness and
acceptance.

Determinations of fertility are generally made using ovulation prediction
tests, most notably those based on luteinizing hormone ("LH"), which are able to
give an indication of impending ovulation. Approximately 15% of couples in the
United States experience fertility problems. This number has increased in recent
years due, in part, to couples choosing to delay the start of their families and
therefore attempting to conceive at more advanced ages than in the past. The
Company believes that this increased incidence of infertility, as well as a
desire on the part of couples to plan conception with more certainty, has led to
increasing demand for ovulation prediction tests. LH ovulation prediction
urine-based tests are easy to use, and are becoming widely accepted by
professional fertility care providers and the general public.

According to a 1996 report by Frost & Sullivan, the market for women's
health self-test products is currently comprised mostly of home pregnancy
(approximately 90%) and ovulation prediction (approximately 10%) tests. A 1996
Clinica Reports study estimates that the worldwide market for pregnancy and
ovulation prediction self tests was approximately $592 million in 1995. Frost &
Sullivan estimates that the U.S. market was approximately $255 million in 1995
and is expected to grow to over $415 million by the year 2002. The Company
believes that the accuracy, simplicity, convenience and confidentiality of
consumer pregnancy and ovulation prediction tests are significant factors
contributing to this growth.

Nutritional Supplements. The Nutritional Supplement Lines Acquisition
provides Selfcare with the opportunity to expand the scope of its self-care
product offerings for the women's health market. The Company believes that it is
well-positioned to capitalize on the expected growth in the vitamin and
nutritional supplement industry. According to a 1995 Frost & Sullivan report,
manufacturers' revenues for vitamins and nutritional supplements grew from
approximately $1.2 billion in 1991 to $1.7 billion in 1995. The Company believes
that growth in the vitamin and nutritional supplement market is being driven by
several factors, including: (i) national media attention regarding scientific
research suggesting potential health benefits from the regular consumption of
certain vitamins and other nutritional products, (ii) the aging of the U.S.
population (because a larger portion of older age groups use vitamin and
nutritional supplements), (iii) the growing practice of self-care and preventive
medicine in connection with a heightened awareness and understanding of the
connection between diet and health by the general public but especially among
women, and (iv) the favorable efforts of and opportunities presented by the
enactment and implementation of the Dietary Supplement Health and Education Act
of 1994 ("DSHEA").

In the last several years, public awareness of the positive effects of
vitamins and nutritional supplements on health has been heightened by widely
publicized reports of scientific findings. Recent studies have indicated a
correlation between the regular consumption of selected vitamins and nutritional
supplements and reduced incidences of conditions affecting men and women
generally, such as heart disease, cancer, stroke, as well as conditions which
affect women to a greater degree or exclusively, such as neural tube birth
defects (NTDs),

40
<PAGE> 43

osteoporosis, and anemia incident to menstruation and other conditions. The
American Dietetic Association (the "Dietetic Association") recently concluded
that women are at unique risk for certain major nutrition-related diseases and
conditions, such as osteoporosis and certain cancers. It also noted that fewer
than one-third of women recently surveyed alter their diet to lower their risk
of such diseases and conditions. The Company believes that as women increasingly
become aware of these diseases and conditions and the relationship between such
health risks and good nutrition, they will turn toward nutritional supplements
targeted at their needs. For example, according to the Centers for Disease
Control and Prevention, folic acid has been shown to be important in preventing
various NTDs such as spina bifida and anencephaly. The U.S. Public Health
Service recommends that women of childbearing age who are capable of becoming
pregnant should consume 0.4 mg of folic acid per day for the purpose of reducing
their risk. In addition, according to the Dietetic Association, osteoporosis
affects more than 25 million women over the age of 45 years in the United States
and Canada. A calcium-rich diet is believed by the Dietetic Association to be
the best way to prevent osteoporosis.

The Company also expects that the aging of the United States population,
together with a corresponding increased focus on preventative health measures,
will result in increased demand for vitamins and nutritional supplement
products. According to the United States Census Bureau, through 2010, the
35-and-older age group of consumers, which the Company believes represents a
substantial majority of regular users of vitamin and nutritional supplements, is
expected to grow significantly faster than the general United States population.
Based on a national survey indicating that only 33% of Americans consumed
vitamins and nutritional supplements on a regular basis in 1995, the Company
believes that there is a large untapped domestic market for vitamins and
nutritional supplements. Industry sources also report that vitamin consumers are
taking more vitamins and nutritional supplements per day than in the past.

The primary channels of distribution in the vitamin and nutritional
supplement industry are: (i) mass market retailers which include mass
merchandisers, drug stores, supermarkets and discount stores; (ii) health food
stores; (iii) direct sales organizations; and (iv) mail order. The national
brand category primarily consists of multivitamins and mineral products marketed
under nationally advertised names such as Centrum(R), One-A-Day(R), Theragran(R)
and StressTabs, one of the Nutritional Supplement Lines.

HIV and Other Infectious Diseases

According to the WorldWatch Institute, infectious diseases are the leading
cause of death worldwide, killing at least 17 million people every year.
According to the Centers for Disease Control and Prevention, deaths attributable
to infectious diseases rose by 58% from 1980 to 1992, and in 1992 accounted for
8% of deaths in the United States (the latest date for which such figures are
available). In 1992, infectious diseases were the third-leading cause of death
in the United States, behind heart disease and cancer.

Infectious diseases are a broad category of contagious bacterial and viral
infections, including food-, water-, air- and insect-borne illnesses, and
diseases transmitted through blood or bodily secretions. Infectious disease
diagnostic tests are currently marketed primarily for professional use by
physicians and other healthcare professionals in hospitals and other
point-of-care sites, and in clinical laboratories. Governmental agencies,
purchasing directly or through international bodies such as the World Health
Organization, are among the largest purchasers of such products. The Company
does not believe that infectious disease self tests, other than recently
introduced mail-in HIV tests, are currently being marketed on a significant
scale.

HIV is a virus generally transmitted by sexual contact, intravenous drug
use and blood transfusions. It is characterized by an asymptomatic phase lasting
up to several years, eventually culminating in the suppression of normal immune
responses leading to AIDS, for which there is no known cure. As of the end of
1996, the World Health Organization estimated that more than 8.4 million people
worldwide had been stricken with AIDS and 30 million people worldwide were
infected with HIV. It is estimated that worldwide there are at least 8,500 new
HIV infections every day, and nearly 60% of those are in developing countries.
The Centers for Disease Control and Prevention currently estimate that in the
United States approximately 1.5 million people are infected with HIV. However,
it is also estimated that only approximately 18% of U.S. adults have ever been
tested for the HIV infection, and that only 50% of all HIV-positive Americans
have been tested.

41
<PAGE> 44

In the absence of an effective immunization or treatment, early detection
and subsequent lifestyle changes have become an important strategy for limiting
the spread of HIV. Due to the long delay between transmission of HIV and the
appearance of symptoms of AIDS (an average of seven years), an infected person
can unknowingly infect many other people. Until recently, professionally
administered tests have been the only means available for diagnosing the HIV
infection approved by regulatory authorities in the United States, Europe and
other major, international markets. See "-- Products and
Technologies -- Infectious Disease Products -- HIV Tests." The Company believes
that many people at risk of infection are reluctant to undergo HIV testing, due
in part to the fear that the test results, or the fact that the person has been
tested, will become known to others without their consent. For example, a
research program conducted by the Centers for Disease Control and Prevention in
1992 revealed that 29% of adults in the United States would use an HIV self
test, while only 8% would participate in current diagnostic programs.

The mail-in HIV testing services that are currently available, including
those licensed to the Company from a third party, require a user to collect a
sample at home, which is then sent to and analyzed in a laboratory. The patient
must call the laboratory several days later to obtain the results of the test.
By comparison, under the protocol of the Company's HIV self test, called
CarePlan, the test will be performed by a user entirely at home, producing a
randomized, coded result in less than 15 minutes. The user may then immediately
call a toll-free number to have the coded result interpreted. The Company
believes that the availability of immediate test results may give CarePlan a
significant advantage over the mail-in HIV testing services currently marketed
by Home Access Health, Inc. ("Home Access") and Direct Access Diagnostics, an
affiliate of Johnson & Johnson ("Direct Access").

Selfcare believes that significant potential markets exist for self tests
which can be used to screen for the presence of other infectious diseases and
agents, including Strep-A, Lyme disease and chlamydia. Strep-A is a bacterial
infection which causes a severe sore throat and, if not detected and treated
early, can lead to a variety of health problems, such as pneumonia, rheumatic
heart disease and toxic shock syndrome. The Centers for Disease Control and
Prevention estimate that between 25 and 40 million cases of Strep-A infection
occur in North America each year. Lyme disease is an infection transmitted by
the deer tick which causes flu-like symptoms and which, if left untreated, can
cause arthritis and brain damage. According to the Centers for Disease Control
and Prevention, in 1994 there were 13,083 cases of Lyme disease reported by 44
state health departments in the United States, a 58% increase from the 8,257
cases reported in 1993. Chlamydia is a sexually transmitted disease which, if
left untreated, can cause pelvic inflammatory disease and sterility in women.
The World Health Organization estimates that chlamydia strikes 78 million men
and women worldwide each year. Accordingly, the Company is also seeking to
develop new self-test products, either internally or through licensing or
acquisition to address these markets.

42
<PAGE> 45

PRODUCTS AND TECHNOLOGIES

The following table summarizes only those products currently marketed, to
be marketed or under development by the Company which the Company considers to
be most significant to its potential growth. The information set forth in the
table is qualified in its entirety by the more detailed information following
the table. In addition to the products described in the table below, the Company
and Orgenics currently market a broad array of professional diagnostic tests for
infectious diseases, primarily HIV, chlamydia and, to a lesser extent,
hepatitis, Lyme disease and others. See "-- Infectious Disease Products."

<TABLE>
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
PRODUCT APPLICATION STATUS
------- ----------- ------
<S> <C> <C>
DIABETES PRODUCTS UNDER DEVELOPMENT
New System Electrochemical blood In final stage of
glucose monitoring system development for worldwide
utilizing disposal test marketing by LifeScan (a
strips subsidiary of Johnson &
Johnson) as a
LifeScan-branded product

Generic Test Strips Disposable test strips Under development for
designed to be compatible worldwide marketing by the
with other manufacturers' Company as a
electrochemical blood Selfcare-branded generic
glucose monitoring systems product
WOMEN'S HEALTH PRODUCTS
Marketed Products
Pregnancy Self Test An easy-to-use self test Marketed in the U.S. and
that indicates pregnancy Europe by the Company as a
within three minutes Selfcare-branded product and
in the U.S. under private
labels

Ovulation Prediction Self Test An easy-to-use self test Marketed in the U.S. and
that gives up to 48 hours Europe by the Company as a
advance notice of ovulation, Selfcare-branded product and
increasing the chances for in the U.S. under private
conception labels

CarePlus Contraception product Marketed in the U.S. by the
consisting of condoms and Company as a
spermicide inserts, in Selfcare-branded product
packaging designed to appeal
to women
Product under Development
Birth Control Aid System using disposable test Under co-development by the
strips for monitoring Company and one of its
fertility for purposes of strategic partners for
contraception initial marketing outside
the U.S.
NUTRITIONAL SUPPLEMENTS
Nutritional Supplement Lines Nutritional supplements sold To be marketed in the U.S.
under various brand names by Selfcare subject to
and targeted, in part, at completion of the
the women's health market Nutritional Supplement Lines
Acquisition
INFECTIOUS DISEASE PRODUCTS
UNDER DEVELOPMENT
HIV 1/2 Self Test Single-use, home screening Under development for
test in a rapid, whole blood initial marketing in Europe,
format, with educational and subject to regulatory
consulting materials approvals

HIV Mail-In Test Single-use, home collection Under development by a third
and mail-in home HIV test, party for initial marketing
with educational and by the Company in Europe,
consulting materials subject to regulatory
approval

Strep-A Self Test Single-use, home screening Under development by one of
test utilizing a swab in a the Company's third-party
rapid format manufacturers for worldwide
marketing by the Company
- --------------------------------------------------------------------------------------------------------------
</TABLE>

43
<PAGE> 46

Product Overview

The products currently marketed by the Company consist primarily of
pregnancy self tests and infectious disease diagnostic test kits for the
professional market. The Company's pregnancy self tests are supplied by
third-party manufacturers, principally Princeton BioMeditech Corporation
("Princeton"), and marketed by the Company in the United States and Europe under
the Selfcare brand name as well as private labels. The Company's infectious
disease diagnostic kits are manufactured and marketed outside the United States,
primarily to healthcare professionals. Selfcare also has several products and
technologies under development which address each of the Company's target
markets and are important to the Company's growth prospects. The Company's
current products as well as products under development are described more fully
below.

Diabetes Products under Development

The New System. The Company's principal product for the diabetes market is
an electrochemical, biosensor-based blood glucose monitoring system to be
distributed by LifeScan. The system consists of an instrument, referred to as a
meter, and a disposable test strip. The meter component of the system
incorporates all of the significant features of the leading systems currently on
the market, including results displayed in less than 30 seconds, a large,
easy-to-read display to assist visually impaired users, and a simple user
interface. The test strips to be used with the system have been improved by the
implementation of careful process control in the manufacturing of such strips
which the Company believes will result in a more consistent product than the
test strips currently on the market. In September 1996, the Company received
regulatory clearance from the U.S. Food and Drug Administration (the "FDA") for
the system. In conjunction with LifeScan, the Company subsequently undertook
certain enhancements to the user interface features for the system. However, the
underlying chemistry and function of the disposable strips for the enhanced
version of the system (hereinafter referred to as the "New System") were not
changed from those of the prior version of the New System.

To operate the New System, a user first calibrates the meter for use with a
particular test strip by a simple push-button operation. The test strip is then
inserted into the meter, which automatically activates in a standby mode. The
user then places a small blood sample obtained by a finger prick on the end of
the test strip, which senses the size of the necessary sample and automatically
runs the test when the necessary amount of blood is available, providing results
in less than 30 seconds.

The Company and LifeScan expect the New System to become one of LifeScan's
principal blood glucose monitoring products, supplementing LifeScan's existing
photometric systems. Although LifeScan is currently the leader in the home blood
glucose monitoring market, with a U.S. market share of over 40% in 1995,
LifeScan does not currently market an electrochemical blood glucose monitoring
system. The Company believes that the addition of the New System to LifeScan's
current product line will allow LifeScan to continue to compete successfully in
the blood glucose monitoring market. According to a recent Frost & Sullivan
report, the U.S. blood glucose monitoring market (including both the home and
professional markets) was approximately $1.1 billion in 1995 and is expected to
grow at a compound annual rate of approximately 19% from 1994 to 2001.

On October 9, 1996, Selfcare and LifeScan entered into a distribution
agreement (the "Distribution Agreement") with respect to the New System,
pursuant to which Selfcare will supply the New System to LifeScan and LifeScan
will be the exclusive, worldwide distributor of the New System. The Company
plans to submit in early 1997 a pre-market clearance notification (a "Section
510(k) Notification") to the FDA pursuant to Section 510(k) of the Federal Food,
Drug and Cosmetics Act, as amended (the "FDC Act"), seeking permission from the
FDA ("FDA Clearance") to begin commercial distribution of the New System.
Selfcare currently believes that it can complete development, receive FDA
Clearance and commence shipments of the New System as early as the first half of
1997. However, no assurance can be given that these events will occur or will
not be delayed. The failure of any of these events to occur would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors -- Risks Related to the LifeScan
Alliance, "-- Strategic Transactions -- LifeScan Alliance," and "-- Marketing
and Sales."

44
<PAGE> 47

Generic Test Strips. Many companies in the blood glucose monitoring
industry market products based on an electrochemical, biosensor technology. A
complete system consists of a meter and a disposable test strip. Selfcare plans
to develop, manufacture, and market disposable, electrochemical, biosensor test
strips which can be used in electrochemical blood glucose monitoring meters
currently sold by the other leading manufacturers in the United States and
Europe. Under the terms of the LifeScan Alliance, the Company cannot develop a
generic test strip for the New System. However, the Company is developing
generic test strips for use with several other meters, including MediSense's
ExacTech(TM) and Companion 2(TM), Bayer's Glucometer Elite(TM) and Boehringer
Mannheim's Accu-Chek(R) Advantage(TM). On June 28, 1996, the Company obtained
FDA Clearance for its first generic test strip, which is compatible with the
ExacTech system sold by MediSense.

[Description of Graphic Entitled -- Typical Generic Strip
Schematic: The graphic depicts a generic blood glucose
monitoring test strip's component parts including, in
ascending order from bottom of graphic to the top of graphic
as follows: substrate strip (large flat rectangular strip),
conducting layers (geometric strips), enzyme/mediator layer
(semi-circular shape), spreading layer (small flat rectangular
shape) and top layer (medium sized flat rectangular shape with
oval space for placing test sample).]

The functions of the principal components of all electrochemical blood
glucose meters are similar. The design of test strips, however, varies in both
dimensions and materials, because some features are unique to each meter. The
general strip design is a multi-layer sandwich of materials that receives a
collected blood sample and allows the sample to be analyzed in a meter which
then provides a reading which can be used by the patient to take actions to
regulate his or her blood glucose level through medication, exercise and diet.

Selfcare believes that it has developed manufacturing technology to enable
it to be the first company to produce high quality generic test strips at a cost
which is as low as, or lower than, those made by most manufacturers of branded
test strips. To achieve this goal, Selfcare has established multi-disciplinary
development teams which are able to work on several products in parallel. The
goal of each team is to design a new test strip configuration for each target
branded product which, while delivering equivalent or superior results, uses
less expensive materials and is simpler to construct. At the same time, the
teams hope to maintain the general similarities among the test strips which may
lead to efficiencies in manufacturing.

The Company intends to sell the generic test strips under the Selfcare
brand name through the low cost distribution channels which Selfcare has already
established for its women's health self-test diagnostic products in the United
States and Europe. See "Marketing and Sales." In the future, the Company may
offer its generic strips to retailers as private label products. The Company
intends to commence marketing its generic test strip designed to be compatible
with MediSense's ExacTech system under the name "Excel(TM)," initially in the
United States in the first half of 1997.

The Company currently plans to manufacture future blood glucose-related
products at the Company's facility in Inverness, Scotland (the "Inverness
Facility"), with the exception of the generic strip for the MediSense ExacTech
system, which will be manufactured at the Company's facility in Galway, Ireland
(the "Galway Facility"). See "-- Manufacturing."

In August 1996, the Company, through a wholly-owned subsidiary, Selfcare
International GmbH, entered into a supply agreement with A. Menarini Industrie
Farmaceutical Riunite S.r.L. of Florence, Italy ("Menarini"). The agreement
provides that the Company will be a principal supplier to Menarini of blood
glucose strips distributed or to be distributed by Menarini in selected markets
in Europe and certain countries in other parts of the world. The blood glucose
test strips will be manufactured at the Inverness Facility. The Company expects
shipments under this agreement to commence in the second half of 1997. Under the
agreement, Menarini is subject to certain minimum purchases of products from the
Company, and the Company has agreed not to supply any third party with such
products in the selected markets for the term of the agreement.

45
<PAGE> 48

Women's Health Products

Selfcare is currently marketing pregnancy and ovulation prediction self
tests which the Company purchases from third-party manufacturers, principally
Princeton, and then repackages under private labels, as well as under the
Selfcare brand. In order to reduce product costs and ensure quality, Selfcare is
in the process of developing its own manufacturing capabilities for these tests.
The Company believes that pregnancy and ovulation prediction tests to be
manufactured by Selfcare will be of the same quality as the tests that are now
currently obtained from contract suppliers. In September 1996, the Company
entered into an agreement with Nova Biomedical Corporation ("Nova") pursuant to
which Nova agreed to repackage and supply Selfcare with early pregnancy and
ovulation test kits. Under such agreement, the Company has agreed to purchase a
minimum quantity of specified products from Nova. The Company is also developing
a birth control aid for introduction in markets outside the United States.

Pregnancy Products. Selfcare markets a full line of pregnancy self-test
kits from various manufacturers in both stick and cassette versions. The stick
version has an exposed wick which absorbs urine when placed in the urine stream,
while the cassette version requires the user to first collect a urine sample in
a cup and then utilize an enclosed dropper to place the urine sample in the test
well. Both versions employ identical technology enabling the display of visual
results in approximately three minutes.

Ovulation Prediction Products. Selfcare's LH ovulation prediction tests,
marketed as the Early Ovulation Predictor under both the Selfcare brand name and
private labels, provide 24 to 48-hour notice of when ovulation is likely to
occur. By identifying the days when a woman is most fertile, these tests assist
couples in their family planning. The Early Ovulation Predictor has an
easy-to-use and easily read self-test cassette which is used by applying a urine
sample to the sample well with a supplied dropper. Clinically accurate results
are available in approximately three minutes.

Birth Control Aid. The Company is co-developing a birth control aid with
Princeton which will allow a woman to accurately identify the six-day period
when she is likely to be able to conceive. Selfcare's birth control aid is
designed to allow a woman to perform the test at any time during her monthly
cycle, and will yield the information on her fertility status almost immediately
utilizing an easy-to-use and read test device similar to the Company's pregnancy
tests and fertility monitors. The Company's birth control aid will be a
urine-based, estrogen and progesterone test which will give 72-hour notice of
ovulation and also indicate the end of a woman's fertile period. The system will
use a meter to read a test strip, and will have the capability to store previous
test results, as well as to prompt the user to commence testing. To date, the
FDA has not permitted such products to be marketed as a contraceptive aid in the
United States. Accordingly, this product will initially be introduced in
European countries where such claims are permitted. Unilever Corporation
("Unilever") has recently introduced a birth control product in the United
Kingdom which uses a urine strip and an instrument and currently has a similar
product in clinical trials in the United States. Selfcare believes that it may
benefit from Unilever's effort to bring a birth control product to the U.S.
market. However, there can be no assurance that any such product will be
approved for commercialization in the United States.

CarePlus. Selfcare has recently commenced marketing in the United States a
contraceptive product called CarePlus(TM) under the Selfcare brand which
consists of condoms and spermicide inserts, in packaging designed to appeal to
women.

46
<PAGE> 49

Nutritional Supplement Lines

Pursuant to the Nutritional Supplement Lines Acquisition, Selfcare has
agreed to acquire the U.S. rights to the Nutritional Supplement Lines, which had
domestic sales of approximately $24 million in 1996. The Stresstabs, Allbee(R)
and Z-Bec(R) product lines included in the Nutritional Supplement Lines
Acquisition currently represent, according to industry sources, approximately a
29% share of the B-complex vitamin category sold through U.S. drug, food and
mass merchandising retail chains. The following table summarizes those
Nutritional Supplement Lines which the Company believes will form an important
part of its retail marketing strategy:

<TABLE>
<CAPTION>
NUTRITIONAL SUPPLEMENT PRODUCT DESCRIPTION
- ------------------------------ -----------
<S> <C>
Stresstabs* B-complex vitamin with folic acid (daily supplements of folic
acid have been shown to be important in preventing various
neural tube defects (NTDs) such as spina bifida and
anencephaly)

Stresstabs with Iron* B-complex vitamin with folic acid and iron

Stresstabs with Zinc B-complex vitamin with folic acid and zinc

Ferro-Sequels* Iron supplement (iron supplements help prevent anemia
associated with menstruation and other women's health
conditions)

Posture* Calcium supplement (a calcium-rich diet is believed to be the
most effective way of preventing osteoporosis)

Protegra(TM) Antioxidant multivitamin and mineral supplement

Allbee B-complex vitamin with Vitamin E and Vitamin C

Z-Bec B-complex vitamin with Vitamin C, Vitamin E and zinc
<FN>
- ---------------
* Products formulated to address certain women's health requirements.
</TABLE>

Pursuant to the terms of the Nutritional Supplement Lines Acquisition, at
the closing (the "Acquisition Closing") the Company and AHP will enter into
supply agreements, pursuant to which AHP will agree to supply the Company with
the products for the Nutritional Supplement Lines for up to one year after the
closing. The Company will purchase such products at agreed upon prices from AHP
in quantities based on quarterly forecasts provided by the Company. AHP will
manufacture such products itself, or, in the case of products it does not
currently manufacture, obtain them from third party suppliers. AHP has agreed
that the Nutritional Supplement Lines supplied pursuant to such agreements will
conform to agreed upon specifications and that they will be manufactured in
compliance with applicable laws and regulations, including the FDC Act and
CGMPs. After the one-year period lapses, the Company will be required to
establish alternative supply arrangements for the products. See "Risk Factors --
Dependance on Certain Suppliers."

Upon the Acquisition Closing, the Company will become responsible for all
marketing and sales functions for the Nutritional Supplement Lines, as well as
substantially all administrative functions, including order receipt, billing,
customer service and collection. The Company will also become responsible for
the distribution of all products three months following the date of the
Acquisition Closing. The Company will market the Nutritional Supplement Lines
through its existing retail distribution channels, and will seek to expand sales
through trade allowances, increased advertising and promotion, and
cross-merchandising with other Selfcare products. The Company will also
reposition the brands which address specific women's nutritional needs through
redesigned packaging and increased emphasis on the products' self-care benefits
for women. The Company expects to continue to expand its women's health product
line with products supplied by or co-developed with third party manufacturers,
as well as products developed by the Company.

Infectious Disease Products

Selfcare is currently marketing a wide array of professional diagnostic
test kits for infectious disease agents, including HIV, hepatitis and Lyme
disease. In addition, the Company is developing self-test products for HIV 1/2
and Strep-A. Orgenics also markets professional diagnostic kits for HIV,
hepatitis and other

47
<PAGE> 50

infectious disease agents, including chlamydia, and is developing several
professional diagnostic products in various formats for a variety of other
infectious diseases.

HIV Tests. Selfcare produces two visually-read, rapid test HIV products for
the emergency blood screening and clinical diagnostic markets. The first of
these tests, the rapid test device ("RTD"), is a membrane-based, rapid enzyme
immunoassay ("EIA") test employing recombinant HIV-1 and HIV-2 coated latex
attached to a plastic membrane as an antibody capture mechanism. This product
has been on the market since June 1991 and is registered for sale in India, a
number of European countries, as well as many countries in Africa and the Middle
East. The second test is in a patented format licensed from Cambridge Biotech
Corporation ("Cambridge Biotech") under the trademarked name Capillus(TM).
Capillus is an instrument or visually-read latex agglutination assay employing
an acrylic capillary slide to achieve agglutination. The instrument is a simple,
low cost, battery-run photometer. The World Health Organization regularly
purchases HIV tests for shipment to developing countries, such as India, to be
used in major government AIDS control programs. Currently, approximately 33% of
the Indian government's requirements for HIV rapid tests are purchased from the
Company through the World Health Organization. An equivalent percentage of such
requirements is purchased from Orgenics.

The Company also produces an HIV 1/2 microtiter plate screening assay that
is used mainly in blood collection and donation centers. Three individual EIA
products are also produced for hepatitis-D antigen, total antibody and IgM in
human blood serum. Sales are mainly under private label to Murex Ltd. and Sanofi
Pasteur.

In January 1997, Selfcare entered into an agreement with ChemTrak
Incorporated ("ChemTrak") pursuant to which ChemTrak appointed Selfcare as its
exclusive distributor in Europe, Scandinavia and certain other countries
formerly comprising the U.S.S.R., including Russia (the "European Territory") of
ChemTrak's home collection and mail-in HIV testing system for which FDA approval
is currently pending. As part of this agreement, Selfcare agreed to pursue
regulatory approval of the system in each country comprising the European
Territory. In addition, Selfcare agreed to establish and operate one or more
central testing facilities and offer counseling services to report results and
offer counseling to users of the system. ChemTrak retains the right to convert
the Company's exclusive distribution rights into non-exclusive rights upon the
occurrence of certain events, including the Company's failure to make certain
regulatory filings and the Company's failure to maintain market share goals.
There can be no assurance that Selfcare will be successful in obtaining the
necessary regulatory approvals in Europe, in establishing satisfactory testing
facilities and counseling services or in successfully commercializing the system
in Europe. See " -- Strategic Transactions -- Agreement with ChemTrak."

The Company believes that a home HIV test program using technology
currently available or under development by the Company may be marketable in
certain European countries in late 1997, although no assurance can be given that
necessary regulatory approvals for such a test will be obtained by such time, or
at all. The Company anticipates that it will develop or acquire HIV self tests
in different formats as necessary for the introduction of such tests in other
countries, including the United States, following the initial marketing of these
tests in Europe. In each case, the Company will be required to obtain certain
regulatory approvals before marketing such tests and no assurance can be given
that such approvals will be obtained.

Selfcare is also developing an educational and testing program called
CarePlan to be used in conjunction with the Company's HIV self tests. The
educational material explains the spread of the virus, risk behavior, and how to
reduce risk and exposure. A recent study of a program of free, confidential HIV
screening, counseling and treatment indicates that normal medical channels are
not meeting the needs of the population at risk because many people suffer from
embarrassment, fear the loss of confidentiality, or do not have a regular
doctor. In addition, a research program conducted by the Centers for Disease
Control and Prevention revealed that 29% of adults in the United States would
use a confidential HIV home test, while only 8% would participate in current
diagnostic programs.

Accordingly, Selfcare believes that a significant potential market exists
for an easy and completely private HIV self-test method. Home Access and Direct
Access are currently selling home collection and mail-in HIV testing and
telephone counseling services in the United States. These services (and other
tests for which FDA

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authorization is currently being sought), provide a user with instructions and
material for taking a small home-drawn blood sample which the user then mails to
a designated laboratory where the actual test is performed. A week after sending
in the sample, the user telephones the laboratory to obtain the results on an
anonymous basis. If the result is positive, the caller is offered immediate
access to a counselor. By comparison, under the protocol of the CarePlan
educational and testing program being developed by Selfcare, the test will be
performed by the user entirely at home, producing a randomized, coded result in
less than 15 minutes. The user may then immediately call a toll-free number,
report the code anonymously, and be informed whether the result is negative or
inconclusive. If the result is inconclusive, the caller is advised to consult
their physician for a confirmatory test and then, if necessary, to consult with
a counselor. Although the Company believes that the availability of immediate
test results may give CarePlan a significant advantage over the mail-in HIV
testing services of the type for which FDA Clearance has been obtained, there
are substantive regulatory and political obstacles, both in the United States
and abroad, which must be overcome before an HIV self test such as CarePlan can
be commercialized. There can be no assurance that these obstacles can be
overcome in a manner which will allow the Company to successfully market an HIV
self test. See "Risk Factors -- No Assurance of FDA Clearance; Comprehensive
Government Regulation."

Selfcare recognizes that there are significant barriers to the introduction
of HIV self tests such as CarePlan. Despite the fact that many current
recipients of professional clinical laboratory test results do not receive
counseling even if they test positive for HIV, the FDA has expressed concern
about allowing individuals to receive test results without counseling. The
Company's HIV self test is being designed so that if a test result is not
negative, the person will be counseled to see their physician for a confirmatory
test which would lead to appropriate medical and professional treatment and/or
counseling. Such counseling is desirable to stop the possibility of inadvertent
spreading of the disease, to counsel and advise on safe sex practices to stop
the spread of the epidemic, as well as to promote the emotional well being of
the patient. The issue of "error proofing" the home self tests is also a
significant concern. The mail-in HIV testing services that are currently
available require the patient to collect a sample at home, which is then sent to
and analyzed in a laboratory. The FDA has expressed concern about ensuring the
integrity of the collection of the sample and interpretation of results. The
Company believes the FDA will have additional concerns with respect to HIV self
tests which are designed to be interpreted at home. Despite the political and
regulatory barriers in the industrialized world, Selfcare is positioning itself
to compete in the consumer market for HIV self tests, and is already marketing
clinical diagnostic products, including products for use in public health
programs in certain developing countries. Selfcare believes it has the ability
to market HIV self-testing and educational programs, and intends to be poised to
enter the market if regulatory barriers are overcome.

Other Infectious Disease Tests. In addition to its HIV tests, the Company
produces two separate Western Blot kits to distinguish between early and late
infections of Lyme disease which if left untreated can lead to severe arthritis
and brain damage. The Company expects to produce and sell an improved Lyme
disease test kit in 1997. Selfcare will seek to provide other companies with
private label products manufactured by Selfcare which utilize the Western Blot
test technology.

The Company anticipates that it will complete the Orgenics Acquisition upon
completion of this offering. See " -- Strategic Transactions -- Orgenics
Acquisition." Orgenics manufactures professional diagnostic test products based
on several proprietary technological systems including genetic assays,
immunoassays, rapid tests and confirmatory tests using multiple antigens. These
tests, or adaptations of them, are applicable to detecting a wide variety of
infectious diseases and agents, including HIV-1 and HIV-2, hepatitis, and
chlamydia. Orgenics' products are designed to enable small-to-medium-sized
laboratories to analyze low volumes of tests economically. In May 1995, Orgenics
introduced a new product, DoubleCheck(TM), a single sample, compact diagnostic
device which, in its first commercialized application, detects HIV in saliva and
blood serum samples in less than ten minutes, making it suitable for use in
physicians' offices and other patient point-of-care sites. Orgenics is also in
the advanced stages of development of a DoubleCheck test which will detect H.
pylori (a bacterium associated with stomach ulcers and stomach cancer), as well
as a new, easily performed DNA probe-based genetic assay test called
GeneComb(TM), which Orgenics believes will substantially reduce the time
required to perform testing for genetic material, including HIV. Orgenics'
current products are sold in more than 20 countries, principally in Europe,
Latin America, Africa and Asia. Orgenics has

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obtained regulatory approval for sale of its DoubleCheck HIV test in France and
Latin America, has FDA Clearance for ImmunoComb(R) for chlamydia,
cytomegalovirus and toxoplasmosis, and intends to submit a Section 510(k)
Notification for H. pylori. The DoubleCheck and ImmunoComb test formats are
immunoassay-based tests which detect the presence of infectious disease agents.

MARKETING AND SALES

United States

In the United States, Selfcare has created an effective, low overhead sales
network. The Company's network utilizes independent, commissioned retail brokers
in conjunction with the Company's direct sales personnel. The Company's sales
efforts are currently focused on large drug, food and mass merchandising retail
chains, as well as wholesalers who service smaller accounts. The Company
currently contracts with its broker agencies geographically distributed across
the United States. The LifeScan Alliance contemplates that the New System will
be distributed worldwide exclusively by LifeScan, whose marketing resources can
more effectively leverage this technology.

Self-Test Products. Selfcare is taking steps to enter the generic
electrochemical blood glucose test strip market against established, branded
competition. The Company believes that it can produce test strips to be used
with the electrochemical blood glucose monitoring systems marketed by certain
major manufacturers at a lower cost to consumers than branded test strips. On
June 28, 1996, Selfcare obtained FDA Clearance for the first of its generic test
strip products. Selfcare intends to sell its generic blood glucose test strips
through its existing self test distribution network.

The Company currently markets several over-the-counter pregnancy and
ovulation prediction self tests. The Company purchases its pregnancy and
ovulation prediction self tests from third-party manufacturers and repackages
them for sale. These tests are marketed under both the Selfcare label and a
variety of private labels through major drug, food store and mass merchandising
chains. Selfcare pregnancy products are currently available in approximately 55%
of pharmacy chain outlets in the United States and are becoming available in new
outlets. Selfcare has recently commenced marketing CarePlus under the Selfcare
label through major drug, food store and mass merchandising chains in the United
States.

Nutritional Supplements. Upon the Acquisition Closing, the Company will
become responsible for all marketing and sales functions for the Nutritional
Supplement Lines, as well as substantially all administrative functions,
including order receipt, billing, customer service and collection. The Company
will also become responsible for the distribution of all products three months
following the date of the Acquisition Closing. Pursuant to the Nutritional
Supplement Lines Acquisition, the Company will be permitted to use packaging and
labels bearing the names of AHP and its affiliates for the Nutritional
Supplement Lines until AHP's current inventory of such packaging and labels is
exhausted. After such time, the Nutritional Supplement Lines will bear packaging
and labels designed by the Company and will not contain references to AHP or its
affiliates. The Company will market the Nutritional Supplement Lines through its
existing retail distribution channels, and will seek to expand sales through
trade allowances, increased advertising and promotion, and cross-merchandising
with other Selfcare products. The Company will also reposition the brands which
address specific women's nutritional needs through redesigned packaging and
increased emphasis on the products' self-care benefits for women.

International

Initially, the Company's international marketing will focus on developing a
distribution network in Europe. The Company has assembled a ten-person sales and
marketing staff based in Brussels, Belgium and Munich, Germany. The Company
believes that the nature of the distribution of self-test products differs from
country to country. In particular, the distribution of medical products in
Europe is characterized by numerous, small pharmacies and drug store chains as
opposed to large, national retailers. The Company intends to focus its initial
efforts at marketing women's health products and generic blood glucose test
strips in Germany and the United Kingdom.

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In August 1996, the Company entered into an agreement to become a principal
supplier of blood glucose test strips to Menarini which plans to distribute
these strips in selected markets in Europe and certain countries in other parts
of the world.

STRATEGIC TRANSACTIONS

An important part of Selfcare's business strategy is to enter into
strategic alliances and licensing arrangements with third parties, primarily
medical products companies, for the development and distribution of certain
products. The Company also pursues a strategy of selective acquisitions of
companies, assets and technologies which it believes will enhance its ability to
deliver innovative self-test diagnostic products to the marketplace at low cost.

Cambridge Diagnostics Acquisition

In November 1994, Selfcare acquired Cambridge Diagnostics from Cambridge
Biotech, which at that time was operating in Massachusetts under Chapter 11 of
the U.S. Bankruptcy Code. Cambridge Diagnostics, located in Galway, Ireland,
produces three categories of tests for infectious disease as well as packages
products for the Company's European customers, including pregnancy tests, birth
control and other women's health products. At the time of the acquisition,
Cambridge Diagnostics (then known as Cambridge Biotech Limited) was operating
under the protection of a court-appointed examiner in a procedure analogous to a
Chapter 11 reorganization under U.S. bankruptcy law. Pursuant to the acquisition
agreements, the terms of which were approved by the United States Bankruptcy
Court and the Irish High Court, Selfcare acquired all of Cambridge Diagnostics'
issued and outstanding capital stock and, pursuant to certain license
agreements, acquired certain technologies necessary for the production of
Cambridge Diagnostics' HIV 1/2 RTD, Capillus, Rapid Test and Lyme disease test
kits for an aggregate of $2.1 million and the assumption of certain liabilities.
In addition, the Company furnished Cambridge Diagnostics with a $900,000
unsecured working capital line of credit. Under the terms of Cambridge Biotech's
license agreements with Pasteur Sanofi Diagnostics, Cambridge Biotech could not
assign or sublicense its rights with respect to certain of these technologies
directly to the Company. In order to allow the Company to have access to such
technologies, Selfcare and Cambridge Biotech formed an affiliate, Cambridge
Affiliate Corporation ("Cambridge Affiliate"), 51% owned by Cambridge Biotech
and 49% owned by Selfcare. A series of contracts was entered into between
Cambridge Affiliate and Cambridge Diagnostics, pursuant to which Cambridge
Diagnostics manages Cambridge Affiliate and manufactures and sells products on
behalf of Cambridge Affiliate. Cambridge Affiliate is managed and funded
separately from Selfcare and Cambridge Diagnostics.

Selfcare financed the acquisition of Cambridge Diagnostics by utilizing a
bank line of credit and subsequently refinanced the amount borrowed through the
issuance of an aggregate of $3.0 million in original principal amount of
promissory notes (the "Cambridge Diagnostics Notes"), together with attached
warrants having an aggregate purchase price of $30,000 (the "Cambridge
Diagnostics Warrants"), to certain individuals, including Ron Zwanziger, the
Company's Chairman and Chief Executive Officer, Dr. David Scott, Managing
Director of Inverness, and Willard Lee Umphrey and John F. Levy, each a director
of the Company. The Cambridge Diagnostics Notes are due March 31, 1998 and bear
interest at the rate of 10% per annum. Upon certain events of default by the
Company, the noteholders may demand full or partial payment of the notes and the
accrued interest. See "Certain Transactions -- Cambridge Diagnostics
Transactions." As a fee for placement of the Cambridge Diagnostics Notes,
Selfcare issued an aggregate of 119,834 shares of Common Stock to U.S. Boston
Capital Corporation, an entity owned by Willard Lee Umphrey, a director of the
Company, and Mr. Leon Okurowski. See "Certain Transactions -- Transactions with
U.S. Boston Capital Corporation." Additionally, the Company issued 92,950 shares
of Common Stock to Mr. Zwanziger for his personal guarantee of the Cambridge
Diagnostics Notes.

In July 1996, the Company entered into agreements with holders of $2.75
million in principal amount of the Cambridge Diagnostics Notes in order for the
Company to obtain approval for listing of the Common Stock on the American Stock
Exchange (the "AMEX"). Pursuant to such agreements, the principal amount of the
notes were to be automatically converted into shares of Common Stock if the
Company's stockholders' equity as of November 30, 1996 were determined to be
less than $4.0 million. The Company stockholders'

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equity as of such date was $17.3 million (after giving effect to the events
occurring since such date which are described in footnote 2 to the table in
"Capitalization," but prior to giving effect to this offering); as a result, the
Company became obligated to repay such notes on or about December 31, 1996. In
December 1996, the Company entered into agreements (the "First Extension
Agreements") with holders of substantially all of the Cambridge Diagnostics
Notes pursuant to which such holders agreed to defer repayment of the principal
amount of their notes until January 15, 1998. In consideration of such deferral,
the Company agreed to issue warrants to purchase an aggregate of 54,545 shares
of Common Stock to such holders, exercisable at any time within the next five
years and at an exercise price of $12.875 per share.

The number of shares of Common Stock issuable pursuant to the Cambridge
Diagnostics Warrants is equal to 69% of the net sales of Cambridge Diagnostics
for the fiscal year preceding the repayment of the Cambridge Diagnostics Notes,
divided by $32.87. Based on this formula and Cambridge Diagnostics' net sales
for fiscal year 1995, had the Cambridge Diagnostics Notes been repaid on
December 31, 1996, all of the Cambridge Diagnostics Warrants would have become
exercisable for an aggregate of 1,142,635 shares of Common Stock. Pursuant to
the First Extension Agreements, such holders agreed that their Cambridge
Diagnostics Warrants would become exercisable as if the Cambridge Diagnostics
Notes had been repaid on December 31, 1996. As a result, the number of shares of
Common Stock issuable pursuant to such Cambridge Diagnostic Warrants will be
based on the net sales of Cambridge Diagnostics in 1995. On December 31, 1996,
the holders of $2.6 million in principal amount of the Cambridge Diagnostics
Notes, including substantially all of the holders who were subject to the First
Extension Agreements, entered into agreements (the "Second Extension
Agreements") to terminate and cancel their Cambridge Diagnostics Warrants, in
exchange for which the Company agreed to transfer to such holders, for no
additional consideration, an aggregate of 990,050 shares of Common Stock on the
earlier of January 15, 2000 or the occurrence of a change in control (as defined
in the Second Extension Agreements) of the Company. Of the holders of the
remaining $400,000 in principal amount of the Cambridge Diagnostics Notes, the
holders of $375,000 in principal amount of such notes remain parties to the
First Extension Agreements.

In May 1996, Cambridge Biotech proposed plans of reorganization under
Chapter 11 that contemplated the sale of its diagnostics business to bioMerieux
Vitek, Inc. ("bioMerieux"). Under the terms of the proposed sale, bioMerieux
would succeed to Cambridge Biotech's interest in Cambridge Affiliate, and
bioMerieux would acquire effective control of rights to practice the patents of
Syva Company ("Syva") and Pasteur Sanofi Diagnostics. Syva and Pasteur Sanofi
Diagnostics objected to confirmation of a plan that would permit Cambridge
Biotech to assume or transfer control of its rights as licensee with respect to
their patents. On July 18, 1996, the Bankruptcy Court confirmed Cambridge
Biotech's Chapter 11 plan over all objections, specifically upholding Cambridge
Biotech's right to assume the Syva and Pasteur Sanofi Diagnostics licenses. Syva
and Pasteur Sanofi Diagnostics immediately appealed the Bankruptcy Court's
order. The Syva appeal was subsequently settled. Pasteur Sanofi Diagnostics,
however, obtained orders staying the Bankruptcy Court's

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plan-confirmation order and the proposed sale of stock to bioMerieux pending
determination of its appeal. On September 27, 1996, the United States District
Court affirmed the plan-confirmation order, including Cambridge Biotech's right
to assume the licenses extended to the Cambridge Affiliate. Pasteur Sanofi
Diagnostics then appealed to the Court of Appeals for the First Circuit. On
October 9, 1996, the First Circuit lifted the stay of the plan-confirmation
order, and scheduled Pasteur Sanofi Diagnostics' appeal for expedited
determination. Though the question of Cambridge Biotech's right to assume the
Pasteur Sanofi Diagnostics licenses has not been decided by the First Circuit,
Cambridge Biotech and bioMerieux consummated the sale in October 1996. On
November 5, 1996, a three-judge panel of the First Circuit Court of Appeals
heard oral arguments with respect to Pasteur Sanofi Diagnostics' appeal. If the
First Circuit rules that Cambridge Biotech cannot assume its license agreements
with Pasteur Sanofi Diagnostics, then it will be unclear whether Cambridge
Biotech may continue to extend the license to Cambridge Affiliate. The failure
of the Company to retain such license could have a material adverse effect on
the Company. See "Business -- Strategic Transactions -- Cambridge Diagnostics
Acquisition."

Inverness Facility

In May 1995, the Company invested approximately $1.6 million for all of the
shares of voting capital stock in Inverness (formerly Hebocraft Limited), a
corporation organized under the laws of Scotland. A concurrent investment of
approximately $1.6 million, represented by shares of 6% cumulative redeemable
preferred stock of Inverness, was made by Inverness & Nairn Local Enterprise
Corporation ("INLEC"). Inverness has received funds in the amount of
approximately $2.7 million from the government of Scotland for equipment
acquisitions, product development and employee training. The Company has
guaranteed the repayment of those obligations. In addition, in June 1995,
Inverness entered into a lease with Highlands and Islands Enterprises ("HIE"),
an affiliate of INLEC, to rent the Inverness Facility, a 50,000 square foot
production facility occupied by Inverness in December 1995 after having been
constructed by HIE. The annual rent under the Inverness Facility's twenty-year
lease is approximately $520,000 per year, subject to certain increases. The
Company has guaranteed all payments by Inverness under the terms of the lease,
although Inverness is not obligated to pay rent for the first two years of the
lease. The Company is currently configuring the Inverness Facility for
production of the test strips for use in the New System. The Company also plans
to manufacture certain generic blood glucose test strips at the Inverness
Facility including blood glucose test strips for distribution by Menarini. See
" -- Manufacturing."

LifeScan Alliance

In November 1995, the Company entered into the LifeScan Alliance with
LifeScan, a subsidiary of Johnson & Johnson, which gives LifeScan certain rights
to market the New System. See " -- Products and Technologies -- Diabetes
Products under Development." Under the terms of the LifeScan Alliance, Johnson &
Johnson Development Corporation ("JJDC"), an affiliate of LifeScan, advanced
$7.0 million to the Company at the time the Company entered into the LifeScan
Alliance and $6.7 million in connection with the filing by the Company on May
20, 1996 of a Section 510(k) Notification with respect to a prior version of the
New System. In September 1996, the Company received notification of FDA
Clearance to begin commercial distribution of the prior version of the New
System. In conjunction with LifeScan, the Company subsequently undertook certain
enhancements to the user interface features for the prior version of the New
System. The underlying chemistry and function of the disposable strips of the
New System, however, were not changed from those of the prior version of the New
System. In October 1996, the Company entered into the Distribution Agreement
with LifeScan pursuant to which LifeScan is to distribute the New System. The
Company intends to file in early 1997 a Section 510(k) Notification with the FDA
with respect to the New System. The New System must receive FDA Clearance before
it may be sold in the United States.

As contemplated by the terms of the LifeScan Alliance, in connection with
entering into the Distribution Agreement, LifeScan paid the Company a success
fee of $7.0 million and JJDC converted its approximately $13.7 million in
previous advances to the Company into 201,622 shares of Common Stock which
represents 5% of (i) the Common Stock outstanding as of November 10, 1995, and
(ii) any shares of Common Stock issued prior to such conversion pursuant to the
exercise of rights to acquire Common Stock outstanding as of

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November 10, 1995. In addition, under the terms of the LifeScan Alliance, the
Company must issue to JJDC, for no additional consideration, shares of Common
Stock equal to 5% of any additional Common Stock issued pursuant to the exercise
of rights to acquire Common Stock outstanding as of November 10, 1995 (the total
of all shares so issued, the "Conversion Shares"). The precise number of
Conversion Shares depends on the number of shares of Common Stock which the
Company is required to issue in connection with the financing of the Inverness
Facility, as discussed below, as well as the vesting and exercise of options and
warrants. However, the Company estimates that the number of additional
Conversion Shares which JJDC will acquire is approximately 278,572. See "Shares
Eligible for Future Sale."

The Distribution Agreement provides that it will remain in effect through
December 31, 2010. It may be terminated earlier by either party upon the
happening of certain events, including a default on the part of the other party
not cured within applicable grace periods. The Distribution Agreement entitles
LifeScan to purchase from the Company the meters, test strips and related
components comprising the New System (collectively, "System Components") after
the Company has notified LifeScan that it is prepared to commence commercial
production of the New System. The Distribution Agreement provides that the
Company will be LifeScan's exclusive supplier of System Components, subject to
certain rights of LifeScan described below to make or obtain System Components
from others if the Company fails to meet its supply obligations. The
Distribution Agreement provides for periodic forecasts by LifeScan of its
planned purchases. If these forecasts exceed certain levels, the Company is
entitled to give notice to LifeScan if the Company anticipates that it will be
required to incur capital expenditures to meet LifeScan's anticipated
requirements of certain System Components. If the Company gives such a notice,
LifeScan must either agree to make certain payments to the Company if its actual
purchases fall short of projections by a specified margin, or the Company will
not be required to supply LifeScan's full forecast of such System Components.

Under the Distribution Agreement, the price per test strip varies depending
on the volumes purchased, while the price for System Components other than test
strips is the Company's cost, including appropriate allocations of overhead. If
the sale of test strips to LifeScan ceases to be profitable for the Company, the
price for test strips shall be such amount as gives the Company a commercially
reasonable profit. If the Company and LifeScan do not agree on this price, it is
subject to arbitration pursuant to a specified procedure. LifeScan is required
to purchase specified amounts of test strips beginning in 1998, subject to
adjustment if the Company has not obtained FDA Clearance by June 1, 1997. If
LifeScan's purchases of test strips fall below a certain level following
calendar year 2001, the Company may terminate the Distribution Agreement. The
Distribution Agreement does not otherwise require LifeScan to make any purchases
from the Company.

The Distribution Agreement prohibits the Company from selling instruments,
test strips or related components which are designed to be used with other
components of the New System to anyone other than LifeScan. This restriction
will cease to apply if LifeScan introduces a competing electrochemical system
for self testing of blood glucose not sourced from the Company prior to January
1, 2000. The Company is also prohibited from selling components of a complete
electrochemical system to measure blood glucose, consisting of test strips,
instruments and related components, unless LifeScan either (i) introduces an
electrochemical system for home use testing of blood glucose not sourced from
the Company, or (ii) fails to purchase specified minimum levels of test strips
over the life of the Distribution Agreement. If this restriction on the Company
terminates as a result of LifeScan's failure to purchase specified minimum
volumes of test strips, the Company will remain prohibited from supplying
products to any business in the home use testing market which has sales in
excess of a specified amount. Under certain circumstances, if the Company fails
to supply products in the volumes forecasted and ordered by LifeScan, LifeScan
would automatically become entitled to produce such products itself.

If the Company makes a Section 510(k) Notification on or before May 10,
1998 with respect to certain products relating to diabetes, LifeScan has the
right to require the Company to submit a proposed form of distribution agreement
for the applicable product reflecting certain agreed terms and to negotiate in
good faith with respect to the terms of a distribution agreement for such
product or products. If LifeScan elects to enter into a distribution agreement
for such product or products, LifeScan must pay the Company $3.0 million with
respect to each such product. In addition, if FDA Clearance is obtained for such
product, LifeScan must pay the Company an additional $2.0 million. If the
Company does not obtain written permission from the FDA to

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begin commercial distribution of such product within one year after LifeScan has
made the $3.0 million payment with respect to the product, LifeScan may require
the Company to repay that amount in eight equal quarterly installments, without
interest (provided payments are made in a timely manner).

If the Company makes a Section 510(k) Notification with respect to a novel
system for the measurement of human blood glucose which does not use test strips
in conjunction with an electronic meter or which does not measure an in vitro
fluid sample, the Company is required to provide LifeScan with the opportunity
to enter into a distribution agreement with respect to such system in accordance
with general terms previously agreed to in connection with the LifeScan
Alliance.

There can be no assurance that the Company will enter into any additional
distribution agreements with LifeScan or that LifeScan will purchase System
Components under the Distribution Agreement. See "Risk Factors -- Risks Related
to the LifeScan Alliance."

Agreement with Princeton

On March 15, 1996, the Company entered into an agreement with Princeton
which provides for the development of certain specific infectious disease tests
by Princeton for marketing by Selfcare on a non-exclusive basis. The agreement
also grants Selfcare an option to market under its own brand name other
infectious disease tests, and certain other types of tests, developed by
Princeton, on terms to be agreed. Pursuant to the agreement, the Company is also
obligated to purchase specified minimum amounts of certain tests kits from
Princeton through 1998 and has provided certain financing for the purchase of
equipment (which will remain the property of the Company) to be used in
producing tests kits for the Company. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources." The agreement also provides that Selfcare will provide funding for
the development by Princeton of a birth control aid, with respect to which the
Company will have exclusive worldwide marketing rights.

Agreement with Menarini

In August 1996 Selfcare entered into an agreement with Menarini pursuant to
which the Company became a principal supplier of blood glucose test strips for
blood glucose meters distributed or to be distributed by Menarini in selected
markets in Europe and certain countries in other parts of the world which
Menarini currently sources from another supplier. Under the agreement, Menarini
is subject to certain minimum purchases of products from Selfcare, and Selfcare
has agreed not to supply any third party with such products in the selected
markets for the term of the agreement. It is anticipated that distribution of
the blood glucose test strips will be undertaken by the diagnostics division of
Menarini, known as Menarini Diagnostics S.R.L. ("Menarini Diagnostics").
Menarini Diagnostics had 1995 revenues of $120 million, 430 employees, and nine
international subsidiaries. A significant part (approximately 40%) of the
existing business of Menarini Diagnostics is the supply of blood glucose test
strips and meters. Selfcare expects shipments under this agreement to commence
in the second half of 1997. The blood glucose test strips to be supplied to
Menarini pursuant to this agreement will be manufactured at the Company's
Inverness Facility.

Orgenics Acquisition

In December 1995, the Company entered into an Investment and Loan Agreement
(the "Orgenics Agreement") with Orgenics, pursuant to which the Company invested
$500,000, and two investment limited partnerships, Medica Investment (Israel)
L.P., ("Medica Israel") and Medica Investment (U.S.) L.P., (individually,
"Medica U.S." and, together with Medica Israel, "Medica") collectively invested
$500,000, in a $1.0 million debenture issued by Orgenics (the "Orgenics
Debenture"). On April 25, 1996, the Company exercised its right to acquire
Medica's interest in the Orgenics Debenture for 135,421 shares of Common Stock,
which were issued on May 7, 1996. See "Certain Transactions." Concurrently with
the issuance of the Orgenics Debenture, the Company provided guaranties (in the
form of letters of credit) of $200,000 of the debt of Orgenics' French
subsidiary to two French banks.

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In October 1996, the Company made a tender offer to all the holders of the
outstanding shares in Orgenics and Orgenics International Holding, B.V.
("Orgenics International"), a Dutch holding company whose only material asset is
its investment in Orgenics. In addition, on October 24, 1996, the Company
converted the Orgenics Debenture in accordance with its terms into redeemable
preferred shares of Orgenics representing 20% of Orgenics' outstanding share
capital on a fully diluted basis as of February 7, 1996, after giving effect to
the issuance of such preferred shares. The redeemable preferred shares have the
same voting rights as the ordinary shares of Orgenics, and are redeemable by
Orgenics in the event that the Company fails to perform its obligations under
the option agreements hereinafter described. As a result of purchases pursuant
to such tender offer and the conversion of the Orgenics Debenture, the Company
has acquired (on a fully-diluted basis) direct ownership of approximately 26.8%
of the shares of Orgenics, and approximately 59.7% of the shares of Orgenics
International. The purchase price for these interests was approximately $8.0
million (inclusive of the conversion of the Orgenics Debenture). Based on
Orgenics International's ownership of Orgenics shares, Selfcare currently holds
a 57.1% direct and indirect equity interest in Orgenics, and under the terms of
the Orgenics Agreement, has the right to appoint two of the seven members of
Orgenics' board of directors.

The Company is a party to option agreements (the "Option Agreements") with
substantially all the holders of Orgenics and Orgenics International shares (the
"Optionees"). Pursuant to the exercise of the options under the Option
Agreements (as more fully described below) upon the completion of this offering,
the Company expects to acquire direct or indirect (through Orgenics
International) ownership of approximately 99.3% of the outstanding share capital
of Orgenics. Under the terms of the Option Agreements, the Optionees have put
options which require the Company to purchase their shares, and the Company has
a call option to purchase such shares. The Company's call option is exercisable
at any time prior to August 7, 1999. The put options will become exercisable
upon the closing by the Company of this offering.

Upon exercise of the put or call options under the Option Agreements upon
completion of this offering, Selfcare will be required to pay for each share of
Orgenics which it acquires an amount equal to 1.5 times Orgenics' gross revenues
per share (on a fully diluted basis as of the exercise date, and after giving
effect to the conversion of the Orgenics Debenture) during the four fiscal
quarters ending December 31, 1996. However, if certain performance goals are met
by Orgenics, the multiple would increase to 1.75 times. The Company believes
that these performance goals were met during the applicable period. Accordingly,
the Company estimates that the amount of the consideration payable for the
Orgenics and Orgenics International shares to be acquired upon completion of
this offering will be approximately $9.3 million.

The consideration for the Orgenics shares purchased pursuant to the Option
Agreements is payable by Selfcare, at the election of each Optionee, entirely in
cash, entirely in Common Stock, or 50% in cash and 50% in Common Stock. For
purposes of determining the number of shares of Common Stock payable under the
Option Agreements, such shares will be valued based on their value as of the
date of exercise. Such value will be the average of the closing prices of the
Common Stock on the AMEX on the ten trading dates immediately preceding the
valuation date.

The Company has granted certain registration rights with respect to shares
of Common Stock which are issued pursuant to the Option Agreements. See "Shares
Eligible for Future Sale."

When the Orgenics Acquisition is completed, the Company's short-term plans
for the integration of Orgenics into Selfcare include having the Cambridge
Diagnostics' and Orgenics' distribution systems sell each other's products in
selected territories; integrating sales and marketing in Europe; improving the
use of the combined manufacturing facilities; and rationalizing research and
development capabilities. In the longer term, Selfcare plans to utilize
Orgenics' relationships in the professional market, particularly in professional
HIV diagnostic tests, to help gain acceptance for the Company's HIV self tests.
Selfcare will also leverage Orgenics' products and technology to develop a
simple self-test format, in particular for the chlamydia test, the first of
several which will meet the needs of consumers for quality, low-cost,
confidential self tests.

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Acquisition of Shares of Enviromed

In October 1996, the Company purchased 200,000 common shares of Enviromed,
plc ("Enviromed"). Later in the month, the Company entered into an agreement
with EN PLC Limited Partnership ("EN PLC"), pursuant to which the Company agreed
to purchase 7,961,386 common shares of Enviromed held by EN PLC for a promissory
note with a principal amount of approximately $3.8 million (the "EN PLC Note").
The EN PLC Note is payable in eight quarterly payments of principal and interest
commencing in January 1997 and bears interest at the Bank of Boston Prime Rate
plus 1.5%. In December 1996, the Company and EN PLC entered into an agreement
pursuant to which EN PLC agreed to defer 72.9% of the first four quarterly
principal payments (but not the related interest payments) under the EN PLC Note
until January 17, 1998. The Company agreed to issue to EN PLC a warrant to
purchase 15,401 shares of Common Stock at an exercise price of $12.875 per
share. The warrant is exercisable at any time prior to January 1, 2002. As a
result of this purchase, the Company acquired a 28.5% equity interest in
Enviromed. The Company subsequently acquired an additional 100,000 shares of
Enviromed which increased the Company's equity interest in Enviromed to 28.9%.
The Company currently does not intend to purchase any additional shares of
Enviromed. See "Certain Transactions -- Transactions with EN PLC Limited
Partnership."

Agreement with ChemTrak

In January 1997, Selfcare entered into an agreement with ChemTrak pursuant
to which ChemTrak appointed Selfcare as its exclusive distributor in the
European Territory of ChemTrak's home collection and mail-in HIV testing system
for which FDA approval is currently pending. As part of this agreement, Selfcare
agreed to pursue regulatory approval of the system in each country comprising
the European Territory. In addition, Selfcare agreed to establish and operate
one or more central testing facilities and offer counseling services to report
results and offer counseling to users of the system. ChemTrak retains the right
to convert the Company's exclusive distribution rights into non-exclusive rights
upon the occurrence of certain events, including the Company's failure to make
certain regulatory filings and the Company's failure to maintain market share
goals. There can be no assurance that Selfcare will be successful in obtaining
the necessary regulatory approvals in Europe, in establishing satisfactory
testing facilities and counseling services or in successfully commercializing
the system in Europe.

Nutritional Supplement Lines Acquisition

On January 14, 1997, the Company entered into the Nutritional Supplement
Lines Acquisition, pursuant to which a newly-formed subsidiary of the Company
(the "Acquisition Subsidiary") and the Company have agreed to acquire the
Nutritional Supplement Lines from AHP. At the Acquisition Closing the
Acquisition Subsidiary will pay to AHP $30.0 million in cash and the Company
will issue to AHP a $6.0 million promissory note (the "AHP Note"). The cash
portion of the purchase price will be funded with a $25.0 million term loan (the
"AHP Term Loan") and a $5.0 million bridge loan (the "AHP Bridge Loan") made to
the Acquisition Subsidiary, each of which will be guaranteed by the Company. The
AHP Note will be due on the first anniversary of the Acquisition Closing, and
will bear interest payable quarterly at the rate of 7.0% per annum. The Company
may prepay the AHP Note at any time. The Company currently intends to prepay the
AHP Note and/or the AHP Bridge Loan with proceeds from this offering; however,
the Company may elect to refinance the AHP Note and/or the AHP Bridge Loan from
other sources. See "Use of Proceeds." The Company has received a non-binding
Summary of Proposed Terms and Conditions with Fleet National Bank ("Fleet")
which outlines the proposed terms of the AHP Term Loan and the AHP Bridge Loan
(collectively, the "Proposed Acquisition Facility"). The Company has paid Fleet
an initial fee of $50,000 in connection with receiving Fleet's non-binding
proposal and Fleet's agreement to proceed with its approval process. The AHP
Term Loan would have a five-year term, with quarterly amortization of principal,
and would bear interest at the annual rate of LIBOR plus two percent, or Fleet's
Prime Rate. The Proposed Acquisition Facility would impose certain financial
covenants on the Acquisition Subsidiary, including (i) requirements to maintain
certain levels of total indebtedness to EBITDA, (ii) maximum capital
expenditures, and (iii) a requirement of a positive net income for any fiscal
year. The Company would also agree to (i) restrictions on acquisitions without
Fleet's consent, (ii) material asset sales and other payments,

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and (iii) dividends and distributions. Further, the Company, as guarantor of the
Acquisition Subsidiary's debt under the Proposed Acquisition Facility, will be
subject to certain covenants and will be limited in its ability to receive
dividends and distributions from the Acquisition Subsidiary. Subject to
completion of its review and approval process, Fleet will prepare a commitment
letter which will further detail the terms of and conditions of the Acquisition
Facility. If such commitment letter is acceptable to the Company, Fleet and the
Company will proceed to complete definitive agreements for the Acquisition
Facility. See "Use of Proceeds."

The Acquisition Closing is conditioned on the satisfaction or waiver of
certain conditions, including: (i) the Company's obtaining financing sufficient
to enable it to pay the cash portion of the consideration for the acquisition,
(ii) the parties' obtaining all necessary government consent and approvals,
including the expiration or termination of any applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (iii)
approval by the Board of Directors of AHP ("AHP Board Approval"), and (iv) other
conditions which the Company considers customary for a transaction of this kind.
The Acquisition Closing is to occur on the later of February 10, 1997 or the
third business day after all of the conditions to the transaction (other than
those contemplated to be satisfied at the Acquisition Closing) shall have been
satisfied or waived. Under the terms of the Nutritional Supplement Lines
Acquisition, AHP has agreed that its Board of Directors will consider whether or
not to grant the AHP Board Approval during its meeting scheduled for February 6,
1997, provided the commitment letter for the Proposed Acquisition Facility has
been issued. Otherwise, the Board of Directors of AHP will consider whether or
not to grant the AHP Board Approval on February 26, 1997, provided such
commitment letter has been issued by such date.

Pursuant to the terms of the Nutritional Supplement Lines Acquisition, at
the Acquisition Closing the Company will enter into supply agreements with AHP
to purchase products for the Nutritional Supplement Lines from AHP. The
Company's agreement with AHP will provide that AHP will supply the products for
a period of up to one year after the Acquisition Closing. Upon the consummation
of the Nutritional Lines Acquisition, the Company will become responsible for
all marketing and sales functions concerning the products. In addition, the
Company will also become responsible for substantially all administrative
functions concerning the Nutritional Supplement Lines, including order receipt,
billing, customer service and collection. The Company will also become
responsible for distribution of all the products three months after closing of
the acquisition. Assumption of these activities could place a significant strain
on the Company's resources and personnel, and will require the Company to devote
significant additional resources and personnel to these areas. Failure by the
Company to successfully assume these services could have an adverse impact on
the Company's ability to support the Nutritional Supplement Lines and could have
a material adverse affect on the Company's result of operations. See "Risk
Factors -- Dependence on Certain Suppliers."

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Other Future Transactions

Although the Company is not currently a party to any acquisition agreements
other than those described above, it continues to explore other possible
strategic transactions, including, for example, the acquisition of new products
that would complement or enhance Selfcare's existing and planned product lines.

MANUFACTURING

The Company currently manufactures its existing infectious disease
diagnostic products for the professional market at the Galway Facility and
sources its existing pregnancy and other women's health self-test products from
contract manufacturers. The Company believes that there are multiple qualified
sources for its existing women's health products and for the materials and
components used in the manufacture of its other existing products and therefore
does not consider it necessary to maintain protected supply arrangements with
any supplier. However, the Company has entered into a manufacturing arrangement
with Nova to supply Selfcare with electrochemical blood glucose meters for the
New System.

The Company has expended substantial efforts on the manufacturing scale-up
activities necessary to support the introduction of its planned new products.
Accordingly, in December 1995 the Company opened a new manufacturing facility in
Inverness, Scotland. See "-- Strategic Transactions -- Inverness Facility." The
Inverness Facility has been configured for highly automated, low cost production
of disposable test strips for use with electrochemical blood glucose monitoring
systems. Sophisticated control instrumentation systems will automatically print,
cut and pack strips in vials. The Company is currently producing quantities
sufficient to support clinical trials, and has scheduled the ramp-up of its
production capacity to support commercial sales in the first half of 1997. The
Company plans to commence manufacturing blood glucose test strips for
distribution by Menarini at the Inverness Facility in the second half of 1997.
The Company has implemented a program to produce generic electrochemical glucose
test strips for one or more systems at the Galway Facility. There can be no
assurance, however, that the Company will be successful in achieving the
production of new products at its facilities at the volumes or cost levels
required to support commercialization in the United States or abroad. See "Risk
Factors -- Risks Related to International Sales and Operations." The Company
anticipates that it will complete the Orgenics Acquisition upon completion of
this offering. Orgenics manufactures infectious disease diagnostic tests for the
professional markets at a facility in Israel. See "-- Strategic
Transactions -- Orgenics Acquisition" and "-- Facilities."

In connection with Nutritional Supplement Lines Acquisition, AHP has agreed
to supply the Company with the products for the Nutritional Supplement Lines for
a period of up to one year after the Acquisition Closing. Thereafter, the
Company will be required to establish alternative supply arrangements for the
products. See "Risk Factors -- Dependence on Certain Suppliers" and
"-- Strategic Transactions -- Nutritional Supplement Lines Acquisition."

In September 1996, the Company entered into an agreement with Nova pursuant
to which Nova will perform the final packaging of early pregnancy and ovulation
test kits for Selfcare. Under such agreement, the Company has agreed to purchase
a minimum quantity of specified products from Nova.

Medical device manufacturers are subject to various governmental
regulations. See "-- Government Regulation," "-- Facilities," "Risk
Factors -- No Assurance of FDA Clearance," and "Risk Factors -- Comprehensive
Government Regulation."

PATENTS AND PROPRIETARY RIGHTS

Patents and other proprietary rights are crucial to the Company's business
and its competitive position. The Company's strategy to develop and maintain its
competitive position is to file patent applications to protect technology,
inventions and improvements that it believes are important to its business, and
to protect know-how and continuing technological innovation as trade secrets.
The Company's success will depend in part on its ability to maintain patent
protection for its products, to preserve its trade secrets and to operate
without infringing the proprietary rights of third parties.

The Company seeks to maintain the confidentiality of its proprietary
technology, including technology which may not be patented or patentable, by
requiring employees, collaborators, advisors and consultants to sign
confidentiality agreements. There can be no assurance that these agreements will
not be breached, or that the Company will have adequate remedies for breach. The
Company also seeks to preserve the confidentiality

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of its proprietary information by limiting access by parties who work outside
the Company to such confidential information. There can be no assurance however,
that these measures will prevent the unauthorized disclosure or use of this
information, or that others will not be able to independently develop such
information. Moreover, as is the case with the Company's patent rights, the
enforcement of its trade secrets can be lengthy and costly, with no guarantee of
success. See "Risk Factors -- Dependence on Patents and Proprietary Technology."

Selfcare, through its subsidiary, Cambridge Diagnostics, holds several
licenses: (i) the worldwide rights to a diagnostic test for hepatitis-D in
humans; (ii) a non-exclusive license for all markets except the U.S. and Canada
with respect to the Capillus rapid test technology, which is based on detecting
envelope proteins with applications to HIV-1 and HIV-2, and a non-exclusive
right to use recombinant technology to manufacture certain purified virus parts
which will react to antibodies of the target disease or condition; (iii) a non-
exclusive license with certain territorial limitations for an enzyme-linked
immunoabsorbent assay ("ELISA") test for HIV 1/2 under the RecombigenTM
tradename; (iv) an exclusive license for all markets except the United States
and Canada for a rapid test for HIV 1/2 under the Recombigen tradename; and (v)
a non-exclusive worldwide license for the Western Blot Lyme disease test kit.

Cambridge Affiliate holds licenses for HIV-2 proteins which are used in its
RTD, Capillus and EIA diagnostic tests for the detection of HIV-2 antibodies.
These tests are manufactured for Cambridge Affiliate at the Galway Facility and
are marketed by Cambridge Diagnostics on behalf of Cambridge Affiliate. The
licenses relating to the HIV-2 proteins extend to any future single-use,
disposable rapid test product for use at home or in a doctor's office, developed
by Cambridge Affiliate using such proteins. See "Risk Factors -- Risk Related to
Certain Licensing Arrangements."

Selfcare has a number of U.S. patents pending covering systems and products
for blood glucose monitoring. Selfcare also holds two exclusive worldwide
licenses for techniques applicable to non-invasive blood glucose monitoring
systems utilizing non-linear, dialectric spectroscopy. In March 1996, the
Company obtained a license for a near infrared technique under a U.S. patent
held by the University of Iowa and Ohio University and for which an
international patent is pending.

The Company also licenses certain ovulation prediction technology from a
limited partnership, the general partner of which is controlled by Willard Lee
Umphrey, a Selfcare director. See "Certain Transactions -- Transactions with
U.S. Boston Capital Corporation."

In the future, the Company may be required to obtain licenses to patents or
proprietary rights of third parties. No assurance can be given that any licenses
required under such patents or proprietary rights will be made available on
terms acceptable to the Company, if at all. If the Company does not obtain such
licenses, it could encounter delays in product introductions while it attempts
to design around such patent or other rights, or be unable to develop,
manufacture or sell such products. See "Risk Factors -- Dependence on Patents
and Proprietary Technology; Trademarks."

Orgenics holds several patents and licenses with respect to: (i) the use of
EIA methods to enable the diagnosis of special infectious diseases with
applications for ImmunoComb products in Germany, France, Israel, Japan, Spain
and the United States; (ii) the distribution of ImmunoComb products in the
Benelux countries, France, Japan, Spain, Switzerland and Germany; (iii) the use
and distribution of DNA probe products based on Chemi-Probe in the United
States, France, Germany and Japan; (iv) the use and distribution of DoubleCheck,
a device to detect antigens and antibodies to infectious diseases in saliva,
blood serum and other bodily fluids, in the United States and Israel; (v) the
use of GeneComb, a genetic assay system to detect target DNA, in the United
States, Israel and under the World Intellectual Property Organization's Patent
Cooperation Treaty (the "PCT"); and (vi) the use of applications on apparatus
for dry chemical analysis in the United States, Israel, Europe and Japan.

The Company is conducting research and expects to seek additional patents
in the future, but there can be no assurance as to its success, or the
timeliness in obtaining any such patents, or as to the breadth or degree of
protections which any patents will afford the Company. The patent position of
medical products companies is often highly uncertain and usually involves
complex legal and factual questions. There can be no assurance that patent
applications relating to the Company's products or technology will result in
patents being issued or that, if issued, such patents will afford adequate
protection to the Company and not be challenged as unenforceable or invalid, or
not be infringed. In addition, the Company could incur substantial costs in

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defending suits brought against it or in prosecuting suits in which the Company
may assert its patents or other proprietary rights against others. If the
outcome of such litigation is adverse to the Company, the Company's business and
results of operations could be adversely affected.

Selfcare has filed applications for registration of several trademarks in
Europe and the United States. Applications for registration of the mark First
Signal for pregnancy products have been filed in Europe, and a registration has
issued in two countries. CarePlan is also the subject of applications for
registration in Europe for use on an HIV self test, and registrations have
issued in several countries. YourTime is the subject of trademark applications
in the United States and Europe for use on fertility-related products. The
YourTime mark has been registered in several European countries. Excel is also
the subject of trademark applications in the United States and Europe for use on
the Company's disposable test strips designed to be compatible with MediSense's
ExacTech System. CarePlus is also the subject of trademark applications in the
United States for use on contraceptive products. Selfcare has filed trademark
applications in the United States and Europe for the Company's "Little Man" logo
and has filed trademark applications in Europe for the name Selfcare.

GOVERNMENTAL REGULATION

Self-Test Products

The medical devices manufactured and marketed by the Company are subject to
regulation in the United States by the FDA and, in many instances, by comparable
agencies in foreign countries where these devices are manufactured or
distributed. In their evaluation process, these governmental authorities often
require lengthy and detailed laboratory and clinical testing procedures and
manufacturing data. In addition, the conduct of both animal and clinical testing
is presently covered in many countries by regulations designed to protect
research subjects and to ensure the validity of the test data. Government
regulation may impose costly procedures upon the Company and may delay or
prevent the marketing of certain of the Company's products. Failure to obtain,
or delays in obtaining, such approvals would prevent or delay the commercial
development of such products and could have a material adverse effect on the
business of the Company. If the government regulatory bodies approve the sale of
a product, their regulations generally will apply to manufacturing and marketing
of the product, including product labeling. Furthermore, approval of products by
governmental and other healthcare programs is important for sales in certain
countries. Many countries require that before users will be reimbursed for the
costs of diagnostic products in connection with applicable healthcare programs,
such products must be approved by a governmental agency. Failure to obtain, or
delays in obtaining, such approvals would limit the market for the products in
those countries and consequently reduce or delay revenues to the Company.

U.S. Government Regulation. The manufacture, distribution and sale of
diagnostic products, such as the Company's test kits, require compliance with
regulations which, though complex, are generally considered less difficult to
comply with than those covering therapeutic products. In the United States, test
kits and reagents which are intended for research purposes only, which are
labeled and sold as such and which are not used for the diagnosis of disease,
may be marketed without stringent regulation by the FDA. However, the FDA and
similar agencies in foreign countries have substantial regulations which apply
to the testing, marketing, export and manufacturing of products to be used for
the diagnosis of disease.

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Under the FDC Act, as amended by the Safe Medical Devices Act of 1990,
manufacturers of medical devices must comply with applicable provisions thereof
and certain associated regulations governing the testing, manufacturing,
labeling, marketing and distribution of medical devices. The FDC Act requires
certain clearances from the FDA before medical devices, such as the Company's
blood glucose monitoring products, can be marketed.

FDA permission to distribute a new device can be obtained in one of two
ways. If a new or significantly modified device is "substantially equivalent" to
an existing legally marketed device, the new device can be commercially
introduced after submission of a Section 510(k) Notification to the FDA, and
after the subsequent issuance by the FDA of an order permitting commercial
distribution. Changes to existing devices that do not carry the potential to
affect safety or effectiveness can be made by the Company without a 510(k)
Notification.

The second more comprehensive approval process applies to a new device that
is not substantially equivalent to an existing product. First, the Company must
conduct clinical trials in compliance with testing protocols approved by an
institutional review board for the participating research institution. Second,
the Company must submit to the FDA a Premarket Approval ("PMA") Application that
contains, among other things, the results of the clinical trials. The PMA
Application also contains other information required under the FDC Act such as a
full description of the device and its components, a full description of the
methods, facilities and controls used for manufacturing and proposed labeling.
Finally, the manufacturing site for the product subject to the PMA must pass an
FDA pre-approval inspection. This procedure requires much more extensive
pre-filing testing than does the Section 510(k) Notification procedure, and
involves a significantly longer FDA review after the date of filing. In
addition, after product approvals are received, they may still be withdrawn if
compliance with regulatory standards is not maintained or if problems occur
after the product reaches the market.

While the Company believes most of its future products will qualify for FDA
Clearance pursuant to the Section 510(k) notification procedures, no assurance
can be given that such clearance will be given. Future products may instead
require PMA clearance. There is no guarantee that regulatory marketing
clearances will be obtained in the future on a timely basis, if at all. Delays
in receiving such clearances could have a significant adverse effect on the
Company's business, financial condition and results of operations.

Following submission of a Section 510(k) Notification, a manufacturer may
not place the device into commercial distribution until an order is issued by
the FDA. The FDA has no specific time limit within which it must respond to a
Section 510(k) Notification. After review of a Section 510(k) Notification, the
FDA will either agree with the manufacturer that the proposed device is
"substantially equivalent" to another legally marketed device and allow the
device to be marketed in the United States, or determine that the proposed
device is not substantially equivalent and not allow such marketing. The FDA may
also require that further information, such as additional clinical test data or
analysis or test results, be submitted before the FDA is able to make a
determination regarding substantial equivalence. There can be no assurance that
the Company will receive FDA Clearance for the New System. Failure to obtain FDA
Clearance for the New System on a timely basis could have a material adverse
effect on the Company's business, financial condition and results of operations.

The Company's facilities are required to comply with the FDC Act and
applicable regulations, in particular, the FDA's Current Good Manufacturing
Practices ("CGMP") regulations. These regulations require that the Company
manufacture its products and maintain its documents in a prescribed manner with
respect to manufacturing, testing and control activities. Further, the Company
is required to comply with various FDA requirements for labeling.

If the FDA believes that the Company is not in compliance with the FDC Act,
or its associated regulations, it can institute proceedings to detain or seize
the Company's products, require a recall, enjoin future violations and assess
civil and criminal penalties against the Company, its directors, officers or
employees. The FDA may also withdraw market approval for the Company's products
or require the Company to repair, replace or refund the cost of any device
manufactured or distributed by the Company. Recently, the FDA has pursued a more
rigorous enforcement program to ensure that regulated firms such as the Company

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comply with the provisions of the FDC Act. Although the Company believes that it
is in material compliance with all relevant regulations, the commencement of any
action described above against the Company could have a significant impact on
its business, financial condition and results of operations.

The Company's products for the patient point-of-care market in the United
States may be adversely affected by the Clinical Laboratory Improvement
Amendments of 1988 ("CLIA"), which are intended to ensure the quality and
reliability of medical testing, and may have the effect of discouraging, or
increasing the cost of, testing in physicians' offices. CLIA requires the U.S.
Department of Health and Human Services to establish certification standards for
any laboratory that performs tests on human specimens and issue certificates to
laboratories that meet the standards.

Foreign Government Regulation. Certain other countries require the Company
to obtain clearances for its products prior to marketing the products in those
countries. In addition, certain other countries impose product specifications
that differ from those mandated in the United States. These requirements may
significantly affect the efficiency and timeliness of international market
introduction of the Company's products. Sales of the Company's products outside
the United States are also subject to extensive regulatory requirements, which
vary widely from country to country. The Company generally is unable to predict
the time required to obtain such government approvals.

Due to recent controversies concerning the blood supply in France, the
French Ministry of Health appears to be particularly concerned with blood
testing products and on several recent occasions has required recalls of
specific diagnostic tests upon short notice. In July 1993, the French Ministry
of Health prohibited the sale in France of certain diagnostic tests for HIV, due
to a concern that the tests did not meet required sensitivity levels. The
Ministry of Health has subsequently imposed a separate ban on a single HIV test
manufactured and sold due to the failure of such test to identify a newly
discovered HIV subtype. There can be no assurance that there will not be similar
actions in the future. See "Risk Factors -- No Assurance of FDA Clearance;
Comprehensive Government Regulation."

In certain countries, an import license is required for marketing HIV or
hepatitis diagnostic products.

Nutritional Supplements

The manufacturing, processing, formulating, packaging, labeling and
advertising of nutritional supplements, such as the Nutritional Supplement Lines
which the Company plans to acquire upon completion of this offering, are subject
to regulation by one or more federal agencies, including the FDA, the Federal
Trade Commission (the "FTC"), the Consumer Products Safety Commission, the
United States Department of Agriculture, the United States Postal Service, the
United States Environmental Protection Agency and the Occupational Safety and
Health Administration. These activities are also regulated by various agencies
of the states, localities and foreign countries, in which the Company's products
are sold. In particular, the FDA regulates the safety, manufacturing, labeling
and distribution of dietary supplements, including vitamins, minerals and herbs,
food additives, OTC and prescription drugs and cosmetics. In addition, the FTC
has overlapping jurisdiction with the FDA to regulate the promotion and
advertising of dietary supplements, OTC drugs, cosmetics and foods.

DSHEA was enacted on October 25, 1994. DSHEA amends the Federal Food, Drug
and Cosmetic Act by defining dietary supplements, which include vitamins,
minerals, nutritional supplements, herbs and botanicals as a new category of
food separate from conventional food. DSHEA provides a regulatory framework to
ensure safe, quality dietary supplements and to foster the dissemination of
accurate information about such products. Under DSHEA, the FDA is generally
prohibited from regulating dietary supplements as food additives or as drugs
unless product claims, such as claims that a product may diagnose, mitigate,
cure or prevent an illness, disease or malady, trigger drug status.

DSHEA provides for specific nutritional labeling requirements for dietary
supplements effective January 1, 1997, although final regulations have not been
published and the FDA has indicated that implementation will be delayed. DSHEA
permits substantiated, truthful and non-misleading statements of nutritional
support to be made in labeling, such as statements describing general well-being
resulting from consumption

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of a dietary ingredient or the role of a nutrient or dietary ingredient in
affecting or maintaining structure or function of the body. Any statement of
nutritional support beyond traditional claims must be accompanied by disclosure
that the FDA has not evaluated such statement and that the product is not
intended to cure or prevent any disease. The Company anticipates that the FDA
will promulgate CGMPs which are specific to dietary supplements and require at
least some of the quality control provisions contained in the CGMPs for drugs,
which are more rigorous than the CGMPs for foods. The Company believes that the
manufacture of the Nutritional Supplement Lines is currently in compliance with
the applicable food CGMPs.

The FDA has proposed but not finalized regulations to implement DSHEA. The
Company cannot determine what effect such regulations, when promulgated, will
have on its business in the future. Such regulations are likely to require
expanded or different labeling for the Company's vitamins and nutritional
supplement products and could, among other things, require the recall,
reformulation or discontinuance of certain products, additional record keeping,
warnings, notification procedures and expanded documentation of the properties
of certain products and scientific substantiation regarding ingredients, product
claims, safety or efficacy. The Company believes that it is in material
compliance with all applicable laws.

DSHEA created two new governmental bodies. The Commission on Dietary
Supplements was established for two years to provide recommendations to the
President and Congress for the regulation of supplement labeling, and health
claims, including procedures for making disease-related claims. Such
recommendations could lead to legislative or regulatory changes. The Office of
Dietary Supplements, established within the National Institute of Health, is
charged with coordinating research on dietary supplements and disease
prevention, compiling research results, and advising the Secretary of Health and
Human Services on supplement regulation, safety and health claims.

Although the vitamin and nutritional supplement industry is subject to
regulation by the FDA and local authorities, dietary supplements, including
vitamins, minerals, herbs and nutritional supplements, now have been statutorily
affirmed as foods and not as drugs or food additives. Therefore, the regulation
of dietary supplements is less restrictive than that imposed upon manufacturers
and distributors of drugs or food additives. Unlike food additives and new
drugs, which require regulatory approval of formulation safety and labeling and
for drugs, efficacy prior to marketing, dietary supplement companies are
authorized to make substantiated statements of nutritional support and to market
manufacturer-substantiated-as-safe dietary supplement products without such FDA
preclearances. Failure to comply with applicable FDA requirements can result in
sanctions being imposed on the Company or the manufacturers of its products,
including warning letters, product recalls and seizures, injunctions and
criminal prosecutions.

THIRD-PARTY REIMBURSEMENT

Third-party payors such as private insurance companies, self-insured
employers, health maintenance organizations and governmental payors under
Medicare and Medicaid programs are a source of reimbursement to users of blood
glucose monitoring systems and related products, but there is no uniform policy
on reimbursement among third-party payors. The Medicare program reimburses
people with diabetes for one meter and for one box of 50 strips each month. In
1994, the Health Care Financing Administration (the "HCFA"), which sets rates
for the Medicare program, reduced the maximum reimbursement rates for a box of
50 test strips from $63 to between $32 to $37, depending on the state in which
the reimbursement is sought. Presently, the Office of the Inspector General of
the U.S. Department of Heath and Human Services (the "OIG") is conducting a
survey to determine more economical methods of providing blood glucose test
strips to Medicare beneficiaries. Also, in January 1995, the HCFA set a special
payment limit of $58.71 on personal blood glucose meters, down from a maximum
$179 (the special payment limit is $66.95 in Alaska, Hawaii, Puerto Rico and the
Virgin Islands). This payment limit may lead to increased pricing pressures
among manufacturers of blood glucose meters and test strips. Frequent testers
who currently receive reimbursement may seek alternative, lower-cost generic
test strips that are currently on the market for use in photometric systems. The
Company's business, financial condition and results of operations could be
adversely affected by the continuing efforts of governmental and private payors
to reduce the costs of healthcare by lowering reimbursement rates for its
products, particularly test strips.

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As a provider of products that are reimbursed by Medicare, Medicaid and
other third-party payors, the Company is subject to the anti-kickback provisions
of the Medicare and Medicaid fraud and abuse laws and similar state laws. These
laws prohibit the exchange of remuneration for referrals of services or products
reimbursed by Medicare, Medicaid or other third-party payors. Violations of
these prohibitions may result in civil and criminal penalties and exclusion from
the Medicare and Medicaid programs. In a December 1992 study of discounts and
rebates offered to consumers by the personal blood glucose monitoring industry,
the OIG concluded that claims for reimbursements for these devices submitted to
the Medicare program often did not reflect manufacturers' rebates. As a result,
OIG recommended that HCFA take appropriate action, including implementing fee
schedules, identifying and addressing abusive practices as well as recovering
Medicare overpayments. The Company believes that it is in substantial compliance
with the federal antikickback statute and related safe harbor regulations
regarding the disclosure of discounts.

Recent healthcare cost containment initiatives in the United States that
have focused on reduction in reimbursement levels may affect the Company
negatively. However, emphasis on preventive measures to reduce the overall costs
to the healthcare system of complications from diabetes could lead to more
frequent testing and use of the Company's test strips. The Company is unable to
predict the outcome or the effect on its business of the current healthcare
reform debate.

PRODUCT LIABILITY

The testing, marketing and sale of human healthcare products entails an
inherent risk of products liability claims and there can be no assurance that
products liability claims will not be asserted against the Company. In addition,
the marketing of the Nutritional Supplement Lines may cause the Company to be
subjected to various product liability claims, including, among others, that the
Nutritional Supplement Lines have inadequate warnings concerning side effects
and interactions with other substances. Although the Company maintains products
liability insurance, there can be no assurance that products liability claims
will not exceed such insurance coverage limits or that such insurance will be
available in the future on commercially reasonable terms, if at all. See "Risk
Factors -- Product Liability; Limited Insurance Coverage."

RESEARCH AND DEVELOPMENT

The Company is focusing its research and development efforts primarily on
the development of its diabetes products, including its electrochemical blood
glucose monitoring system and generic test strips. In addition, the Company
utilizes its in-house research and development resources to adapt its existing
technologies and technologies it acquires from third parties into self-test
formats, including formats addressing HIV, chlamydia and Strep-A. The Company
also seeks to develop new technologies which it is not able to obtain from
others. From time to time, the Company engages in co-development projects with
third parties with respect to new diagnostic products the Company may want to
market in the future. The Company may provide financial development assistance
to such parties and may also utilize its own research and development resources
to design certain portions of such products. The research and development
department of the Company together with Orgenics employs 39 full-time
researchers, including 23 Ph.D.s. Total research and development expenses for
the years ended December 31, 1995, 1994 and 1993 were $1.5 million, $584,000 and
$600,000, respectively.

COMPETITION

Selfcare

Self-Test Products. Competition in the medical products industry in
general, and in the consumer self-diagnostics sector in particular, is based
primarily on product performance (including reliability and ease of use), price,
acceptance by health professionals, patients and other consumers, marketing
support, and distribution. The availability of patent protection and the ability
to obtain FDA Clearance for marketing are also important competitive factors. In
the women's health market, the Company believes that it has already developed a
significant market penetration with its private label and branded pregnancy and
LH tests. In the infectious diseases market, the Company believes that it has
achieved an important degree of acceptance

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among professional and public health purchasers, and that the planned Orgenics
Acquisition will enhance the Company's ability to expand its product offerings
and distribution for this market. The Company believes that it can continue to
compete effectively in these markets based on its planned product line
expansions, supported by its research and development capabilities, its advanced
manufacturing expertise, and its established distribution force. The Company
believes that these assets will also enable it to compete effectively in the
market for "generic" blood glucose test strips which can be used with other
manufacturers' meters. The Company also believes that its exclusive distribution
alliance with LifeScan and the proprietary technology incorporated in the New
System will prove advantageous to the Company in competing in the market for
self-test blood glucose monitoring systems.

Notwithstanding these positive factors, however, the Company faces
competition in all of its targeted markets from a large number of competitors,
including major medical products companies such as Johnson & Johnson, Boehringer
Mannheim, Bayer and MediSense (in the market for blood glucose monitoring
systems), Johnson & Johnson, Carter-Wallace, Inc., Warner-Lambert Co., Unilever
and many others (in the women's health self-test market), the Diagnostic
Division of Abbott Laboratories ("Abbott Laboratories") and Johnson & Johnson
(in the markets for professional and consumer tests for infectious diseases). In
August, 1996, Abbott Laboratories acquired MediSense. Abbott Laboratories has
far greater resources than those of the Company and, consequently, the Company
believes that MediSense will be a substantially more significant competitor than
it is currently. The Company also competes with numerous other smaller companies
which compete directly with the Company's existing and planned products, such as
ChemTrak and Quidel Corporation. Many of these competitors have substantially
greater financial, technical and human resources than the Company.

If the Company is successful in developing and marketing generic test
strips which are compatible with other manufacturers' electrochemical blood
glucose monitoring systems, others may attempt to enter this market with similar
products. In addition, the introduction of lower-priced generic test strips
could lead the manufacturers of the systems with which such test strips are
compatible to lower their own test strip prices, thereby reducing or eliminating
the price advantage enjoyed by the generic test strip producers. On June 28,
1996, the Company obtained FDA Clearance for its first generic test strip, to be
sold under the name "Excel" which is compatible with the ExacTech system sold by
MediSense. The Company intends to commence marketing this product in the United
States in the first half of 1997. Although the Company believes that its Excel
generic test strip will be priced lower than the strips produced by MediSense
for its ExacTech system and therefore will compete effectively with the
MediSense product, there can be no assurance that MediSense will not institute
price cuts and thereby reduce or eliminate any price advantage which the
Company's product may enjoy. In addition, there can be no assurance that the
Company will be able to maintain the quality of its products relative to those
of its competitors or continue to develop and market new products effectively.
See "Risk Factors -- Competition; Risk of Technological Obsolescence."

The Company is also aware of several competitors, including Cygnus, Inc.,
Biocontrol Technology, Inc., Futrex Medical Instrumentation, Inc., Rio Grande
Medical Technologies, Inc. and Integ, Inc., which are attempting to develop a
non-invasive blood glucose monitoring technology. Non-invasive blood glucose
monitoring involves methods for measuring blood glucose levels without the need
to draw blood and, in certain proposed configurations, without the need to
utilize disposable components, such as test strips. The Company believes that
manufacturers are pursuing a number of different technological approaches to
non-invasive blood glucose monitoring. These include near-infrared spectroscopy,
which involves shining a beam of near-infrared light to penetrate the skin and
determine the amount of glucose in the blood, and reverse iontophoresis, which
utilizes a "patch" system to extract glucose through the skin for measurement by
an external meter. In addition, the Company believes that several manufacturers
are pursuing minimally invasive approaches to blood glucose monitoring, such as
using a fine needle to withdraw a small sample of interstitial fluid which is
analyzed by use of mid-infrared spectroscopy. Although the Company does not
believe that any products utilizing such technologies will be available for
several years, there can be no assurance that such products will not be
developed sooner, and the development and successful introduction of any such
products could have a material adverse effect on the Company's business,
financial condition and results of operations.

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Nutritional Supplements. The market for the sale of vitamins and
nutritional supplements is highly competitive. Competition is based principally
upon price, quality of products, customer service and marketing support. There
are numerous companies in the vitamin and nutritional supplement industry
selling products to retailers such as mass merchandisers, drug store chains,
independent drug stores, supermarkets and health food stores. Most companies are
privately held and the Company is unable to precisely assess the size of such
competitors. However, a number of the Company's competitors, particularly
manufacturers of nationally advertised brand name products, are substantially
larger than the Company and have greater financial resources. Notwithstanding
the foregoing, the Company believes that it will be able to compete favorably
with other vitamin and nutritional supplement companies because of the existing
brand recognition and market penetration enjoyed by the Nutritional Supplement
Lines and the Company's planned marketing strategy for these products. The
Nutritional Supplement Lines face competition from a number of major
multivitamin and mineral supplement manufacturers such as Lederle Consumer
Health Products, a division of AHP, Nature's Bounty, Bayer, and Twinlab
Corporation.

Orgenics

The Company anticipates that it will complete the Orgenics Acquisition upon
completion of this offering. See " -- Strategic Transactions -- Orgenics
Acquisition."

The primary competitors for Orgenics' ImmunoComb line of products are
standard, ELISA systems such as those produced by Organon, Inc., Pasteur Sanofi
Diagnostics, Abbott Laboratories, Boehringher Mannheim and other diagnostic
tests produced by Abbott Laboratories, Ortho Diagnostic Systems, Inc. and
Hybritech, Inc. ELISA tests are generally used by high-volume batch processors
such as blood banks and other centralized laboratories. In addition, there are
other rapid testing systems, generally for HIV, based upon immunoconcentration,
which can provide results in five to ten minutes. In contrast to ImmunoComb, an
immunoassay-based test which can be used to simultaneously test multiple samples
for multiple analytes, the immunoconcentration systems are single sample and
mostly single analyte systems. Based on Orgenics' assertions, the Company
believes that other characteristics of the immunoconcentration systems are that:
(i) the single sample presentation results in production costs per test that are
two to three times more expensive than those of ImmunoComb; and (ii) the
procedure for each immunoconcentration test limits the number of tests that can
be processed at one time resulting in less flexibility in the number of samples
that can be processed at one time. The Company expects that Orgenics'
DoubleCheck HIV test will be competitive with single-analyte immunoconcentration
tests in speed, but will offer greater sensitivity at lower cost.

In the field of DNA probe products, Orgenics competes with, among others,
Molecular Biosystems, Inc., Abbott Laboratories, Roche Molecular Systems, a
division of Hoffman La-Roche, Sanofi Diagnostics, Organon, Inc., Enzo Biochem,
Inc., Gene-Trak Systems, Inc. and Gen-Probe, Incorporated. Several of Orgenics'
competitors use a labeling technology in which precursors of DNA are labeled by
either Biotin or a radioactive marker and incorporated into the DNA probe by an
enzymatic reaction. The use of an enzymatic reaction requires highly-purified
DNA material. It is difficult for most clinical laboratories to achieve high
purification levels without highly-trained personnel. Orgenics' non-enzymatic
Chemi-Probe labeling technology, which does not require highly-purified DNA, is
not subject to these limitations. In addition, the Company believes that
Orgenics' non-enzymatic, genetic assay GeneComb technology provides a simpler,
more rapid assay than do competing detection systems which rely on enzyme
immunoassay methodology.

EMPLOYEES

As of December 1, 1996, the Company, not including Orgenics, had
approximately 201 employees. Of the Company's total work force at that date, 23
employees were engaged in research and development activities, 24 were engaged
in marketing and sales, 134 were devoted to production and distribution, and 20
were responsible for management and administration. Of the Company's 201
employees, 21 hold advanced science degrees. A significant number of the
Company's management and professional employees have prior experience with other
medical products or biotechnology companies. None of the Company's employees are
covered by a collective bargaining agreement. The Company considers its
relations with its employees to be good.

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As of December 1, 1996, Orgenics had 82 employees in Israel, of whom
sixteen were employed in research and development, five in marketing and sales,
52 in production and nine in management and administration. Orgenics also
employs an additional 22 employees in France, 11 of whom are engaged primarily
in marketing and sales, three in production and eight in management and
administration. As of December 1, 1996, Orgenics' Brazilian operation (55%
majority owned) had 20 employees, eight of whom were in marketing and sales, and
12 in management and administration. Of Orgenics' 124 total employees, 18 held
advanced degrees. Orgenics considers its relations with its employees to be
good.

Certain provisions of the collective bargaining agreements between the
Histadrut (General Federation of Labor in Israel) and the Coordination Bureau of
Economic Organizations (including the Industrialists Association) are applicable
to Orgenics' Israeli employees by order of the Israeli Ministry of Labor. These
provisions concern mainly the length of the work day, minimum daily wages for
professional workers, contributions to a pension fund, insurance for
work-related accidents, procedures for dismissing employees, determination of
severance pay and other conditions of employment. Orgenics generally provides
its employees with benefits and working conditions which exceed the required
minimums. Furthermore, under the collective bargaining agreement, the wages of
most of Orgenics' employees are linked to the Israeli consumer price index,
although the extent of the linkage has been limited.

FACILITIES

The Company's principal corporate administrative offices are housed in
10,000 square feet of leased space in Waltham, Massachusetts. The lease for this
facility is for a three-year term with a Company option to extend for a two-year
period and provides for monthly rent of $8,333. The Company also leases
facilities in Brussels, Belgium for a marketing and sales office and for
warehousing, and in Munich, Germany for offices and warehouse space. The lease
for the Company's facility in Belgium covers 80 square meters of space, provides
for monthly rent of $800 and is terminable on three months notice. The lease for
the Company's facility in Germany covers 380 square meters of space, provides
for rent of $6,666 per month and is for a term ending May 31, 2000. The Company
believes that its current facilities are adequate for its existing operations
for the foreseeable future, although the Company anticipates expanding its U.S.
facilities to accommodate repackaging and shipping new products.

The Company's manufacturing facilities are located in the United Kingdom
and Ireland. In December 1995, the Company began occupancy of a new 50,000
square foot manufacturing facility in Inverness, Scotland. The Inverness
Facility was designed and constructed to Selfcare's specifications and includes
areas for manufacture, warehousing, research and development, and administrative
offices. The Company plans to produce diabetes products (including generic test
strips and test strips for the New System and blood glucose test strips for
distribution by Menarini) at the Inverness Facility. See "-- Strategic
Transactions -- Inverness Facility." The Inverness Facility lease expires in
2015, with an option to purchase, and is rent-free through 1997. Cambridge
Diagnostics is located in Galway, Ireland in a 40,000 square foot facility
leased from the Industrial Development Agency of Ireland and a private developer
under a lease which expires in 2022. The Galway Facility houses the central
manufacturing, warehousing, research and development, and administrative
functions of Cambridge Diagnostics, which is responsible for the development,
production and distribution of the Company's infectious disease diagnostic
products. In addition, pregnancy, ovulation prediction, birth control and other
women's health self-test products for the European market are packaged at the
Galway Facility. It is also a suitable location for the eventual manufacture of
products for the diabetes and women's health markets.

The FDA regulates companies that manufacture commercial medical devices and
requires that such companies manufacture such devices in a properly designed
environment. The Inverness Facility was designed and constructed, and the Galway
Facility has been upgraded, with the intention of complying with the FDA's GMP
regulations and requirements necessary for approvals and commercial sales within
the United States. The Company is required to register these facilities with the
FDA and to ensure that each meets GMP requirements prior to commercial sales in
the United States. Each registered facility is required to submit to an FDA
inspection no less frequently than every two years. The Company completed ISO
9002 regulation of the Galway Facility in August 1996 and intends to register
the Inverness Facility with the FDA during 1997.

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Orgenics houses its executive offices, development and manufacturing in a
leased facility of approximately 21,000 square feet in Yavne, Israel. The lease
for this facility expires in 1999 and carries rent of approximately $17,000 per
month. The facility includes a number of specialized features and equipment,
including environmentally controlled areas, customized production equipment, and
computerized systems for purchasing, inventory, and materials tracking. Orgenics
also maintains small sales offices in Illkirch, France and Sao Paulo, Brazil.
The lease for the French facility runs through June 1997 and carries monthly
rent of approximately $5,955, which is linked to the French building cost index.
The lease for the Brazilian office is for an indefinite term with monthly rent
of approximately $856. Orgenics' management have informed the Company that they
believe the existing facilities are adequate for Orgenics' present level of
operations for the foreseeable future.

LEGAL PROCEEDINGS

From time to time, the Company may be exposed to litigation arising out of
its products and operations. See "Intellectual Property." The Company is not
engaged in any legal proceedings which are expected individually or in the
aggregate to have a material adverse effect on the Company's financial condition
or results of operations.

Pasteur Sanofi Diagnostics licensed the Pasteur HIV Technology to Cambridge
Biotech and its affiliates, including Cambridge Affiliate, relating to patents
and proprietary rights underlying the Company's HIV-related products. The
licenses of the Pasteur HIV Technologies to Cambridge Biotech are non-exclusive
and cover diagnostic test kits in finished form embodying the Pasteur HIV
Technologies. The territorial scope of the licenses is worldwide, with the
exception of exclusive rights which Pasteur Sanofi Diagnostics asserted to have
granted in the Pasteur HIV Technologies to Genetic Systems Corporation ("Genetic
Systems") in the United States, Canada, Mexico, Australia, New Zealand and India
(the "Excluded Countries"). However, the licenses provide that, to the extent
that Pasteur Sanofi Diagnostics recovers the right to practice the patents
underlying the Pasteur HIV Technologies in the Excluded Countries, Cambridge
Biotech is entitled to non-exclusive rights in such technology in such
countries. In 1990, Pasteur Sanofi Diagnostics acquired ownership of Genetic
Systems, whereupon Cambridge Biotech commenced selling products incorporating
the Pasteur HIV Technologies in the United States. These activities were
challenged in a patent infringement lawsuit filed in bankruptcy court in March
1995 by Institut Pasteur, the minority stockholder of Pasteur Sanofi
Diagnostics, and Genetic Systems. In September 1995, the bankruptcy court ruled
in favor of Cambridge Biotech on this issue, and Institut Pasteur and Genetic
Systems subsequently filed an appeal in district court. The date for the appeal
hearing is unknown. If the bankruptcy court decision were reversed on appeal,
the territories to which Cambridge Affiliate could sell HIV-related products
would be limited and this could have a material adverse effect on the Company.
See "Business -- Patent and Patents and Proprietary Rights."

Pasteur Sanofi Diagnostics has notified Orgenics that as a result of
Orgenics' use of certain peptides, Orgenics may be liable for infringement of
certain patents held by Institut Pasteur, and under which Pasteur Sanofi
Diagnostics holds an exclusive license. Orgenics has informed the Company that
it is not aware of any other threatened litigation that would have a material
adverse effect on Orgenics or its business.

The Company has been involved in a dispute with Enviromed with respect to a
joint venture agreement entered into between the Company and Enviromed in March
1994 and other agreements (collectively, the "Disputed Enviromed Agreements")
entered into between the Company and Enviromed and its wholly-owned subsidiary
Cranfield Biotechnology Ltd. ("Cranfield") and the issuance of shares of Common
Stock to Enviromed in connection therewith. See "Certain Transactions." In
connection with this dispute, the Company has informed Enviromed that, due to
the failure of Enviromed and Cranfield to perform their obligations under the
Disputed Enviromed Agreements, it disputes Enviromed's ownership of the Common
Stock held of record by Enviromed. On July 5, 1996, Enviromed filed suit against
the Company and the representatives of the underwriters of the Initial Public
Offering (the "IPO Representatives") in United States District Court for the
Southern District of New York alleging breach of a registration rights agreement
relating to the Common Stock held of record by Enviromed. Enviromed claimed that
its rights under a registration rights agreement were breached in connection
with the Initial Public Offering and requested damages, injunctive relief and a
declaratory judgment that Enviromed is the lawful owner of the shares. The

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Company has filed counterclaims against Enviromed arising out of the failure of
Enviromed and Cranfield to perform their obligations under the Disputed
Enviromed Agreements and is contesting Enviromed's claims vigorously. On October
18, 1996, the case was ordered transferred to the United States District Court
for the District of Massachusetts. The Company is not able to estimate the
amount of damages, if any, which might result from Enviromed's claims against
the Company, but believes that any such damages would not be in an amount which
would have a material adverse effect on the Company. The Company agreed to
indemnify the IPO Representatives for any losses they might incur, including
reasonable attorney's fees and expenses, as a result of the Enviromed lawsuit.
On November 15, 1996, Enviromed filed a dismissal without prejudice of its
claims against the IPO Representatives.

Trinity Biotech plc ("Trinity") and Eastcourt Limited ("Eastcourt") have
filed Schedule 13Ds with the Securities and Exchange Commission (the
"Commission") stating that Enviromed sold the Common Stock held by it of record
to Flambelle Limited ("Flambelle"), a wholly-owned subsidiary of Trinity, and
Eastcourt, an entity owned 50% each by Enviromed and Flambelle, on August 28,
1996. On November 1, 1996, Enviromed announced that it had disposed of its
holding of shares of Eastcourt to Flambelle for consideration of $1.25 million.
In December 1996, Eastcourt filed a Schedule 13D/A and Flambelle filed a
Schedule 13D with the Commission.

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MANAGEMENT

EXECUTIVE OFFICERS, SIGNIFICANT EMPLOYEES AND DIRECTORS

The executive officers, significant employees and directors of the Company
and their ages are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Executive Officers

Ron Zwanziger.................. 42 Chairman and Chief Executive Officer

Anthony H. Hall................ 52 Chief Financial Officer

Kenneth D. Legg, Ph.D.......... 53 Secretary and Vice President, U.S. Operations

Richard A. Pinkowitz, Ph.D..... 52 Vice President, U.S. Sales and Marketing

David Scott, Ph.D.............. 39 Managing Director of Inverness Medical Limited

Otto Wahl...................... 48 Managing Director of Selfcare International GmbH

Significant Employees
Gilbert Daggett................ 47 U.S. National Sales Manager

Detlef Jantos.................. 37 General Manager of Selfcare GmbH for Germany,
Austria and Switzerland

Jerry McAleer, Ph.D............ 40 Director of Development, Inverness Medical
Limited

Piet Moerman, M.D.............. 32 General Manager for the Benelux countries and
France

John O'Meara................... 41 General Manager of Cambridge Diagnostics Ireland
Ltd.

Diane M. Sullivan.............. 41 Director of U.S. Marketing

Other Directors
Jonathan J. Fleming(2)......... 39 Director

John F. Levy................... 49 Director

Peter Townsend................. 62 Director

Carol R. Goldberg(1)........... 66 Director

Edward B. Roberts, Ph.D.(2).... 60 Director

Willard Lee Umphrey(1)......... 55 Director
<FN>
- ---------------

(1) Member of the Compensation Committee.

(2) Member of Audit Committee.

</TABLE>

EXECUTIVE OFFICERS

Ron Zwanziger, Chairman and Chief Executive Officer Mr. Zwanziger has
served as Selfcare's Chairman and Chief Executive Officer of the Company since
its inception. From 1981 to 1991, he was chairman and chief executive officer of
MediSense, a medical device company.

Anthony H. Hall, Chief Financial Officer Mr. Hall joined Cambridge
Diagnostics as General Manager covering Africa, Asia, the Middle East and Europe
in June 1992, prior to its acquisition by Selfcare. In the early part of 1994,
Mr. Hall was appointed Vice President and General Manager of Cambridge Biotech's
diagnostics business in the United States. Mr. Hall was appointed the Company's
Chief Financial Officer in October 1995. From October 1995 to January 1997, Mr.
Hall served as managing director of Cambridge Diagnostics. Prior to joining
Cambridge Diagnostics, Mr. Hall was managing director of Neuroscience Limited, a
medical instrumentation company, from 1983 to 1992.

Kenneth D. Legg, Ph.D., Secretary and Vice President, U.S. Operations Dr.
Legg joined the Company as Secretary and Vice President in charge of U.S.
Operations in November 1991. From 1987 to 1991, Dr. Legg

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was president of K.D. Legg and Associates, a firm specializing in technical
issues in the areas of biomedical and scientific instrumentation, product
development, and strategic planning.

Richard A. Pinkowitz, Ph.D., Vice President U.S. Sales and Marketing Dr.
Pinkowitz joined the Company as Vice President U.S. Sales and Marketing in June
1992. Before joining Selfcare, Dr. Pinkowitz was director of business
development at MediSense from 1987 to 1992.

David Scott, Ph.D., Managing Director, Inverness Medical Limited Dr. Scott
has served as Managing Director of Inverness since June 1995. Prior to joining
Selfcare in October 1993, Dr. Scott held several positions at MediSense UK, most
recently as its managing director where he was responsible for managing product
development, as well as the mass manufacture of its principal product, ExacTech.

Otto Wahl, Managing Director, Selfcare International GmbH Mr. Wahl has been
Managing Director of Selfcare International GmbH since November 1995. Prior to
joining Selfcare, Mr. Wahl was the managing director for MediSense in Germany,
Austria and Switzerland and area manager for Eastern Europe.

Max Herzberg, Ph.D. It is contemplated that, upon the anticipated
completion of the Orgenics Acquisition, Dr. Herzberg will be named an executive
officer of the Company. See "Business -- Strategic Transactions -- Orgenics
Acquisition." Dr. Herzberg, a founder of Orgenics, has served as chairman of the
board and chief executive officer of Orgenics since 1983. Dr. Herzberg is also a
director of OIH, Orgenics Takara Co. Ltd. and Biograde Ltd.

SIGNIFICANT EMPLOYEES

Gilbert Daggett, U.S. National Sales Manager Mr. Daggett joined Selfcare in
1994 as U.S. National Sales Director. Mr. Daggett was eastern director of sales
for LifeScan from 1983 to 1992.

Detlef Jantos, General Manager of Selfcare GmbH for Germany, Austria, and
Switzerland Mr. Jantos joined Selfcare as General Manager of Selfcare GmbH for
Germany, Austria and Switzerland in 1995. Prior to joining Selfcare, Mr. Jantos
was employed by MediSense as regional sales manager in 1989 and sales and
marketing manager from 1990 to 1994.

Jerry McAleer, Ph.D., Director of Development, Inverness Medical
Limited Dr. McAleer joined Selfcare as Director of Development of Inverness in
1995 and heads the development of the electrochemical glucose strips. Prior to
joining Selfcare, Dr. McAleer held senior research and development positions at
MediSense from 1985 to 1993 and more recently, at Ecossensors, Inc., an
environmental research company, where he was responsible for the development of
electrochemically based assay systems.

Piet Moerman, General Manager of Selfcare for the Benelux countries and
France Dr. Moerman joined Selfcare as General Manager for the Benelux countries
and France in 1994. Prior to joining the Company, Dr. Moerman held various
positions at MediSense from October 1989 to April 1994, including product
manager (Europe), business development manager and marketing manager
(Europe-West).

John O'Meara, General Manager, Cambridge Diagnostics Ireland Ltd. Mr.
O'Meara joined Selfcare as General Manager of Cambridge Diagnostics in January
1997. Prior to joining Selfcare, Mr. O'Meara was director of manufacturing for
Tambrands Ireland, a feminine hygiene products company.

Diane M. Sullivan, Director of Marketing Ms. Sullivan has served as
Director of Marketing since 1995. From 1991 to 1994, Ms. Sullivan was a
consultant to the Company and other clients. She was marketing manager at
MediSense from 1988 to 1991.

OTHER DIRECTORS

Jonathan J. Fleming, Director Mr. Fleming has served on the Board of
Directors of the Company since April 1995. Since 1987 he has been a partner of
MVP Ventures, a venture capital firm based in Boston, Massachusetts. Mr. Fleming
is also a founder and partner of Medica Investments, a venture capital firm
based in Tel Aviv, Israel and Boston, Massachusetts. He is a director of
Synaptic Pharmaceutical Corporation, a pharmaceutical company.

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Carol R. Goldberg, Director Ms. Goldberg has served on the Board of
Directors of the Company since August 1992. Since December 1989, she has served
as president of The AVCAR Group, Ltd., an investment and management consulting
firm in Boston, Massachusetts. Ms. Goldberg is a director of America Service
Group, Inc., a managed healthcare company, of Barry's Jewelers, Inc. a jewelry
product company, and of The Gillette Company.

John F. Levy, Director Mr. Levy has served on the Board of Directors of the
Company since August 1996. Since 1993 he has been an independent consultant. Mr.
Levy served as president and chief executive officer of Waban, Inc., a warehouse
merchandising company, from 1989 to 1993. He is a director of National Picture
and Frame, Inc., a consumer products company.

Edward B. Roberts, Ph.D., Director Dr. Roberts has served on the Board of
Directors of the Company since April 1992. He is the David Sarnoff Professor of
Management of Technology at the Massachusetts Institute of Technology, where he
has been a faculty member since 1963. Dr. Roberts was co-founder and chairman of
Pugh-Roberts Associates, an international management consulting firm
specializing in strategic planning and technology management, now a division of
PA Consulting Group. He co-founded and is a director of Medical Information
Technology, Inc., a producer of hospital information systems, and is a director
of Advanced Magnetics, Inc., a medical imaging company, and of Pegasystems Inc.,
a developer of customer service management software.

Peter Townsend, Director Mr. Townsend has served on the Board of Directors
of the Company since August 1996. He is the founder and a director of Festival
of Britain 2000 Limited, a company organized to support early learning
facilities for children. Mr. Townsend served as chief executive officer and a
director of Enviromed, a medical products company, from 1991 to 1995.

Willard Lee Umphrey, Director Mr. Umphrey has served on the Board of
Directors of the Company since December 1991. He is a co-founder, and since 1985
has served as chairman of the Quantitative Group of Funds, an investment
management company. He is also president of U.S. Boston Capital Corporation, a
broker-dealer.

Messrs. Zwanziger, Umphrey and Levy and Ms. Goldberg are among the limited
partners of EN PLC, an entity formed by Mr. Zwanziger and a group of investors
for the purpose of purchasing ordinary shares of Enviromed. In addition, Mr.
Zwanziger shares control of EN PLC's general partner with another individual who
is not affiliated with the Company. See "Certain Transactions -- Transactions
with EN PLC Limited Partnership."

CLASSIFICATION OF THE BOARD OF DIRECTORS

The Board of Directors is divided into three classes, each of whose members
will serve for a staggered three-year term. The Board is comprised of two Class
I Directors (Messrs. Zwanziger and Umphrey), two Class II Directors (Dr. Roberts
and Ms. Goldberg) and three Class III Directors (Messrs. Fleming, Townsend and
Levy). At each annual meeting of stockholders, a class of directors will be
elected for a three-year term to succeed the directors of the same class whose
terms are then expiring. The terms of the Class I Directors, Class II Directors
and Class III Director will expire upon the election and qualification of
successor directors at the annual meeting of stockholders held following the end
of the calendar years 1996, 1997 and 1998, respectively.

Each officer serves at the discretion of the Board of Directors. There are
no family relationships among any of the directors and executive officers of the
Company.

BOARD COMMITTEES

The Board of Directors has a Compensation Committee and an Audit Committee.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation for employees of and consultants to the Company,
establishes and approves salaries and incentive compensation for certain senior
officers and employees and administers the Company's stock option plans. The
Audit Committee reviews the

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results and scope of the financial audit and other services provided by the
Company's independent public accountants.

BOARD COMPENSATION

Directors are not entitled to cash compensation in their capacities as
directors. All of the directors are reimbursed for their expenses incurred in
connection with their attendance at Board of Directors and committee meetings.

Under the terms of the Company's Amended and Restated 1996 Stock Option and
Grant Plan (the "1996 Plan"), an option to purchase up to 12,000 shares of
Common Stock was granted to each non-employee director of the Company as of the
date of the Initial Public Offering at an exercise price equal to the initial
public offering price. In addition, each new non-employee director elected after
the date of the Initial Public Offering and before November 4, 1996 received an
option to purchase up to 12,000 shares of Common Stock upon such director's
election to the Board of Directors at an exercise price equal to the fair market
value of the Common Stock on the date of grant. After November 4, 1996, options
to non-employee directors may be granted in the sole discretion of the Board of
Directors. All options granted to non-employee directors will vest ratably over
four years from the date of grant.

EXECUTIVE COMPENSATION

The following table sets forth the compensation for the last three
completed fiscal years for the Company's Chief Executive Officer and its four
most highly compensated executive officers (other than the Chief Executive
Officer) whose total annual salary and bonus exceeded $100,000 in fiscal 1995
(the Chief Executive Officer and such other executive officers are hereinafter
referred to as the "Senior Executives"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
------------------------------------------------------
ANNUAL
COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
YEAR SALARY BONUS OPTIONS COMPENSATION(1)
---- -------- ------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
Ron Zwanziger........................ 1996 $176,277 50,000 400,000 --
1995 149,444 -- 1,062,425 $14,850
1994 86,374 -- -- --

Anthony H. Hall...................... 1996 129,996 20,000 45,000 --
1995(2) 32,598 -- 39,000 --
1994(3) -- -- 117,000 --

Kenneth D. Legg, Ph.D................ 1996 111,055 20,000 45,000 --
1995 97,074 -- 186,446 11,550
1994 68,339 -- -- --

Richard A. Pinkowitz, Ph.D........... 1996 108,788 20,000 15,000 --
1995 94,986 -- 173,446 11,550
1994 75,640 -- -- --

Otto Wahl............................ 1996 207,600 -- 30,000 --
1995 162,306 -- 45,500 --
1994(3) -- -- 52,000 --
<FN>
- ---------------

(1) These amounts represent the fair market value of shares of Common Stock or
options to purchase Common Stock received in lieu of base salary during
1995.

(2) Mr. Hall was appointed the Company's Chief Financial Officer in October
1995. Prior to October 1995, Mr. Hall was the Managing Director of Cambridge
Diagnostics and was not employed by the Company.

(3) Messrs. Hall and Wahl were not employed by the Company during 1994.

</TABLE>

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<PAGE> 77

Option Grants

The following table sets forth certain information concerning grants of
stock options made during fiscal 1996 to each of the Senior Executives:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED EXERCISE
UNDERLYING TO EMPLOYEES PRICE EXPIRATION
OPTIONS GRANTED IN FISCAL YEAR PER SHARE DATE(1)
--------------- -------------- --------- ----------
<S> <C> <C> <C> <C>
Ron Zwanziger............................. 400,000(2) 48.4% $13.875 12/10/03

Anthony H. Hall........................... 15,000(3) 1.8% $ 8.750 8/20/06
30,000(4) 3.6% $13.875 12/10/03

Kenneth D. Legg, Ph.D. ................... 15,000(3) 1.8% $ 8.750 8/20/06
30,000(4) 3.6% $13.875 12/10/03

Richard A. Pinkowitz, Ph.D. .............. 15,000(4) 1.8% $13.875 12/10/03

Otto Wahl................................. 15,000(3) 1.8% $ 8.750 8/20/06
15,000(4) 1.8% $13.875 12/10/03
<FN>
- ---------------

(1) Unless otherwise indicated, the expiration date of an option is the tenth
anniversary of the date on which the option was originally granted. The
exercisability of these options is accelerated upon the occurrence of a
change in control (as defined in the 1996 Plan).

(2) This option vests following seven years of additional employment with the
Company from the date of the grant. However, the option will vest in
February 1999 if certain stock price goals are achieved within two years of
the grant. In the event that such goals are not achieved, this option may
fully vest on any subsequent anniversary of the date of grant if certain
other stock price goals are met.

(3) These options are exercisable in four equal annual installments commencing
on August 20, 1997.

(4) These options will become fully vested at the end of their seven-year term.
These options contain certain performance goals, including goals based on
the Company's budget, stock price, sales, product releases, financings and
technology development, which, if substantially achieved, will cause the
vesting of such options to be accelerated in accordance with a vesting
schedule contained in the agreements evidencing the options.

</TABLE>

* All options listed in the table above, except those granted to Messrs.
Zwanziger and Wahl, are intended to qualify as incentive stock options under
the Code.

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<PAGE> 78

Year-End Option Values

The following table sets forth certain information concerning each exercise
of a stock option during fiscal 1996 by each of the Senior Executives and the
number and value of unexercised options held by each of the Senior Executives on
December 31, 1996:

AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES UNEXERCISED
UNDERLYING IN-THE-MONEY
OPTIONS AT OPTIONS AT
NUMBER FISCAL YEAR-END FISCAL YEAR-END(1)
OF SHARES ----------------- ------------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------------- ------------------
<S> <C> <C> <C> <C>
Ron Zwanziger................... -- -- 1,062,425/400,000 $10,860,380/--

Anthony H. Hall................. -- -- 109,200/91,800 1,140,984/530,571

Kenneth D. Legg, Ph.D. ......... -- -- 121,446/110,000 1,234,382/603,475

Richard A. Pinkowitz, Ph.D. .... -- -- 264,446/80,000 2,880,377/545,350

Otto Wahl....................... -- -- 51,675/75,825 547,399/520,728
<FN>
- ---------------

(1) Based on the fair market value of the Common Stock as of December 31, 1996
($12.25 per share), the closing price of the Common Stock as reported on the
AMEX on such date, less the option exercise price, multiplied by the number
of shares underlying the options.
</TABLE>

EMPLOYMENT AGREEMENTS

The Company has employment agreements with several of its executive
officers.

Under the terms of his employment agreement, dated October 15, 1991,
Kenneth D. Legg, Ph.D. has been granted shares of Common Stock. The terms of Dr.
Legg's employment agreement also contains a non-competition provision whereby
Dr. Legg agrees not to compete with or hire any consultants or employees
employed by the Company for a period of one year after termination of his
employment.

Under his employment agreement, dated June 15, 1992, Richard Pinkowitz,
Ph.D., Vice President of Sales and Marketing, has been granted options to
purchase shares of Common Stock. The terms of Dr. Pinkowitz's employment
agreement also contain a non-competition provision whereby Dr. Pinkowitz agrees
not to compete with or hire any consultants or employees employed by the Company
for a period of one year after termination of his employment.

Pursuant to the Service Contract Employment Agreement, dated November 13,
1994, and the supplemental agreement dated October 30, 1995, between Otto Wahl
and Selfcare International GmbH ("Selfcare International"), a wholly-owned
subsidiary of Selfcare, Mr. Wahl was appointed Vice President, Managing Director
for Sales and Marketing of Selfcare International at a monthly salary of
DM20,000 until February 9, 1996, and thereafter at an annual salary of
DM240,000. Under the terms of his employment agreement, Mr. Wahl is also
entitled to a car for business and personal use for which lease payments,
insurance payments and maintenance costs are paid by Selfcare and a
profit-linked bonus of at least DM40,000 after February 9, 1996. Under the terms
of his employment agreement, Mr. Wahl has been granted options to purchase
52,000 shares of Common Stock. The terms of Mr. Wahl's employment agreement also
contain a non-competition provision whereby Mr. Wahl agrees not to render any
services to any company doing business in Selfcare's field of operation and not
to engage in any business transaction within that field of operation or to
acquire any direct or indirect interest in any company doing business in the
Company's field of operation, unless the consent of Selfcare is obtained.
Further, Mr. Wahl agrees not to hire any consultants or employees employed by
Selfcare for a period of one year after termination of his employment with
Selfcare. In

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<PAGE> 79

consideration of the non-competition provision, Mr. Wahl would be paid one year
of his salary after termination of his employment with Selfcare. Mr. Wahl's
employment agreement terminates in April 1998.

EMPLOYEE BENEFIT PLANS

AMENDED AND RESTATED 1996 STOCK OPTION AND GRANT PLAN

Plan Administration; Eligibility. The Company has authorized the issuance
of up 1,000,000 shares of Common Stock under the 1996 Plan. The 1996 Plan may be
administered by the Board of Directors or by an Option Committee appointed by
the Board of Directors (in either case, the "Administrator").

The Administrator has full power to select, from among the eligible
participants, the individuals to whom awards will be granted, to make any
combination of awards to participants, and to determine the specific terms and
conditions of each award, subject to the provisions of the 1996 Plan. The
Administrator may permit Common Stock, and other amounts payable pursuant to an
award, to be deferred. In such instances, the Administrator may permit interest,
dividend or deemed dividends to be credited to the amount of deferrals.

Persons eligible to participate in the 1996 Plan will be those employees
and other key persons, such as directors and consultants, of the Company and its
subsidiaries who are responsible for or contribute to the management, growth or
profitability of the Company and its subsidiaries, as selected from time to time
by the Administrator. Independent Directors will also be eligible for certain
awards under the 1996 Plan.

Stock Options. The 1996 Plan permits the granting of (i) options to
purchase Common Stock intended to qualify as incentive stock options ("Incentive
Options") under Section 422 of the Internal Revenue Code, as amended (the
"Code"), and (ii) options that do not so qualify ("Non-Qualified Options"). The
option exercise price of each option will be determined by the Administrator but
may not be less than 100% of the fair market value of the Common Stock on the
date of grant in the case of incentive stock options, and may not be less than
85% of the fair market value of the Common Stock on the date of grant in the
case of Non-Qualified Options. However, employees participating in the 1996 Plan
may elect, with the consent of the Administrator, to receive discounted
Non-Qualified Options in lieu of cash bonuses. In the case of such grants, the
option exercise price must be at least 50% of the fair market value of the
Common Stock on the date of grant.

The term of each option will be fixed by the Administrator and may not
exceed ten years from date of grant in the case of an Incentive Option. The
Administrator will determine at what time or times each option may be exercised
and, subject to the provisions of the 1996 Plan, the period of time, if any,
after retirement, death, disability or termination of employment during which
options may be exercised. Options may be made exercisable in installments, and
the exercisability of options may be accelerated by the Administrator.

Upon exercise of options, the option exercise price must be paid in full
either in cash or by certified or bank check or other instrument acceptable to
the Administrator or, if the Administrator so permits, by delivery of shares of
Common Stock already owned by the optionee. The exercise price may also be
delivered to the Company by a broker pursuant to irrevocable instructions to the
broker from the optionee.

At the discretion of the Administrator, stock options granted under the
1996 Plan may include a "re-load" feature pursuant to which an optionee
exercising an option by the delivery of shares of Common Stock would
automatically be granted an additional stock option (with an exercise price
equal to the fair market value of the Common Stock on the date the additional
stock option is granted) to purchase that number of shares of Common Stock equal
to the number delivered to exercise the original stock option. The purpose of
this feature is to enable participants to maintain an equity interest in the
Company without dilution.

To qualify as Incentive Options, options must meet additional Federal tax
requirements, including limits on the value of shares subject to Incentive
Options which first become exercisable in any one calendar year, and a shorter
term and higher minimum exercise price in the case of certain large
stockholders.

Stock Options Granted to Independent Directors. Each non-employee director
of the Company as of the date of the Initial Public Offering was granted an
option to purchase up to 12,000 shares of Common Stock at an exercise price
equal to the initial public offering price. In addition, each new non-employee
director elected

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<PAGE> 80

after the date of the Initial Public Offering and before November 4, 1996
received an option to purchase up to 12,000 shares of Common Stock upon such
director's election to the Board of Directors at an exercise price equal to the
fair market value of the Common Stock on the date of grant. After November 4,
1996, options to non-employee directors may be granted in the sole discretion of
the Board of Directors. The exercise price of each such Non-Qualified Option
will be the fair market value of the Common Stock on the date of grant. Each
Non-Qualified Option granted to Independent Directors shall vest ratably over
four years from the date of grant.

Stock Appreciation Rights. The Administrator may award a stock appreciation
right ("SAR") either as a freestanding award or in tandem with a stock option.
Upon exercise of the SAR, the holder will be entitled to receive an amount equal
to the excess of the fair market value on the date of exercise of one share of
Common Stock over the exercise price per share specified in the related stock
option (or, in the case of freestanding SAR, the price per share specified in
such right, which price may not be less than 85% of the fair market value of the
Common Stock on the date of grant) times the number of shares of Common Stock
with respect to which the SAR is exercised. This amount may be paid in cash,
Common Stock, or a combination thereof, as determined by the Administrator. If
the SAR is granted in tandem with a stock option, exercise of the SAR cancels
the related option to the extent of such exercise.

Restricted Stock. The Administrator may also award shares of Common Stock
to officers, other employees and key persons subject to such conditions and
restrictions as the Administrator may determine ("Restricted Stock"). These
conditions and restrictions may include the achievement of certain performance
goals and/or continued employment with the Company through a specified
restricted period. The purchase price of shares of Restricted Stock will be
determined by the Administrator. If the performance goals or other restrictions
are not attained, the employees will forfeit their awards of Restricted Stock.

Unrestricted Stock. The Administrator may also grant shares (at no cost or
for a purchase price determined by the Administrator) which are free from any
restrictions under the 1996 Plan ("Unrestricted Stock"). Unrestricted Stock may
be issued to employees and key persons in recognition of past services or other
valid consideration, and may be issued in lieu of cash bonuses to be paid to
such employees and key persons.

Subject to the consent of the Administrator, an employee or key person of
the Company may make an irrevocable election to receive a portion of his
compensation in Unrestricted Stock (valued at fair market value on the date the
cash compensation would otherwise be paid).

An Independent Director may, pursuant to an irrevocable written election at
least six months before directors' fees would otherwise be paid, receive all or
a portion of such fees in Unrestricted Stock, valued at fair market value on the
date the directors' fees would otherwise be paid. In certain instances, an
Independent Director may also elect to defer a portion of his directors' fees
payable in the form of Unrestricted Stock, in accordance with such rules and
procedures as may from time to time be established by the Company. During the
period of deferral, the deferred unrestricted stock would receive dividend
equivalent rights.

Performance Share Awards. The Administrator may also grant performance
share awards to employees or other key persons of the Company or any subsidiary
entitling the recipient to receive shares of Common Stock upon the achievement
of individual or Company performance goals and such other conditions as the
Administrator shall determine ("Performance Share Award").

Dividend Equivalent Rights. The Administrator may grant dividend equivalent
rights, which entitle the recipient to receive credits for dividends that would
be paid if the grantee had held specified shares of Common Stock. Dividend
equivalent rights may be granted as a component of another award or as a
freestanding award. Dividend equivalents credited under the 1996 Plan may be
paid currently or be deemed to be reinvested in additional shares of Common
Stock, which may thereafter accrue additional dividend equivalents at fair
market value at the time of deemed reinvestment or on the terms then governing
the reinvestment of dividends under the Company's dividend reinvestment plan, if
any. Dividend equivalent rights may be settled in cash, shares, or a combination
thereof, in a single installment or installments, as specified in

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<PAGE> 81

the award. Awards payable in cash on a deferred basis may provide for crediting
and payment of interest equivalents.

Adjustments for Stock Dividends, Mergers, Etc. The Administrator will make
appropriate adjustments in outstanding awards to reflect stock dividends, stock
splits and similar events. In the event of a merger, liquidation, sale of the
Company or similar event, the Administrator, in its discretion, may provide for
substitution or adjustments of outstanding options and SARs, or may terminate
all unexercised options and SARs with or without payment of cash consideration.

Amendments and Termination. The Board of Directors may at any time amend or
discontinue the 1996 Plan and the Administrator may at any time amend or cancel
outstanding awards for the purpose of satisfying changes in the law or for any
other lawful purpose. However, no such action may be taken which adversely
affects any rights under outstanding awards without the holder's consent.
Further, Plan amendments shall be subject to approval by the Company's
stockholders if and to the extent required by the Code to preserve the qualified
status of Incentive Options.

Change of Control Provisions. The 1996 Plan provides that in the event of a
"Change of Control" (as defined in the 1996 Plan) of the Company, all stock
options and stock appreciation rights shall automatically become fully
exercisable. In addition, at any time prior to or after a Change of Control, the
Administrator may accelerate awards and waive conditions and restrictions on any
awards to the extent it may determine appropriate.

On June 10, 1996, the Board of Directors granted options to purchase up to
50,000 and 25,000 shares of Common Stock, respectively, to Messrs. McAleer and
Scott at an exercise price of $9.00 per share. On August 5, 1996, the Board of
Directors granted options to purchase 12,000 shares of Common Stock to each of
Messrs. Fleming, Roberts, Umphrey and Ms. Goldberg at an exercise price of $8.50
per share. On August 12, 1996, the Board of Directors granted options to
purchase 12,000 shares of Common Stock to each of Messrs. Townsend and Levy at
an exercise price of $8.75. On August 20, 1996, the Board of Directors granted
options to purchase an aggregate of 55,000 shares of Common Stock to Messrs.
Hall, Legg and Wahl and two other employees of the Company at an exercise price
of $8.75. On December 10, 1996, the Company granted options to purchase an
aggregate of 600,000 shares of Common Stock to Messrs. Zwanziger, Hall, Legg,
Pinkowitz, Scott, Herzberg and Wahl and four other employees of the Company at
an exercise price of $13.875. As of December 31, 1996, there were 173,000 shares
of Common Stock available for issuance pursuant to options granted under the
1996 Plan.

1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN

In June 1996, the Company amended the 1994 Plan to provide that no
additional stock options would be granted under such plan. As of January 1,
1997, options to purchase up to 3,004,105 shares of Common Stock remained
outstanding under the 1994 Plan. The 1994 Plan will remain in place solely for
purposes of administration of the options outstanding under such plan, and its
terms are substantially similar to those described above with respect to the
1996 Plan as it relates to Incentive Options and Non-Qualified Options.

1992 STOCK PLAN

In June 1996, the Company amended its 1992 Stock Plan (the "1992 Plan") to
provide that no additional stock options would be granted under such plan. As of
January 1, 1997, options to purchase up to 382,239 shares of Common Stock
remained outstanding under the 1992 Plan. The 1992 Plan will remain in place
solely for purposes of administration of the options outstanding under such
plan, and its terms are substantially similar to those described above with
respect to the 1996 Plan as it relates to Incentive Options and Non-Qualified
Options.

EMPLOYEE STOCK PURCHASE PLAN

The Selfcare, Inc. Employee Stock Purchase Plan (the "Stock Purchase Plan")
provides an opportunity for eligible employees of the Company and its
subsidiaries to purchase shares of Common Stock, at a discount,

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<PAGE> 82

through regular monthly payroll deductions of up to 10% of their regular pay.
Subject to adjustment for stock splits, stock dividends and similar events, a
maximum of 250,000 shares of Common Stock may be issued under the Stock Purchase
Plan.

The first offering under the Stock Purchase Plan began at the consummation
of the Initial Public Offering and ends on December 31, 1996. Unless otherwise
determined by the Board of Directors or the Compensation Committee, subsequent
offerings will commence on each January 1 and July 1 thereafter and will have a
duration of six months. The Board of Directors or the Compensation Committee
may, in its discretion select a different offering period for any offering,
provided the duration of the offering is not more than one year. Generally, all
employees who are customarily employed for more than 20 hours per week and have
been employed by the Company or a participating subsidiary for at least three
months as of the first day of the applicable offering period are eligible to
participate in the Stock Purchase Plan. On January 1, 1997, the Company issued
10,508 shares of Common Stock to certain eligible employees for a discounted
purchase price of $7.225 per share pursuant to the first offering under the
Stock Purchase Plan.

The maximum number of shares which may be purchased by a participating
employee of the Company and its subsidiaries during an offering will be
determined by the Board of Directors or the Compensation Committee on a uniform
basis and generally will equal 1,000 shares. An employee may purchase shares
under the Stock Purchase Plan by authorizing payroll deductions of up to 10% of
his regular pay during this offering period. Unless the employee has previously
withdrawn from the offering, his accumulated payroll deductions will be used to
purchase Common Stock on the last business day of the period at a price equal to
85% of the fair market value of the Common Stock on the first or last day of
this offering period, whichever is lower. For these purposes, the fair market
value of the Common Stock on the first day of the initial offering period was
deemed to be the price to the public on such date. Under applicable tax rules,
an employee may purchase no more than $25,000 worth of Common Stock in any
calendar year (determined on the first day of the offering period(s) in which
such stock is purchased); certain other tax limitations may apply.

The Stock Purchase Plan will be administered by the Board of Directors or
the Compensation Committee. The Board of Directors or the Compensation Committee
has the discretion to designate the subsidiaries of the Company whose employees
are eligible to participate in the Stock Purchase Plan from time to time. The
Board of Directors or the Compensation Committee may at any time amend the Stock
Purchase Plan, subject to the approval of the Company's stockholders if and to
the extent required to preserve the favorable tax treatment of participants, or
discontinue the Stock Purchase Plan.

The Stock Purchase Plan is intended to qualify as an "employee stock
purchase plan" as defined in Section 423 of the Code, which provides that an
employee will not have income for federal income tax purposes at the start of an
offering or upon receipt of shares of Common Stock at the end of an offering,
but generally will recognize ordinary income, in addition to capital gain or
loss, when the employee sells the shares. The Company generally will not be
entitled to a tax deduction upon either the purchase or sale of shares issued
under the Stock Purchase Plan if certain holding period requirements are met by
participating employees.

TAX ASPECTS OF THE 1996 PLAN UNDER THE U.S. INTERNAL REVENUE CODE

The following is a summary of the principal Federal income tax consequences
of option grants under the 1996 Plan. It does not describe all Federal tax
consequences under the 1996 Plan, nor does it describe state or local tax
consequences.

INCENTIVE OPTIONS

Under the Code, an employee will not realize taxable income by reason of
the grant or the exercise of an Incentive Option. If an employee exercises an
Incentive Option and does not dispose of the shares until the later of (a) two
years from the date the option was granted or (b) one year from the date the
shares were transferred to the employee, the entire gain, if any, realized upon
disposition of such shares will be taxable to the employee as long-term capital
gain, and the Company will not be entitled to any deduction. If an employee
disposes of the shares within such one-year or two-year period in a manner so as
to violate the holding period

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<PAGE> 83

requirements (a "disqualifying disposition"), the employee generally will
realize ordinary income in the year of disposition, and, provided the Company
complies with applicable withholding requirements, the Company will receive a
corresponding deduction in an amount equal to the excess of (1) the lesser of
(x) the amount, if any, realized on the disposition and (y) the fair market
value of the shares on the date the option was exercised over (2) the option
price. Any additional gain realized on the disposition of the shares acquired
upon exercise of the option will be long-term or short-term capital gain and any
loss will be long-term or short-term capital loss depending upon the holding
period for such shares. The employee will be considered to have disposed of his
shares if he sells, exchanges, makes a gift of or transfers legal title to the
shares (except by pledge or by transfer on death). If the disposition of shares
is by gift and violates the holding period requirements, the amount of the
employee's ordinary income (and the Company's deduction) is equal to the fair
market value of the shares on the date of exercise less the option price. If the
disposition is by sale or exchange, the employee's tax basis will equal the
amount paid for the shares plus any ordinary income realized as a result of the
disqualifying distribution. The exercise of an Incentive Option may subject the
employee to the alternative minimum tax.

Special rules apply if an employee surrenders shares of Common Stock in
payment of the exercise price of his Incentive Option.

An Incentive Option that is exercised by an employee more than three months
after an employee's employment terminates will be treated as a Non-Qualified
Option for Federal income tax purposes. In the case of an employee who is
disabled, the three-month period is extended to one year and in the case of an
employee who dies, the three-month employment rule does not apply.

NON-QUALIFIED OPTIONS

There are no Federal income tax consequences to either the optionee or the
Company on the grant of a Non-Qualified Option. On the exercise of a
Non-Qualified Option, the optionee has taxable ordinary income equal to the
excess of the fair market value of the Common Stock received on the exercise
date over the option price of the shares. The optionee's tax basis for the
shares acquired upon exercise of a Non-Qualified Option is increased by the
amount of such taxable income. The Company will be entitled to a Federal income
tax deduction in an amount equal to such excess, provided the Company complies
with applicable withholding rules. Upon the sale of the shares acquired by
exercise of a Non-Qualified Option, the optionee will realize long-term or
short-term capital gain or loss depending upon his or her holding period for
such shares.

Special rules apply if an optionee surrenders shares of Common Stock in
payment of the exercise price of a Non-Qualified Option.

INDEMNIFICATION AND OTHER MATTERS

The Company's Certificate of Incorporation contains a provision that
generally eliminates the personal liability of its directors for breaches of
their fiduciary duty. The By-laws of the Company further provide that the
Company shall, to the fullest extent permissible under Delaware General
Corporate Law, indemnify its directors and officers, and in the discretion of
the Board of Directors, non-officer employees, against all expenses and
liabilities reasonably incurred in connection with service for or on behalf of
the Company. In addition, the Company has obtained director and officer
liability insurance with respect to liabilities arising out of certain matters,
including matters arising under the federal securities laws.

There is no pending litigation or proceeding involving any director or
officer, employee or agent of the Company where indemnification will be
required. The Company is not aware of any threatened litigation or proceeding
which may result in a claim for such indemnification.

PARACHUTE PAYMENTS

The exercise of any portion of any option that is accelerated due to the
occurrence of a change of control may cause a portion of the payments with
respect to such accelerated options to be treated as "parachute payments" as
defined in the Code. Any such parachute payments may be non-deductible to the
Company, in

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whole or in part, and may subject the recipient to a non-deductible 20% federal
excise tax on all or portion of such payments (in addition to other taxes
ordinarily payable).

LIMITATION ON COMPANY'S DEDUCTIONS

As a result of Section 162(m) of the Code, the Company's deduction for
certain awards under the 1996 Plan may be limited to the extent that the Chief
Executive Officer or other executive officer whose compensation is required to
be reported in the summary compensation table receives compensation (other than
performance-based compensation) in excess of $1.0 million a year.

COMPENSATION COMMITTEE INTERLOCKS

The current members of the Company's Compensation Committee are Mr. Umphrey
and Ms. Goldberg. See "Certain Transactions."

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CERTAIN TRANSACTIONS

TRANSACTIONS WITH U.S. BOSTON CAPITAL CORPORATION

On December 29, 1993, Selfcare entered into a Technology Purchase and Sale
Agreement and a Technology License and Development Agreement (the "Technology
Agreements") with USB '93 Technology Associates Limited Partnership ("USB '93").
USB '93 is a limited partnership, the general partner of which is USB '93
Technology, Inc. ("USB, Inc."), a corporation whose president and chief
executive officer is Willard Lee Umphrey, a Selfcare director. Under the terms
of the Technology Agreements, USB '93 acquired certain ovulation prediction
technology from Selfcare for a purchase price of $1.36 million (the "Purchase
Price") payable in two installments, and Selfcare agreed to develop, market and
distribute products developed from the technology and pay USB '93 license fees
equal to 1.5% of Selfcare's gross sales and 22.5% of Selfcare's royalty income
until such time as aggregate license fee payments totaled $6.0 million (the
"Aggregate Royalties"). As additional consideration for the license, Selfcare
issued warrants to purchase up to 438,750 shares of Common Stock at an exercise
price of $1.54 per share to USB '93. Selfcare has the option of repurchasing the
technology from USB '93 before payment of the Aggregate Royalties.

In connection with Selfcare's financing of the acquisition of Cambridge
Diagnostics, Cambridge Diagnostics entered into a Guarantee and Debenture, dated
August 30, 1995, with USB, Inc. Pursuant to the Guarantee and Debenture, USB,
Inc. became the guarantor of an aggregate of $3.0 million in notes issued by
Selfcare to certain investors. In return for this guarantee, Cambridge
Diagnostics granted USB, Inc. a security interest in its machinery, equipment,
securities, goodwill and uncalled capital, patents, trademarks, patent
applications, brand names, copyrights, any and all rights acquired by Cambridge
Diagnostics as a licensee or sub-licensee, and all present and future benefit,
right, title and interest in any and all moneys, payments and proceeds of
insurance presently maintained or obtained in the future. As consideration for
its services as placement agent for the Cambridge Diagnostics Notes, the Company
issued an aggregate of 119,834 shares of Common Stock to U.S. Boston Capital
Corporation, an entity owned by Willard Lee Umphrey, a director of the Company,
and Mr. Leon Okurowski. Additionally, the Company issued 92,950 shares of Common
Stock to Mr. Zwanziger for his personal guarantee of the Cambridge Diagnostics
Notes.

U.S. Boston Capital Corporation ("U.S. Boston"), broker-dealer, the
president of which is Willard Lee Umphrey, a director and principal stockholder
of the Company, participated in the Initial Public Offering as a member of the
selling group. U.S. Boston sold 350,000 shares of Common Stock and received
approximately $71,611 in selling fees in connection with the Initial Public
Offering. U.S. Boston's participation in the Initial Public Offering was on the
same terms as other members of the selling group. It is currently anticipated
that U.S. Boston will also participate in this offering as a member of the
selling group. U.S. Boston will participate on the same terms as other members
of the selling group.

TRANSACTIONS WITH EN PLC LIMITED PARTNERSHIP

In March, April, June, and September, 1994, the Company entered into a
joint venture agreement with Enviromed and the other Disputed Enviromed
Agreements for the purpose of distributing diabetes and women's health products
in European Union countries and related purposes. The joint venture activities
were to be conducted through a newly formed entity, Selfcare Europe Ltd.
("SCE"), in which the Company and Enviromed each held 50% equity interests, but
for which the Company had management responsibility. The capital requirements of
SCE were to be funded 75% by Enviromed and 25% by Selfcare, in accordance with
the SCE business plan. In connection with the formation of SCE, SCE entered into
certain distributorship agreements with Selfcare and affiliates of Enviromed,
and Enviromed acquired 593,528 shares of Common Stock in consideration for
Enviromed entering into the joint venture agreement and payment of certain cash
consideration. See "Shares Eligible for Future Sale." In June 1995, Selfcare
notified Enviromed that Enviromed was in breach of its obligations under the
joint venture agreement to make payments to fund SCE's capital needs. In July
1995, Selfcare notified Enviromed that, as a result of Enviromed's failure to
cure this breach, Enviromed's shares in SCE were deemed to be transferred to
Selfcare pursuant to the terms of SCE's charter and the joint venture agreement.
For its part, Enviromed informed Selfcare that it denied Selfcare's claims of
breach, and claimed that Selfcare was in breach of the joint venture agreement
in several

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respects. SCE is currently classified as a wholly owned subsidiary in the
Company's financial statements. See Note 2 to the Consolidated Financial
Statements. In April 1995, Mr. Zwanziger resigned as a director of Enviromed and
his counterpart at Enviromed resigned as a director of the Company. The Company
does not consider SCE to be material to its business or operations.

In October 1995, EN PLC Limited Partnership ("EN PLC") was formed by Mr.
Zwanziger and a group of investors for the purpose of purchasing ordinary shares
of Enviromed. As of October 1, 1996, EN PLC had acquired approximately 27.0% of
Enviromed's outstanding voting stock, but had not yet succeeded in its attempts
to change the management of Enviromed. Mr. Zwanziger shares control of EN PLC's
general partner with another individual who is not affiliated with the Company.
Mr. Zwanziger, Ms. Goldberg and Mr. Umphrey, directors of the Company, are among
EN PLC's limited partners. Mr. Zwanziger has disclaimed beneficial ownership of
the Common Stock held by Enviromed. Prior to the time that EN PLC commenced its
acquisition of Enviromed shares, Selfcare's Board of Directors (including two
directors with no interest in EN PLC) determined unanimously that Selfcare
lacked the capital resources needed to acquire a significant stake in Enviromed,
and that Mr. Zwanziger and the investor group should be encouraged to proceed
independently. In October 1996, the Company entered into an agreement with EN
PLC pursuant to which the Company purchased 7,961,386 shares of Enviromed held
by EN PLC for approximately $3.8 million. The Company issued to EN PLC the EN
PLC Note, which is payable in eight quarterly payments of principal and interest
commencing in January 1997 and bears interest at the Bank of Boston Prime Rate
plus 1.5%. In December 1996, the Company and EN PLC entered into an agreement
pursuant to which EN PLC agreed to defer 72.9% of the first four quarterly
principal payments (but not the related interest payments) under the EN PLC Note
until January 17, 1998. In consideration of this deferral, the Company agreed to
issue to EN PLC a warrant to purchase 15,401 shares of Common Stock at an
exercise price of $12.875 per share. The warrant is exercisable at any time
prior to January 1, 2002. See "Business -- Strategic Transactions -- Acquisition
of Enviromed Shares."

On July 5, 1996, Enviromed filed suit against the Company and the IPO
Representatives in United States District Court for the Southern District of New
York alleging breach of a registration rights agreement relating to the Common
Stock held of record by Enviromed. See "Business -- Legal Proceedings," and
"Shares Eligible for Future Sale." Enviromed claimed that its rights under a
registration rights agreement were breached in connection with the Initial
Public Offering and requested damages, injunctive relief and a declaratory
judgment that Enviromed is the lawful owner of the shares. The Company has filed
counterclaims against Enviromed arising out of the failure of Enviromed and
Cranfield to perform their obligations under the Disputed Enviromed Agreements
and is contesting Enviromed's claims vigorously. On October 18, 1996, the case
was ordered transferred to the United States District Court for the District of
Massachusetts. The Company is not able to estimate the amount of damages, if
any, which might result from Enviromed's claims against the Company, but
believes that any such damages would not be in an amount which would have a
material adverse effect on the Company. The Company agreed to indemnify the IPO
Representatives for any losses they might incur, including reasonable attorney's
fees and expenses, as a result of the Enviromed lawsuit. On November 15, 1996,
Enviromed filed a dismissal without prejudice of its claims against the IPO
Representatives.

Trinity and Eastcourt have filed Schedule 13Ds with the Commission stating
that Enviromed sold the Common Stock held by it of record to Flambelle, a
wholly-owned subsidiary of Trinity, and Eastcourt, an entity owned 50% each by
Enviromed and Flambelle, on August 28, 1996. On November 1, 1996, Enviromed
announced that it had disposed of its holding of shares of Eastcourt to
Flambelle for consideration of $1.25 million.

TRANSACTIONS WITH MVP PARTNERS

Medica Israel and Medica U.S., two investment partnerships, participated in
one-half of the Company's initial $1.0 million investment in Orgenics. On April
25, 1996, the Company exercised its right to acquire Medica's participation,
pursuant to which the Company issued 118,534 and 16,887 shares of Common Stock
to Medica Israel and Medica U.S. respectively. See "Business -- Strategic
Transactions -- Orgenics Acquisition." In October 1996, Selfcare Holdings, Ltd,
an Israeli company owned by Medica Israel, purchased 500

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Series A Preferred Shares for $500,000. See "Description of Capital
Stock -- Issued and Outstanding Capital Stock -- Series A Convertible Preferred
Stock." Jonathan Fleming, a director of the Company, is a partner of MVP
Ventures, which serves as the general partner of both Medica Israel and Medica
U.S.

CAMBRIDGE DIAGNOSTICS TRANSACTIONS

In connection with the financing of the Cambridge Diagnostics Acquisition,
Messrs. Zwanziger, Umphrey, Scott and Levy purchased $225,000, $400,000, $50,000
and $150,000 respectively, of the Cambridge Diagnostics Notes. Each also
received his pro rata interest in the Cambridge Diagnostics Warrants. The
Company plans to repay certain Cambridge Diagnostics Notes on or about December
31, 1996, and Messrs. Zwanziger, Umphrey, Scott and Levy, at that time, will be
entitled to receive 85,696, 152,350, 19,044 and 57,132 shares of Common Stock
underlying the Cambridge Diagnostics Warrants held by such individuals,
respectively.

In addition, in order for the Company to obtain approval for listing of the
Common Stock on the AMEX, the Company, in July 1996, entered into agreements
with certain holders of Cambridge Diagnostics Notes with an aggregate principal
amount of $2.75 million. Pursuant to such agreements, the principal amount of
the notes were to be automatically converted into shares of Common Stock, at the
lesser of the market value of the Common Stock at the time of the conversion or
the Initial Public Offering price, if the Company's stockholders' equity as of
November 30, 1996 were determined to be less than $4.0 million. As consideration
for the foregoing, the Company agreed to pay to each holder who agreed to these
terms additional cash consideration in an amount equal to 5.0% of the principal
amount of the Cambridge Diagnostics Notes held by such holder. The Company
stockholders' equity as of November 30, 1996 exceeded $4.0 million. As a result,
the Company became obligated to repay such notes on or about December 31, 1996.
In December 1996, the Company entered into the First Extension Agreements with
holders of substantially all of the Cambridge Diagnostics Notes pursuant to
which such holders agreed to defer repayment of the principal amount of their
notes until January 15, 1998. In consideration of such deferral, the Company
agreed to issue warrants to purchase an aggregate of 54,545 shares of Common
Stock to such holders, exercisable at any time within the next five years and at
an exercise price of $12.875 per share.

The number of shares of Common Stock issuable pursuant to the Cambridge
Diagnostics Warrants is equal to 69% of the net sales of Cambridge Diagnostics
for the fiscal year preceding the repayment of the Cambridge Diagnostics Notes,
divided by $32.87. Based on this formula and Cambridge Diagnostics' net sales
for fiscal year 1995, had the Cambridge Diagnostics Notes been repaid on
December 31, 1996, all of the Cambridge Diagnostics Warrants would have become
exercisable for an aggregate of 1,142,635 shares of Common Stock. Pursuant to
the First Extension Agreements, such holders agreed that their Cambridge
Diagnostics Warrants would become exercisable as if the Cambridge Diagnostics
Notes had been repaid on December 31, 1996. As a result, the number of shares of
Common Stock issuable pursuant to such Cambridge Diagnostic Warrants will be
based on the net sales of Cambridge Diagnostics in 1995. On December 31, 1996,
the holders of $2.6 million in principal amount of the Cambridge Diagnostics
Notes, including substantially all of the holders who were subject to the First
Extension Agreements, entered into the Second Extension Agreements to terminate
and cancel their Cambridge Diagnostics Warrants, in exchange for which the
Company agreed to transfer to such holders, for no additional consideration, an
aggregate of 990,050 shares of Common Stock on the earlier of January 15, 2000
or the occurrence of a change in control (as defined in the Second Extension
Agreements) of the Company. Of the holders of the remaining $400,000 in
principal amount of the Cambridge Diagnostics Notes, the holders of $375,000 in
principal amount of such notes remain parties to the First Extension Agreements.
See "Business -- Strategic Transactions -- Cambridge Diagnostics Acquisition."

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of January 1, 1997 by (i) each person or entity
known by the Company to own beneficially more than five percent of the Common
Stock, (ii) each Director of the Company, (iii) each of the Senior Executives,
and (iv) all directors and executive officers as a group. The percentage
ownership calculations set forth below do not give effect to the issuance of any
shares of Common Stock which may be issued in connection with the Orgenics
Acquisition.

<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING SHARES
BENEFICIALLY OWNED(2)
NAME AND ADDRESS OF NUMBER OF SHARES --------------------------------
BENEFICIAL OWNER(1) BENEFICIALLY OWNED BEFORE OFFERING AFTER OFFERING
- ----------------------------------------------------- ------------------ --------------- --------------
<S> <C> <C> <C>
5% Stockholders
Flambelle Limited(3) 389,311 6.5% 4.9%
15/16 Fitzwilliam Place
Dublin 2
Republic of Ireland
Eastcourt Limited(3) 389,311 6.5 4.9
Chichester House
278-282 High Holborn
London, UK WC17 7HA
Ron Zwanziger Family Trust 669,500(4) 10.7 8.1
Directors and Senior Executives
Ron Zwanziger 1,591,627(5) 22.7 17.6
Kenneth D. Legg, Ph.D. 316,446(6) 5.2 3.9
Richard A. Pinkowitz, Ph.D. 283,046(7) 4.6 3.5
David Scott, Ph.D. 322,568(8) 5.2 3.9
Otto Wahl 54,275(9) * *
Jonathan J. Fleming 149,205(10) 2.5 1.9
Carol R. Goldberg 92,989(11) 1.6 1.2
Edward B. Roberts, Ph.D. 74,913(12) 1.3 *
Willard Lee Umphrey 839,075(13) 13.1 10.0
Anthony H. Hall 115,858(14) 1.9 1.4
John F. Levy 93,732 1.6 1.2
Peter Townsend 9,750(15) * *
All Directors and Executive Officers as a group (12
persons) 3,943,484 46.6 37.7
</TABLE>

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

* Less than 1%

(1) Unless otherwise noted, the address of the listed persons or entities is
c/o Selfcare, Inc., 200 Prospect Street, Waltham, Massachusetts 02154.

(2) The number of shares of Common Stock outstanding used in calculating the
percentage for each listed person includes the shares of Common Stock
underlying options or warrants held by such person that are exercisable
within 60 days of the date of this Prospectus, but excludes shares of
Common Stock underlying options or warrants held by any other person.

(3) Based solely on Schedule 13Ds filed by Eastcourt and Flambelle with the
Commission in December 1996. The shares of Common Stock reported in said
Schedule 13Ds were purportedly transferred to Eastcourt and Flambelle by
Enviromed. The Company has disputed, and continues to dispute, Enviromed's,
and its purported transferees' (including Eastcourt and Flambelle), alleged
ownership of the shares. See "Business -- Legal Proceedings" and "Certain
Transactions."

(4) Includes a warrant to purchase up to 279,500 shares of Common Stock which
is currently exercisable.

(5) Includes options and warrants to purchase up to 1,062,425 shares of Common
Stock which are currently exercisable or exercisable within 60 days of the
date of this Prospectus. Does not include 841,273 shares of Common Stock
held by other stockholders of the Company who, together with Mr. Zwanziger,
are parties to a voting agreement, pursuant to which such parties have
agreed to vote all shares held by them

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<PAGE> 89

in accordance with the recommendation of the Company's Board of Directors,
through December 31, 1997.

(6) Includes options to purchase up to 121,446 shares of Common Stock which are
currently exercisable or exercisable within 60 days of the date of this
Prospectus.

(7) Includes options to purchase up to 179,946 shares of Common Stock which are
currently exercisable or exercisable within 60 days of the date of this
Prospectus.

(8) Includes options to purchase up to 253,500 shares of Common Stock which
are currently exercisable or exercisable within 60 days of the date of
this Prospectus.

(9) Represents options to purchase up to 54,275 shares of Common Stock which
are currently exercisable or exercisable within 60 days of the date of this
Prospectus.

(10) Includes options to purchase up to 13,784 shares of Common Stock which are
currently exercisable or exercisable within 60 days of the date of this
Prospectus. Also includes an aggregate of 135,421 shares of Common Stock
owned by Medica Israel and Medica U.S., two investment limited
partnerships. MVP Ventures, of which Mr. Fleming is a partner, is a
general partner of each of Medica Israel and Medica U.S. Mr. Fleming
disclaims beneficial ownership of the 135,421 shares of Common Stock owned
by Medica.

(11) Includes options and warrants to purchase up to 43,816 shares of Common
Stock which are currently exercisable or exercisable within 60 days of the
date of this Prospectus.

(12) Includes options and warrants to purchase up to 38,669 shares of Common
Stock which are currently exercisable or exercisable within 60 days of the
date of this Prospectus. Also includes 34,229 shares of Common Stock and a
warrant to purchase up to 2,015 shares of Common Stock held by the Roberts
Family Trust, of which Mr. Roberts is a trustee.

(13) Includes options and warrants to purchase up to 521,836 shares of Common
Stock beneficially owned by Mr. Umphrey which are currently exercisable or
exercisable within 60 days of the date of this Prospectus. Of that amount,
Mr. Umphrey disclaims beneficial ownership of warrants to purchase up to
50,333 shares of Common Stock held by a retirement account for the benefit
of Leon Okurowski, an affiliate of U.S. Boston Capital Corporation. Mr.
Umphrey also disclaims beneficial ownership of an additional 55,250 shares
of Common Stock held by such retirement account.

(14) Represents options to purchase up to 113,100 shares of Common Stock which
are currently exercisable or exercisable within 60 days of this Prospectus.

(15) Includes options to purchase up to 9,750 shares of Common Stock which are
currently exercisable or exercisable within 60 days of the date of this
Prospectus.

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<PAGE> 90

DESCRIPTION OF CAPITAL STOCK

AUTHORIZED AND OUTSTANDING CAPITAL STOCK

The Company's Certificate of Incorporation authorizes the issuance of up to
40,000,000 shares of Common Stock, $.001 par value per share, and 5,000,000
shares of undesignated preferred stock issuable in series by the Board of
Directors (the "Preferred Stock"), of which 4,990,000 shares remained
undesignated as of January 1, 1997. The following summary description of the
capital stock of the Company is qualified in its entirety by reference to the
Company's Certificate of Incorporation and By-laws, copies of which are filed as
exhibits to the Registration Statement of which this Prospectus is a part. The
Certificate of Incorporation and By-laws have been adopted by the stockholders
and the Board of Directors of the Company.

Common Stock. Holders of Common Stock are entitled to one vote per share on
all matters to be voted on by stockholders. Holders of Common Stock are not
entitled to cumulative voting rights. Therefore, the holders of a majority of
the shares voted in the election of directors can elect all of the directors
then standing for election, subject to the rights of the holders of Preferred
Stock, if and when issued. The holders of Common Stock have no preemptive or
other subscription rights.

The holders of Common Stock are entitled to receive such dividends, if any,
as may be declared from time to time by the Board of Directors from funds
legally available therefor, with each share of Common Stock sharing equally in
such dividends. The possible issuance of Preferred Stock with a preference over
Common Stock as to dividends could impact the dividend rights of holders of
Common Stock.

There are no redemption or sinking fund provisions with respect to the
Common Stock. All outstanding shares of Common Stock, including the shares
offered hereby, are, or will be upon completion of this offering, fully paid and
non-assessable.

The By-laws provide, subject to the rights of the holders of the Preferred
Stock, if and when issued, that the number of directors shall be fixed by the
Board of Directors. The directors, other than those who may be elected by the
holders of Preferred Stock, if and when issued, are divided into three classes,
as nearly equal in number as possible, with each class serving for a three-year
term, except with respect to the initial term of each class of directors which
shall be for the period described under "Management -- Board of Directors."
Subject to any rights of the holders of Preferred Stock, if and when issued, to
elect directors, and to remove any director, whom the holders of any such stock
had the right to elect, any director of the Company may be removed from office
only for cause and by the affirmative vote of at least two-thirds of the total
votes which would be eligible to be cast by stockholders in the election of such
director.

Warrants and Rights to Receive Stock. As of January 1, 1997, a total of
2,104,381 shares of Common Stock were issuable upon exercise of outstanding
warrants at exercise prices ranging from $0 to $2.53 per share. Such warrants,
unless exercised after January 1, 1997, will remain outstanding after the
closing of this offering. For a description of certain of these warrants, see
"Certain Transactions."

Undesignated Preferred Stock. The Board of Directors of the Company is
authorized, without further action of the stockholders of the Company, to issue
up to 4,990,000 shares of currently undesignated Preferred Stock in classes or
series and to fix the designations, powers, preferences and the relative,
participating, optional or other special rights of the shares of each series and
any qualifications, limitations and restrictions thereon as set forth in the
Certificate of Incorporation. Any such Preferred Stock issued by the Company may
rank prior to the Common Stock as to dividend rights, liquidation preference or
both, may have full or limited voting rights and may be convertible into shares
of Common Stock.

The purpose of authorizing the Board of Directors to issue Preferred Stock
is, in part, to eliminate delays associated with a stockholder vote on specific
issuances. The issuance of Preferred Stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring or seeking to acquire, a significant portion of the outstanding
stock of the Company.

Series A Convertible Preferred Stock. In October 1996, the Board of
Directors adopted a resolution authorizing 10,000 shares of Series A Convertible
Preferred Stock, par value $.001 per share ("Series A

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Preferred Shares"). The Company subsequently sold 5,500 Series A Preferred
Shares at a price of $1,000 per share to certain non-U.S. investors; the net
proceeds to the Company after commissions and expenses were approximately $5.2
million.

The holders of the Series A Preferred Shares are generally entitled to
receive cumulative quarterly dividends payable in cash at the rate of 6% per
year provided, however, that the dividends shall cease to accrue if the closing
bid price of the Common Stock on the AMEX for any 30 consecutive calendar days
is equal to or greater than $20 per share. No dividends or other distributions
are to be paid in respect of the Common Stock if the dividends on the Series A
Preferred Shares are in arrears.

In the event of a liquidation, dissolution or winding up of the Company,
the holders of the Series A Preferred Shares are entitled to receive, for each
share of Series A Preferred Shares, prior to and in preference to any
distribution of assets or surplus funds of the Company to any holder of Common
Stock, an amount equal to the sum of $1,000 plus any unpaid dividends per share
to which they are entitled.

The investors in the Series A Preferred Shares are entitled, pursuant to
their subscription agreements with the Company, to convert their Series A
Preferred Shares into shares of Common Stock. The Series A Preferred Shares will
become convertible in five equal installments over a 120-day period, with the
initial one-fifth becoming convertible on December 14, 1996 and the last
one-fifth becoming convertible on April 13, 1997. The Series A Preferred Shares
are generally convertible at a discount of 14.5% from the average closing bid
price of the Common Stock for the five trading days prior to their conversion
subject to the following: (i) the maximum conversion price is $20 per share and
(ii) if the conversion price would otherwise be $12.00 or less, it shall instead
be $12.00; provided, however, if the average closing bid price is less than
$12.00, then the conversion price shall be equal to such price. Any Series A
Preferred Shares not previously converted will automatically convert into shares
of Common Stock on October 15, 1998 at the closing bid price on such date. On
December 20, 1996, the Company issued 22,892 shares of Common Stock to a holder
of Series A Preferred Shares who elected to convert 300 Series A Preferred
Shares into Common Stock.

The Series A Preferred Shares do not have any voting rights, except as may
be required by law.

CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BY-LAWS

General. A number of provisions of the Certificate of Incorporation and
By-laws concern matters of corporate governance and the rights of stockholders.
Certain of these provisions, as well as the ability of the Board of Directors to
issue shares of Preferred Stock and to set the voting rights, preferences and
other terms thereof, may be deemed to have an anti-takeover effect and may
discourage takeover attempts not first approved by the Board of Directors
(including takeovers which certain stockholders may deem to be in their best
interests). To the extent takeover attempts are discouraged, temporary
fluctuations in the market price of the Common Stock, which may result from
actual or rumored takeover attempts, may be inhibited.

The Certificate of Incorporation provides for the Board of Directors to be
divided into three classes, as nearly equal in size as possible, of directors
serving staggered three-year terms. As a result, approximately one-third of the
Board of Directors will be elected each year. In addition, the Certificate of
Incorporation provides that stockholders may remove a director only for cause
and only by the vote of the holders of two-thirds of the Common Stock of the
Company. This provision, when coupled with the provision of the Certificate of
Incorporation authorizing only the Board of Directors to fill vacant
directorships, will preclude stockholders from removing incumbent directors
without cause and simultaneously gaining control of the Board of Directors by
filling the vacancies created by such removal with their own nominees, and will
make more difficult, and therefore may discourage, a proxy contest to change
control of the Company. These provisions, together with the ability of the Board
to issue Preferred Stock without further stockholder action, also could delay or
frustrate the removal of incumbent directors or the assumption of control by
stockholders, even if such removal or assumption would be beneficial to
stockholders of the Company. In addition, these provisions could discourage or
make more difficult a merger, tender offer or proxy contest, even if they could
be favorable to the interests of stockholders, and could potentially depress the
market price of the Common Stock. The Board of Directors of the Company believes
that these provisions are appropriate to protect the interests of the

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Company and all of its stockholders. The Board of Directors has no present plans
to adopt any other measures or devices which may be deemed to have an
anti-takeover effect.

Meetings of Stockholders. The Company's By-laws provide that a special
meeting of stockholders may be called only by the Board of Directors unless
otherwise required by law. The Company's By-laws provide that only those matters
set forth in the notice of the special meeting may be considered or acted upon
at that special meeting, unless otherwise provided by law. In addition, the
Company's By-laws set forth certain advance notice and informational
requirements and time limitations on any director nomination or any new business
which a stockholder wishes to propose for consideration at an annual meeting of
stockholders.

No Stockholder Action by Written Consent. The Certificate of Incorporation
provides that any action required or permitted to be taken by the stockholders
of the Company at an annual or special meeting of stockholders must be effected
at a duly called meeting and may not be taken or effected by a written consent
of stockholders in lieu thereof.

Indemnification and Limitation of Liability. The By-laws of the Company
provide that directors and officers of the Company shall be, and in the
discretion of the Board of Directors non-officer employees may be, indemnified
by the Company to the fullest extent authorized by Delaware law, as it now
exists or may in the future be amended, against all expenses and liabilities
reasonably incurred in connection with service for or on behalf of the Company.
The By-laws of the Company also provide that the right of directors and officers
to indemnification shall be a contract right and shall not be exclusive of any
other right now possessed or hereafter acquired under any by-law, agreement,
vote of stockholders or otherwise. The Certificate of Incorporation contains a
provision permitted by Delaware law that generally eliminates the personal
liability of directors for monetary damages for breaches of their fiduciary
duty, including breaches involving negligence or gross negligence in business
combinations, unless the director has breached his or her duty of loyalty,
failed to act in good faith, engaged in intentional misconduct or a knowing
violation of law, paid a dividend or approved a stock repurchase in violation of
the Delaware General Corporation Law or obtained an improper personal benefit.
This provision does not alter a Director's liability under the federal
securities laws. In addition, this provision does not affect the availability of
equitable remedies, such as an injunction or rescission, for breach of fiduciary
duty. The Company believes that this provision will assist the Company in
attracting and retaining qualified individuals to serve as directors.

Amendment of the Certificate of Incorporation. The Certificate of
Incorporation provides that an amendment thereof must first be approved by a
majority of the Board of Directors and (with certain exceptions) thereafter
approved by the holders of a majority of the total votes eligible to be cast by
holders of voting stock with respect to such amendment or repeal and the
affirmative vote of a majority of the outstanding shares of each class entitled
to vote thereon as a class; provided however, that the affirmative vote of
two-thirds of the total votes eligible to be cast by holders of voting stock,
voting together as a single class, and the affirmative vote of two-thirds of the
outstanding shares of each class entitled to vote thereon as a class, is
required to amend provisions relating to the establishment of the Board of
Directors and amendments to the Certificate of Incorporation.

Amendment of By-laws. The Certificate of Incorporation provides that the
By-laws may be amended or repealed by the Board of Directors or by the
stockholders. Such action by the Board of Directors requires the affirmative
vote of a majority of the directors then in office. Such action by the
stockholders requires the affirmative vote of the holders of at least two-thirds
of the total votes eligible to be cast by holders of voting stock with respect
to such amendment or repeal at an annual meeting of stockholders or a special
meeting called for such purpose, unless the Board of Directors recommends that
the stockholders approve such amendment or repeal at such meeting, in which case
such amendment or repeal shall only require the affirmative vote of a majority
of the total votes eligible to be cast by holders of voting stock with respect
to such amendment or repeal.

STATUTORY BUSINESS COMBINATION PROVISION

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Section 203 provides, with certain
exceptions, that a Delaware corporation may not engage

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<PAGE> 93

in any of a broad range of business combinations with a person or affiliate or
associate of such person, who is an "interested stockholder" for a period of
three years from the date that such person became an interested stockholder
unless: (i) the transaction resulting in a person becoming an interested
stockholder, or the business combination, is approved by the board of directors
of the corporation before the person becomes an interested stockholder; (ii) the
interested stockholder acquired 85% or more of the outstanding voting stock of
the corporation in the same transaction that makes it an interested stockholder
(excluding shares owned by persons who are both officers and directors of the
corporation, and shares held by certain employee stock ownership plans); or
(iii) on or after the date the person becomes an interested stockholder, the
business combination is approved by the corporation's board of directors and by
the holders of at least 66 2/3% of the corporation's outstanding voting stock at
an annual or special meeting, excluding shares owned by the interested
stockholder. Under Section 203, an "interested stockholder" is defined (with
certain limited exceptions) as any person that is (i) the owner of 15% or more
of the outstanding voting stock of the corporation, or (ii) an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within the three-year period
immediately prior to the date on which it is sought to be determined whether
such person is an interested stockholder.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or by-laws by action of
its stockholders to exempt itself from coverage, provided that such by-law or
charter amendment shall not become effective until 12 months after the date it
is adopted. Neither the Certificate of Incorporation nor the By-laws contains
any such exclusion.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is State Street Bank
and Trust Company.

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<PAGE> 94

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, and without giving effect to the issuance
of any shares of Common Stock which may be issued in connection with the
Orgenics Acquisition, there will be 7,959,663 shares of Common Stock of the
Company outstanding (exclusive of 6,548,622 shares underlying options, warrants
and rights to receive shares of Common Stock outstanding as of the date of this
Prospectus). Of these outstanding shares, the 2,000,000 shares of Common Stock
being sold in this offering and the 1,495,000 shares sold in the Initial Public
Offering will be immediately eligible for resale in the public market without
restriction under the Securities Act of 1933, as amended (the "Securities Act")
by persons other than "affiliates" of the Company, as that term is defined in
Rule 144 adopted under the Securities Act ("Affiliates"). In addition, in
October 1996 the Company sold 5,500 Series A Preferred Shares to certain
non-U.S. investors. The holders of such shares, among other things, are entitled
to convert their Series A Preferred Shares into shares of Common Stock in five
equal installments over a 120-day period beginning in December 1996. Series A
Preferred Shares are convertible at a discount of 14.5% from the average closing
bid price per share of the Common Stock for the five trading days prior to their
conversion. Upon the election of a holder of Series A Preferred Shares, the
Company issued 22,892 shares of Common Stock on December 20, 1996, all of which
are freely tradeable without restriction or registration. Upon conversion of the
remaining Series A Preferred Shares into shares of Common Stock, based on an
average market price of $12.325 per share resulting in a conversion price of
$12.00, an additional 439,400 shares of Common Stock will be freely tradeable
without restriction or registration under the Securities Act. The remaining
4,441,771 shares of Common Stock (the "Restricted Shares") held by officers,
directors, employees, consultants and other stockholders of the Company were
sold by the Company in reliance on exemptions from the registration requirements
of the Securities Act and are "restricted" securities within the meaning of Rule
144 under the Securities Act and may not be sold publicly unless they are
registered under the Securities Act or are sold pursuant to Rule 144 or another
exemption from registration. Approximately 3,760,757 additional shares of Common
Stock (exclusive of approximately 15,026 shares covered by options and warrants
exercisable within the 90-day period following the date of this Prospectus) will
become eligible for immediate resale in the public market, subject to compliance
with applicable provisions of Rule 144, and the lock-up agreements described
below. The remaining 681,014 shares of Common Stock will have been held for less
than two years and will become eligible for sale under Rule 144 at various dates
thereafter as the holding period provisions of Rule 144 are satisfied.

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<PAGE> 95

In general, under Rule 144 as currently in effect, a stockholder, including
an Affiliate, who has beneficially owned his or her restricted securities (as
that term is defined in Rule 144) for at least two years from the later of the
date such securities were acquired from the Company or (if applicable) the date
they were acquired from an Affiliate is entitled to sell, within any three-month
period, a number of such shares that does not exceed the greater of 1% of the
then outstanding shares of Common Stock (approximately 79,597 shares immediately
after this offering) or the average weekly trading volume in the Common Stock
during the four calendar weeks preceding the date on which notice of such sale
was filed under Rule 144, provided certain requirements concerning availability
of public information, manner of sale and notice of sale are satisfied. In
addition, under Rule 144(k), if a period of at least three years has elapsed
between the later of the date restricted securities were acquired from the
Company or (if applicable) the date they were acquired from an Affiliate of the
Company, a stockholder who is not an Affiliate of the Company at the time of
sale and has not been an Affiliate of the Company for at least three months
prior to the sale is entitled to sell the shares immediately without compliance
with the foregoing requirements under Rule 144. The Commission has proposed an
amendment to Rule 144 which would reduce the holding period required for shares
subject to Rule 144 to become eligible for sale in the public market from two
years to one year, and from three years to two years in the case of Rule 144(k).

The Company's executive officers, directors and certain stockholders have
agreed not to offer, sell or otherwise dispose of any shares of Common Stock (or
any securities convertible into or exercisable for Common Stock), with certain
limited exceptions, for a period of 120 days after the date of this Prospectus
without the prior written consent of Lehman Brothers Inc. on behalf of the
Representatives.

On November 5, 1996, the Company filed a registration statement on Form S-8
under the Securities Act to register all shares of Common Stock issuable under
the 1992 Plan, the 1994 Plan and the 1996 Plan. Shares issued upon the exercise
of stock options after the effective date of the Form S-8 registration statement
will be eligible for resale in the public market without restriction, subject to
Rule 144 limitations applicable to Affiliates and the lock-up agreements noted
above. On December 13, 1996, the Company filed a registration statement on Form
S-8 under the Securities Act to register all shares of Common Stock issuable
under the Company's Employee Stock Purchase Plan.

The Company has granted certain registration rights with respect to shares
of its Common Stock which are currently outstanding or which are issuable in the
future, pursuant to which the Company may in the future be required to prepare
and file registration statements covering the sale of such shares under the
Securities Act. All expenses relating to the filing of such registration
statements, excluding underwriting discounts and selling expenses relating to
the filing of such registration statements, are payable by the Company.

Pursuant to a Registration Rights Agreement dated as of March 8, 1994, the
Company granted registration rights with respect to 593,528 shares of Common
Stock sold to Enviromed and with respect to 438,750 shares of Common Stock that
may be purchased by USB '93 pursuant to the exercise of certain warrants which
had previously been granted to USB '93 (the "Enviromed/USB '93 Shares"). Under
the Registration Rights Agreement, the holders of 66 2/3% of the then
outstanding Enviromed/USB '93 Shares have the right to demand, on one occasion,
that the Company file a registration statement covering sales of such shares. In
addition, if the Company proposes to register any Common Stock under the
Securities Act in connection with a public offering, the holders of
Enviromed/USB '93 Shares are entitled to notice of such registration and to
include their shares in such registration, subject to the right of the
underwriters participating in the offering to limit the number of shares
included in such registration and certain other conditions. In connection with
the Initial Public Offering, Enviromed filed a lawsuit against the Company and
the IPO Representatives which alleges, among other things, that the Company
breached this Registration Rights Agreement with respect to Enviromed. On
November 15, 1996, Enviromed filed a dismissal without prejudice of its claims
against the IPO Representatives. See "Business -- Legal Proceedings."

The Company has granted certain registration rights with respect to the
shares of Common Stock issuable pursuant to the Option Agreements between the
Company and certain direct and indirect holders of Orgenics' ordinary shares.
See "Business -- Strategic Transactions -- Orgenics Acquisition." During the

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<PAGE> 96

three- year period following the issuance of any of the shares of Common Stock
issued pursuant to the Option Agreements (the "Registrable Shares") any former
Orgenics stockholders who hold at least 25% of the Registrable Shares may
request that all or part of the Registrable Shares held by them be registered
for sale under the Securities Act (a "Demand Registration"). The Company is
required to notify other former Orgenics stockholders having similar
registration rights of this request and to provide them with the opportunity to
be included in the Demand Registration. A Demand Registration request may not be
made more often than once in any 12-month period, and, in the case of any such
request made prior to the first anniversary of the closing of a Qualified
Offering, the Company is entitled to limit the total amount of Registrable
Shares to an amount having a value (based on the market value of the Common
Stock on the date on which registration was requested) which is equal to 30% of
the combined gross proceeds of this offering and a subsequent public offering
which is a Qualified Offering. The Company is required to use all commercially
reasonable efforts to effect a Demand Registration within 120 days after it is
made. The former Orgenics stockholders are also entitled to certain "piggy-back"
registration rights with respect to the Registrable Shares following a Qualified
Offering. If the Company proposes to effect certain registrations of its
securities under the Securities Act, the holders of the Registrable Shares are
entitled to notice of such registration and to include their shares of Common
Stock in such registration, subject to the right of an underwriter for the
offering to limit the number of shares included in such registration. In
addition, the Company is required to use all commercially reasonable efforts to
effect the registration under the Securities Act of any Registrable Shares which
have not previously been registered and which are outstanding on August 7, 1997,
and any Registrable Shares which are issued after such date pursuant to
exercises of put options which are made within 30 days of such date. See
"Business -- Strategic Transactions -- Orgenics Acquisition."

Pursuant to certain subscription agreements entered into with those certain
non-U.S. investors (the "Preferred Investors") who purchased 5,500 Series A
Preferred Shares, upon a breach of any warranties in such agreements by the
Company, the Company is obligated, at the written request of any Preferred
Investor prior to October 1997, to register shares of Common Stock issuable upon
the conversion of such investor's Series A Preferred Shares) as promptly as
practicable. The registration statement shall remain effective for a period of
60 days and may include shares of Common Stock of other Preferred Investors. If
the Company fails to effect the registration of such Common Stock within 90 days
after the date of filing the registration statement, the Company will be
obligated to pay to such Preferred Investor $100,000 as liquidated damages,
provided that the aggregate amount of liquidated damages to all Preferred
Investors shall not exceed $400,000.

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<PAGE> 97

UNDERWRITING

Under the terms and subject to the conditions contained in the Underwriting
Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, the Underwriters named below,
for whom Lehman Brothers Inc., Dillon, Read & Co. Inc. and A.G. Edwards & Sons,
Inc. are acting as representatives (the "Representatives"), have severally
agreed to purchase from the Company, and the Company has agreed to sell to each
Underwriter, the aggregate number of shares of Common Stock set forth opposite
the name of each such Underwriter below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------------------------------------------------------------ ---------
<S> <C>
Lehman Brothers Inc. .............................................
Dillon, Read & Co. Inc. ..........................................
A.G. Edwards & Sons, Inc. ........................................
---------
Total................................................... 2,000,000
=========
</TABLE>

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares to the public at the public offering price set forth
on the cover page hereof, and to certain dealers at such public offering price
less a selling concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other Underwriters or to certain other
brokers or dealers. After the offering to the public, the offering price and
other selling terms may be changed by the Representatives.

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions, including the condition that no stop order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for such purpose are pending or threatened by the Securities and
Exchange Commission and that there has been no material adverse change in the
condition of the Company from that set forth in the Registration Statement
otherwise than as set forth or contemplated in this Prospectus, and that certain
certificates, opinions and letters have been received from the Company and its
counsel and independent auditors. The Underwriters are obligated to take and pay
for all of the above shares of Common Stock if any such shares are taken.

The Company and the Underwriters have agreed in the Underwriting Agreement
to indemnify each other against certain liabilities, including liabilities under
the Securities Act. In addition, the Company has agreed to indemnify the
Representatives for any losses they may incur, including attorneys' fees and
expenses, arising out of a potential dispute with certain stockholders. See
"Business -- Legal Proceedings."

The Company has granted to the Underwriters an option to purchase up to an
additional 300,000 shares of Common Stock, exercisable solely to cover
over-allotments, at the public offering price, less the underwriting discounts
and commissions shown on the cover page of this Prospectus. Such option may be
exercised at any time until 30 days after the date of the Underwriting
Agreement. To the extent that such option is exercised, each Underwriter will be
committed, subject to certain conditions, to purchase a number of the additional
shares of Common Stock proportionate to such Underwriter's initial commitment as
indicated in the preceding table.

The Representatives of the Underwriters have informed the Company that the
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

The Company and its directors, executive officers and certain stockholders
have agreed not to offer, sell or otherwise dispose of any shares of Common
Stock (or any securities convertible into or exercisable for Common Stock), with
certain limited exceptions, for a period of 120 days after the date of this
Prospectus without the prior written consent of Lehman Brothers Inc. on behalf
of the Representatives.

It is currently anticipated that U.S. Boston, a broker-dealer, the
president of which is Willard Lee Umphrey, a director and principal stockholder
of the Company, will participate in this offering as a member of

95
<PAGE> 98

the selling group. U.S. Boston will participate on the same terms as other
members of the selling group. As a result of the foregoing, this offering is
subject to the provisions of Rule 2720 of the Conduct Rules of the NASD.
Accordingly, U.S. Boston's participation in the offering will conform with the
requirement set forth in Rule 2720 that a bona fide independent market for the
Common Stock exist as of the date of the filing with the Commission of the
registration statement of which this Prospectus forms a part.

LEGAL MATTERS

The validity of the shares of Common Stock offered by the Company hereby
will be passed upon for the Company by Goodwin, Procter & Hoar LLP, Boston,
Massachusetts. Certain legal matters in connection with this offering will be
passed upon for the Underwriters by Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. The president of a professional corporation which is a partner in
the firm of Goodwin, Procter & Hoar LLP beneficially owns an aggregate of
approximately 40,664 shares of Common Stock and warrants to purchase up to 5,278
shares of Common Stock at an exercise price of $2.53 per share.

EXPERTS

The consolidated financial statements of the Company as of December 31,
1994 and 1995 and for each of the years then ended and as of September 30, 1996
and for the nine-month period then ended, the financial statements of the
Nutritional Supplement Lines as of November 30, 1996 and the years ended
November 30, 1995 and 1996, and the financial statements of Cambridge
Diagnostics for the eleven months ended November 30, 1994 included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

The consolidated financial statements of Orgenics at December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1995 and
as of September 30, 1996 and the nine months then ended, appearing in this
Prospectus and Registration Statement have been audited by Kost Levary and
Forer, Certified Public Accountants (Israel), a member of Ernst & Young
International, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.

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<PAGE> 99

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934, as amended, 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 filed by the Company can be inspected and copied at prescribed rates
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Commission also maintains a web site
(http://www.sec.gov) containing reports, proxy and information statements and
other information regarding registrants that file such material electronically
through the Commission's Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) system. The Company's Common Stock is listed on the American Stock
Exchange and reports, proxy statements and other information concerning the
Company can be inspected at the offices of the American Stock Exchange at 86
Trinity Place, New York, New York 10006. The Company has filed with the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement (which term shall include all amendments, exhibits and schedules
thereto) on Form SB-2 under the Act with respect to the shares of Common Stock
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission, to which Registration Statement reference is
hereby made. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. The Registration
Statement and the exhibits thereto may be inspected and copied at prescribed
rates at the public reference facilities at the addresses set forth above, and
are also publicly available through the Commission's web site
(http://www.sec.gov).

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<PAGE> 100

SELFCARE, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SELFCARE, INC. AND SUBSIDIARIES:
Report of Independent Public Accountants......................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and September 30,
1996............................................................................ F-3
Consolidated Statements of Operations for the Years Ended 1994 and 1995 and for
the Nine Months Ended September 30, 1995 (Unaudited) and 1996................... F-4
Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended
December 31, 1994 and 1995 and for the Nine Months Ended September 30, 1996..... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994 and
1995 and for the Nine Months Ended September 30, 1995 (Unaudited) and 1996...... F-6
Notes to Consolidated Financial Statements....................................... F-7
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
Unaudited Pro Forma Combined Condensed Financial Statements...................... F-30
Unaudited Pro Forma Combined Condensed Balance Sheet as of September 30, 1996.... F-33
Notes to Unaudited Pro Forma Combined Condensed Balance Sheet as of September 30,
1996............................................................................ F-34
Unaudited Pro Forma Combined Condensed Statement of Operations for the Year Ended
December 31, 1995............................................................... F-35
Notes to Unaudited Pro Forma Combined Condensed Statement of Operations for the
Year Ended December 31, 1995.................................................... F-36
Unaudited Pro Forma Combined Condensed Statement of Operations for the Nine
Months Ended September 30, 1996................................................. F-37
Notes to Unaudited Pro Forma Combined Condensed Statement of Operations for the
Nine Months Ended September 30, 1996............................................ F-38
ORGENICS LTD. AND ITS SUBSIDIARIES:
Reports of Independent Auditors.................................................. F-39
Consolidated Balance Sheet as of December 31, 1994 and 1995 and September 30,
1996............................................................................ F-41
Consolidated Statements of Operations for the years ended December 31, 1993, 1994
and 1995 and for the Nine Months Ended September 30, 1995 (Unaudited) and
1996............................................................................ F-42
Consolidated Statements of Changes in Shareholders' Equity for the years ended
December 31, 1993, 1994, and 1995 and for the Nine Months Ended September 30,
1996............................................................................ F-43
Consolidated Statements of Cash Flows for the years ended December 31, 1993,
1994, and 1995 and for the Nine Months Ended September 30, 1995 (Unaudited) and
1996............................................................................ F-44
Notes to Consolidated Financial Statements....................................... F-46
CAMBRIDGE DIAGNOSTICS IRELAND LIMITED
Report of Independent Public Accountants......................................... F-65
Statement of Revenues and Expenses for the eleven month period ended November 30,
1994............................................................................ F-66
Notes to the Statement of Revenues and Expenses for the eleven month period ended
November 30, 1994............................................................... F-67
AMERICAN HOME PRODUCTS CORPORATION WHITEHALL-ROBINS HEALTHCARE DIVISION -- CERTAIN
DOMESTIC VITAMIN AND NUTRITIONAL SUPPLEMENT CONSUMER HEALTHCARE BRANDS (NUTRITIONAL
SUPPLEMENT LINES)
Report of Independent Public Accountants......................................... F-70
Statement of Net Assets to be sold as of November 30, 1996....................... F-71
Statements of Net Revenues in Excess of Direct Expenses for the Years Ended
November 30, 1995 and 1996...................................................... F-72
Notes to Statements.............................................................. F-73
</TABLE>

F-1
<PAGE> 101

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Selfcare, Inc.:

We have audited the accompanying consolidated balance sheets of Selfcare,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 1994, 1995 and
September 30, 1996, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the years ended December 31,
1994, 1995 and the nine month period ended September 30, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with 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, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Selfcare, Inc. and subsidiaries as of December 31, 1994, 1995 and
September 30, 1996, and the results of their operations and their cash flows for
the years ended December 31, 1994, 1995 and the nine month period ended
September 30, 1996, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
November 13, 1996 (except for the matters
discussed in Notes 7, 11(c), and 18, as
to which the dates are December 31, 1996,
December 31, 1996, and January 14, 1997,
respectively)

F-2
<PAGE> 102

SELFCARE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- SEPTEMBER 30,
1994 1995 1996
----------- ------------ -------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 1,762,108 $ 7,394,750 $ 14,552,714
Restricted cash............................................... 69,346 -- --
Accounts receivable, net of allowance for doubtful accounts of
approximately $94,000 in 1994 and 1995 and $235,000 in
1996........................................................ 911,241 1,414,232 2,315,713
Inventory..................................................... 991,941 1,193,114 1,367,640
Prepaid and other current assets.............................. 94,991 305,043 352,271
----------- ------------ ------------
Total current assets................................... 3,829,627 10,307,139 18,588,338
----------- ------------ ------------
PROPERTY AND EQUIPMENT, AT COST:
Machinery and laboratory equipment............................ 582,843 1,705,802 4,253,292
Leasehold improvements........................................ 610,816 691,946 733,454
Furniture and fixtures........................................ 258,419 295,775 386,018
Computer equipment............................................ 63,301 151,092 376,267
----------- ------------ ------------
1,515,379 2,844,615 5,749,031
Less -- Accumulated depreciation and amortization............. 43,343 625,008 1,224,871
----------- ------------ ------------
1,472,036 2,219,607 4,524,160
----------- ------------ ------------
INVESTMENT IN ORGENICS.......................................... -- 1,000,000 1,000,000
----------- ------------ ------------
OTHER ASSETS.................................................... 29,239 165,602 313,106
----------- ------------ ------------
$ 5,330,902 $ 13,692,348 $ 24,425,604
=========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Line of credit................................................ $ 2,167,685 $ -- $ --
Accounts payable.............................................. 914,650 1,764,095 2,638,787
Accrued expenses and other current liabilities................ 742,075 1,665,368 2,965,035
Current portion of convertible advance........................ -- 2,333,333 --
Current portion of deferred revenue........................... 226,667 226,667 1,128,420
----------- ------------ ------------
Total current liabilities.............................. 4,051,077 5,989,463 6,732,242
----------- ------------ ------------
LONG-TERM LIABILITIES:
Deferred revenue, net of current portion...................... 1,197,049 3,123,035 1,437,110
Notes payable, net of current portion......................... -- 2,325,000 2,175,000
Notes payable to related parties.............................. -- 675,000 825,000
Long-term capital lease....................................... -- -- 11,796
Convertible advance, net of current portion................... -- 4,666,667 13,693,548
Convertible payable........................................... -- 500,000 --
----------- ------------ ------------
Total long-term liabilities............................ 1,197,049 11,289,702 18,142,454
COMMITMENTS AND CONTINGENCIES (Notes 4, 5, 9 and 10)
MANDATORILY REDEEMABLE PREFERRED STOCK OF A SUBSIDIARY.......... -- 1,643,580 1,724,768
----------- ------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock
Authorized -- 5,000,000 shares
Issued and outstanding -- none.............................. -- -- --
Common stock, $.001 par value --
Authorized -- 40,000,000 shares
Issued -- 3,760,757, 4,057,924 and 5,688,345 shares in 1994,
1995 and 1996, respectively............................... 3,760 4,058 5,688
Additional paid-in capital.................................... 4,658,147 9,553,220 38,508,574
Deferred compensation......................................... -- (198,965) (10,740)
Less -- Treasury stock, at cost, 15,600 shares in 1995 and
1996........................................................ -- (15,200) (15,200)
Accumulated deficit........................................... (4,579,131) (14,676,034) (40,802,947)
Cumulative translation adjustment............................. -- 102,524 140,765
----------- ------------ ------------
Total stockholders' equity (deficit)................... 82,776 (5,230,397) (2,173,860)
----------- ------------ ------------
$ 5,330,902 $ 13,692,348 $ 24,425,604
=========== ============ ============
</TABLE>

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

F-3
<PAGE> 103

SELFCARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- --------------------------
1994 1995 1996
----------- ------------ 1995 ------------
-----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Net product sales.......................... $ 2,089,387 $ 6,722,625 $ 4,582,200 $ 7,856,775
Grants and other revenue................... 232,538 516,087 224,720 1,241,242
----------- ------------ ----------- ------------
Net revenue........................... 2,321,925 7,238,712 4,806,920 9,098,017
Cost of sales.............................. 1,559,854 5,564,438 3,798,534 6,477,303
----------- ------------ ----------- ------------
Gross profit.......................... 762,071 1,674,274 1,008,386 2,620,714
----------- ------------ ----------- ------------
Operating expenses:
Research and development................. 584,217 1,532,496 868,220 4,161,445
Selling, general and administrative...... 2,962,531 5,649,781 3,625,513 6,241,131
Noncash compensation charge.............. 60,025 52,000 -- 4,184,697
----------- ------------ ----------- ------------
Total operating expenses.............. 3,606,773 7,234,277 4,493,733 14,587,273
=========== ============ =========== ============
Operating loss........................ (2,844,702) (5,560,003) (3,485,347) (11,966,559)
Interest expense, including noncash
interest relating to issuance of warrants
(Note 7)................................. (7,111) (4,519,375) (3,132,616) (14,348,681)
Interest income............................ -- 38,055 36,625 269,515
----------- ------------ ----------- ------------
Loss before minority interest and dividends
and accretion on preferred stock of a
subsidiary............................... (2,851,813) (10,041,323) (6,581,338) (26,045,725)
Minority interest in subsidiary's income... 67,050 -- -- --
Dividends and accretion on mandatorily
redeemable preferred stock of a
subsidiary............................... -- (55,580) (31,600) (81,188)
----------- ------------ ----------- ------------
Net loss.............................. $(2,784,763) $(10,096,903) $(6,612,938) $(26,126,913)
=========== ============ =========== ============
Net loss per common and common equivalent
share.................................... $ (.52) $ (1.66) $ (1.10) $ (4.25)
=========== ============ =========== ============
Weighted average number of common and
common equivalent shares outstanding..... 5,378,736 6,071,799 6,025,700 6,146,821
=========== ============ =========== ============
</TABLE>

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

F-4
<PAGE> 104

SELFCARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK
---------------------
PREFERRED STOCK NUMBER OF $.001 ADDITIONAL DEFERRED
OF A SUBSIDIARY SHARES PAR VALUE PAID-IN CAPITAL COMPENSATION
--------------- --------- --------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993............................ $ -- 2,507,310 $2,507 $ 1,834,477 $ --
Issuance of common stock, net of issuance costs of
$92,133........................................... -- 1,216,332 1,216 2,762,682 --
Issuance of common stock in connection with
consulting agreements............................. -- 36,465 36 59,989 --
Exercise of stock options........................... -- 650 1 999 --
Net loss............................................ -- -- -- -- --
---------- --------- ------ ----------- ---------
Balance, December 31, 1994............................ -- 3,760,757 3,760 4,658,147 --
Subsidiary's issuance of preferred stock............ 1,588,000 -- -- -- --
Accretion on preferred stock of a subsidiary........ 55,580 -- -- -- --
Issuance of common stock............................ -- 57,083 58 144,260 --
Issuance of common stock in connection with notes
payable........................................... -- 212,784 213 179,835 --
Issuance of common stock warrants in connection with
notes payable..................................... -- -- -- 30,000 --
Noncash interest expense related to common stock
warrants issued in connection with notes
payable........................................... -- -- -- 4,235,768 --
Exercise of stock options........................... -- 27,300 27 69,045 --
Deferred compensation related to grants of common
stock options..................................... -- -- -- 250,965 (250,965)
Amortization of deferred compensation related to
grants of common stock options.................... -- -- -- -- 52,000
Purchase of treasury stock.......................... -- -- -- -- --
Purchase of common stock options.................... -- -- -- (14,800) --
Change in cumulative translation adjustment......... -- -- -- -- --
Net loss............................................ -- -- -- -- --
---------- --------- ------ ----------- ---------
Balance, December 31, 1995............................ 1,643,580 4,057,924 4,058 9,553,220 (198,965)
Accretion on preferred stock of a subsidiary........ 81,188 -- -- -- --
Issuance of common stock, net of issuance costs of
approximately $2,343,000.......................... -- 1,495,000 1,495 10,363,433 --
Issuance of common stock related to convertible
advance........................................... -- 135,421 135 499,865 --
Noncash interest expense related to common stock
warrants issued in connection with notes
payable........................................... -- -- -- 14,095,584 --
Noncash compensation charge for common stock options
issued to Company's President..................... -- -- -- 3,240,000 --
Compensation related to grants of common stock
options........................................... -- -- -- 756,472 --
Amortization of deferred compensation related to
grant of common stock options..................... -- -- -- -- 188,225
Change in cumulative translation adjustment......... -- -- -- -- --
Net loss............................................ -- -- -- -- --
---------- --------- ------ ----------- ---------
Balance, September 30, 1996........................... $1,724,768 5,688,345 $5,688 $38,508,574 $ (10,740)
========== ========= ====== =========== =========

<CAPTION>
TREASURY STOCK TOTAL
-------------------- CUMULATIVE STOCKHOLDERS'
NUMBER OF ACCUMULATED TRANSLATION EQUITY
SHARES COST DEFICIT ADJUSTMENT (DEFICIT)
--------- -------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993............................ -- $ -- $ (1,794,368) $ -- $ 42,616
Issuance of common stock, net of issuance costs of
$92,133........................................... -- -- -- -- 2,763,898
Issuance of common stock in connection with
consulting agreements............................. -- -- -- -- 60,025
Exercise of stock options........................... -- -- -- -- 1,000
Net loss............................................ -- -- (2,784,763) -- (2,784,763)
------- -------- ------------ -------- ------------
Balance, December 31, 1994............................ -- -- (4,579,131) -- 82,776
Subsidiary's issuance of preferred stock............ -- -- -- -- --
Accretion on preferred stock of a subsidiary........ -- -- -- -- --
Issuance of common stock............................ -- -- -- -- 144,318
Issuance of common stock in connection with notes
payable........................................... -- -- -- -- 180,048
Issuance of common stock warrants in connection with
notes payable..................................... -- -- -- -- 30,000
Noncash interest expense related to common stock
warrants issued in connection with notes
payable........................................... -- -- -- -- 4,235,768
Exercise of stock options........................... -- -- -- -- 69,072
Deferred compensation related to grants of common
stock options..................................... -- -- -- -- --
Amortization of deferred compensation related to
grants of common stock options.................... -- -- -- -- 52,000
Purchase of treasury stock.......................... (15,600) (15,200) -- -- (15,200)
Purchase of common stock options.................... -- -- -- -- (14,800)
Change in cumulative translation adjustment......... -- -- -- 102,524 102,524
Net loss............................................ -- -- (10,096,903) -- (10,096,903)
------- -------- ------------ -------- ------------
Balance, December 31, 1995............................ (15,600) (15,200) (14,676,034) 102,524 (5,230,397)
Accretion on preferred stock of a subsidiary........ -- -- -- -- --
Issuance of common stock, net of issuance costs of
approximately $2,343,000.......................... -- -- -- -- 10,364,928
Issuance of common stock related to convertible
advance........................................... -- -- -- -- 500,000
Noncash interest expense related to common stock
warrants issued in connection with notes
payable........................................... -- -- -- 14,095,584
Noncash compensation charge for common stock options
issued to Company's President..................... -- -- -- -- 3,240,000
Compensation related to grants of common stock
options........................................... -- -- -- -- 756,472
Amortization of deferred compensation related to
grant of common stock options..................... -- -- -- -- 188,225
Change in cumulative translation adjustment......... -- -- -- 38,241 38,241
Net loss............................................ -- -- (26,126,913) -- (26,126,911)
------- -------- ------------ -------- ------------
Balance, September 30, 1996........................... (15,600) $(15,200) $(40,802,947) $140,765 $ (2,173,860)
======= ======== ============ ======== ============
</TABLE>

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

F-5
<PAGE> 105

SELFCARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- ---------------------------
1994 1995 1995 1996
----------- ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss................................................... $(2,784,763) $(10,096,903) $(6,612,938) $(26,126,913)
Adjustments to reconcile net loss to net cash used in
operating activities --
Dividends and accretion on mandatorily redeemable
preferred stock of a subsidiary........................ -- 55,580 31,600 81,188
Noncash interest expense related to issuance of
warrants............................................... -- 4,235,768 2,900,591 14,095,584
Compensation expense related to issuance of common stock
options................................................ -- 52,000 -- 4,184,697
Issuance of common stock for services rendered........... 60,025 -- -- --
Amortization of deferred revenue......................... (226,667) (506,374) (224,254) (1,231,227)
Depreciation and amortization............................ 23,299 576,463 430,083 647,018
Minority interest in subsidiary's income................. (67,050) -- -- --
Changes in assets and liabilities, net of assets and
liabilities acquired in connection with the acquisition
of Cambridge Diagnostics in 1994 --
Accounts receivable.................................... (49,634) (476,750) (535,410) (905,904)
Inventory.............................................. (32,505) (163,860) (24,228) (175,926)
Prepaid and other current assets....................... (10,148) (229,573) 117,459 (51,243)
Accounts payable....................................... 190,156 801,224 33,059 875,709
Accrued expenses and other current liabilities......... 130,497 948,364 462,445 1,306,253
----------- ------------ ----------- ------------
Net cash used in operating activities................ (2,766,790) (4,804,061) (3,421,593) (7,300,764)
----------- ------------ ----------- ------------
Cash Flows from Investing Activities:
Purchases of property and equipment........................ (36,826) (1,251,210) (731,292) (2,802,269)
Proceeds from sale of property and equipment............... -- 61,386 36,019 --
(Increase) decrease in other assets........................ 28,844 -- -- --
Payment for investment in Orgenics......................... -- (500,000) -- --
Payment for acquisition of Cambridge Diagnostics, net of
acquired cash............................................ (1,333,869) -- -- --
----------- ------------ ----------- ------------
Net cash used in investing activities................ (1,341,851) (1,689,824) (695,273) (2,802,269)
----------- ------------ ----------- ------------
Cash Flows from Financing Activities:
(Increase) decrease in restricted cash..................... (69,346) 69,346 39,226 (203,825)
(Purchase of) proceeds from note receivable................ 950,000 -- -- --
Net proceeds from the issuance of common stock............. 2,764,898 213,390 106,013 10,364,928
(Repayments on) proceeds from line of credit............... 1,872,685 (2,167,685) (1,717,685) --
Increase in deferred revenue............................... -- 2,432,000 -- 437,481
Proceeds from issuance of notes payable.................... -- 3,000,000 3,000,000 --
Proceeds from issuance of common stock warrants in
connection with notes payable............................ -- 30,000 30,000 --
Purchase of treasury stock................................. -- (15,200) (15,200) --
Proceeds from convertible advance.......................... -- 7,000,000 -- 6,693,548
Purchase of common stock options........................... -- (14,800) (14,800) --
Principal repayments on capital lease obligations.......... -- -- -- (11,070)
Proceeds from sale of preferred stock of a subsidiary...... -- 1,588,000 1,588,000 --
----------- ------------ ----------- ------------
Net cash provided by financing activities............ 5,518,237 12,135,051 3,015,554 17,281,062
----------- ------------ ----------- ------------
Foreign Exchange Effect on Cash and Cash Equivalents......... -- (8,524) 29,409 (20,065)
----------- ------------ ----------- ------------
Net (Decrease) Increase in Cash and Cash Equivalents......... 1,409,596 5,632,642 (1,071,903) 7,157,964
Cash and Cash Equivalents, beginning of period............... 352,512 1,762,108 1,762,108 7,394,750
----------- ------------ ----------- ------------
Cash and Cash Equivalents, end of period..................... $ 1,762,108 $ 7,394,750 $ 690,205 $ 14,552,714
=========== ============ =========== ============
Supplemental Disclosure of Cash Flow Information:
Cash paid for --
Interest................................................. $ 12,168 $ 254,134 $ 93,195 $ 234,611
=========== ============ =========== ============
Income taxes............................................. $ 456 $ 6,162 $ -- $ 16,689
=========== ============ =========== ============
Supplemental Disclosure of Noncash Investing Activities:
On November 23, 1994, the Company acquired all of the
assets and assumed certain liabilities of Cambridge
Diagnostics --
Fair value of assets acquired............................ $ 3,191,794 $ -- $ -- $ --
Liabilities assumed...................................... 1,115,067 -- -- --
----------- ------------ ----------- ------------
Cash paid for acquisition............................ $ 2,076,727 $ -- $ -- $ --
=========== ============ =========== ============
Investment in Orgenics..................................... $ -- $ 500,000 $ -- $ --
=========== ============ =========== ============
</TABLE>

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

F-6
<PAGE> 106

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(1) ORGANIZATION

Selfcare, Inc. ("Selfcare" or the "Company") is engaged in the development,
manufacture and marketing of self-test diagnostic products for the diabetes,
women's health and infectious disease markets. The Company's existing and
planned products are targeted at the two largest existing markets for self-care
diagnostics, diabetes management and women's health, as well as the emerging
market for self tests for infectious diseases and agents, including human
immunodeficiency virus ("HIV").

On November 30, 1994, the Company acquired substantially all of the assets
and the exclusive rights to certain licenses (see Note 10(c)) of Cambridge
Biotech Limited from Cambridge Biotech Corporation ("Cambridge Biotech").
Thereafter, the Company changed this subsidiary's name from Cambridge Biotech
Limited to Cambridge Diagnostic Ireland Limited ("Cambridge Diagnostics"). The
total cost of the acquisition was $3,191,794, which consisted of $2,076,727 in
cash (including acquisition costs) and $1,115,067 of assumed liabilities. This
transaction was accounted for as a purchase (see Note 3).

In October 1996 the Company acquired a 57.1% direct and indirect equity
interest in Orgencis Ltd ("Orgenics") for total consideration of $8,000,000. The
Company estimates that it will pay additional consideration totaling
approximately $9,307,000 in cash and Common Stock for the remaining 47.9% direct
and indirect equity interest (see Note 5).

On January 14, 1997, the Company entered into an agreement to acquire the
U.S. rights to several nutritional supplement product lines (the "Nutritional
Supplement Lines Acquisition") from American Home Products Corporation, Inc.
("AHP") for $30 million in cash and the issuance of a $6 million 7% promissory
note (see Note 18).

Since inception, the Company has devoted substantially all of its efforts
toward the research and development of products, the establishment of
distribution networks in the United States and Europe, and raising capital.
Management anticipates that substantially all future revenues will be derived
from products under development or those developed or acquired in the future.
Principal risks to the Company include the ability of the Company to obtain
adequate financing to fund future operations, dependence on key individuals,
competition from substitute products and larger companies, obtaining regulatory
approval, and the successful development and marketing of commercial products.
Based on the Company's current operating plan, including alternate financing
sources, such as from the Master Agreement with Johnson and Johnson Development
Corporation ("JJDC") and Lifescan, Inc. ("LifeScan") (see Note 8), management
believes that the Company has adequate financial resources to continue
operations through at least October 1997. See "Risk Factors" beginning on page 7
of this prospectus.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of Consolidation

The accompanying consolidated financial statements include the results of
the Company and its wholly owned subsidiaries: Cambridge Diagnostics (an Irish
corporation), Selfhelp Israel, Ltd. (an Israeli corporation), Selfcare
International GmbH (a German corporation), Selfcare Europe Ltd. ("SCE") and
subsidiaries (a UK corporation), and Inverness Medical Limited (a Scottish
corporation) ("Inverness"). Also included in the accompanying consolidated
financial statements is the Company's 49% minority interest in Cambridge
Affiliate Corporation ("Cambridge Affiliate"), as discussed in Note 10(c). All
material intercompany balances and transactions have been eliminated in
consolidation.

The accounts of SCE include its wholly owned subsidiaries, Selfcare Europe,
GmbH (a German company) and Selfcare Benelux (a Belgian company). SCE was a
joint venture between the Company and Enviromed plc ("Enviromed") in which the
Company originally held a 50% interest. Due to default by

F-7
<PAGE> 107

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Enviromed on certain covenants of the joint venture agreement during 1995, the
Company has assumed 100% ownership and effective operating control of SCE (see
Note 9(c)). Accordingly, the Company considers this entity to be a wholly owned
subsidiary and has included its results of operations in the accompanying
consolidated financial statements for the year ended December 31, 1995 and the
periods ended September 30, 1995 and 1996.

(b) Revenue Recognition

Product revenue is recognized when products are shipped to customers, at
which time title is transferred. The Company is recognizing deferred revenue
relating to the 1993 sale of technology over a defined life (see Note 10(a)).
The Company has also recorded deferred revenue in the accompanying consolidated
balance sheets relating to amounts received in advance on certain contracts and
grants (see Notes 4 and 9(b)). The Company records the related revenue on funded
amounts relating to facilities and equipment over their estimated useful lives
and related costs based on when such costs are incurred.

The Company follows the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. The Company has classified its cash equivalents as held-to-maturity
and recorded them at amortized cost, which approximates market value. The
Company considers all highly liquid cash investments with maturities of three
months or less at the date of acquisition to be cash equivalents. Cash and cash
equivalents consisted of the following at December 31, 1994, 1995 and September
30, 1996:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
<S> <C> <C> <C>
Cash and money market funds................... $1,762,108 $7,394,750 $ 1,552,714
Overnight time deposits....................... -- -- 13,000,000
---------- ---------- ------------
$1,762,108 $7,394,750 $ 14,552,714
========== ========== ============
</TABLE>

(d) Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market
and consisted of the following at December 31, 1994, 1995 and September 30,
1996:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- SEPTEMBER 30,
1994 1995 1996
-------- ---------- -------------
<S> <C> <C> <C>
Raw materials.................................. $372,790 $ 776,770 $ 826,805
Work in-process................................ 243,339 237,954 168,593
Finished goods................................. 375,812 178,390 372,242
-------- ---------- -----------
$991,941 $1,193,114 $ 1,367,640
======== ========== ===========
</TABLE>

F-8
<PAGE> 108

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(e) Depreciation and Amortization

Depreciation and amortization are computed using the straight-line method
based on the estimated useful lives of the related assets as follows:

<TABLE>
<CAPTION>
ESTIMATED
ASSET CLASSIFICATION USEFUL LIFE
-------------------- ------------------------
<S> <C>
Machinery and laboratory equipment.................... 3 - 5 Years
Leasehold improvements................................ Lesser of Life of Lease
or Life of Asset
Furniture and fixtures................................ 3 - 7 Years
Computer equipment.................................... 3 - 5 Years
</TABLE>

(f) Postretirement Benefits

The Company does not have any obligations for postretirement or
postemployment benefits, as defined by SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions, as it does not currently offer such
benefits.

(g) Net Loss per Common and Common Equivalent Share

Net loss per common and common equivalent share is based on the weighted
average number of shares of common stock and common stock equivalents
outstanding during the period. All shares, options and warrants issued during
the 12 months immediately preceding the initial public offering were treated as
if they had been outstanding for the two years ended December 31, 1995 and the
nine months ended September 30, 1995, and from January 1, 1996 through August 6,
1996, for the nine months ended September 30, 1996, in accordance with the
treasury-stock method. Common stock equivalents (certain stock options and
warrants) for all periods have not been included, as their inclusion would be
antidilutive.

(h) Foreign Currency Translation

The accounts of the Company's subsidiaries are translated in accordance
with SFAS No. 52, Foreign Currency Translation. Accordingly, assets and
liabilities of the Company's foreign subsidiaries are translated into U.S.
dollars using the exchange rate at each balance sheet date. Income and expense
accounts are translated using an average rate of exchange during the period.
Foreign currency translation adjustments are accumulated as a separate component
of consolidated stockholders' equity. The aggregate transaction gains and losses
were immaterial for all periods presented.

(i) Use of Estimates in the Preparation of Financial Statements

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.

(j) Concentration of Credit Risk

SFAS No. 105, Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentrations of Credit
Risk, requires disclosure of any significant off-balance sheet and credit risk
concentrations. The Company has no significant off-balance-sheet concentration
of credit risk such as foreign exchange contracts, option contracts or other
foreign hedging arrangements. The

F-9
<PAGE> 109

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company maintains the majority of its cash balances and its overnight time
deposits with financial institutions. See Notes 14 and 15 for financial
information by geographic area and significant customer, respectively.

(k) Derivative Financial Instruments and Fair Value of Financial Instruments

The Company does not have any derivative or other financial instruments as
defined by SFAS No. 119, Disclosure About Derivative Financial Instruments and
Fair Value of Financial Instruments.

SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of an estimate of the fair value of certain financial
instruments. The Company's financial instruments consist of cash equivalents,
accounts receivable and debt. The estimated fair value of these financial
instruments approximates their carrying value at December 31, 1994 and 1995 and
September 30, 1996. The estimated fair values have been determined through
information obtained from market sources and management estimates.

(l) Recapitalization

On June 13, 1996, the Company's Board of Directors authorized 5,000,000
shares of preferred stock and declared a 13-for-1 stock split of the Company's
common stock, effected as a dividend for all common stockholders of record as of
June 20, 1996. All share and per share amounts of common stock for all periods
presented have been retroactively adjusted to reflect the stock split.

(m) Initial Public Offering

Effective August 6, 1996, the Company completed it's initial public
offering (the "IPO") of 1,495,000 shares of common stock for $8.50 per share.
The sale of common stock resulted in net proceeds to the Company of
approximately $10,365,000, after deducting all expenses related to the IPO.

(n) Interim Financial Statements

The accompanying consolidated statements of operation and cash flow for the
nine months ended September 30, 1995 is unaudited but, in the opinion of
management, include all adjustments (considered normal and recurring with the
exception of the noncash interest charges (see Note (7) and (11)) necessary for
a fair presentation of results for this interim period. The results of
operations for the nine months ended September 30, 1996 is not necessarily
indicative of results to be expected for the fiscal year ending December 31,
1996.

(3) ACQUISITION OF CAMBRIDGE DIAGNOSTICS

On November 30, 1994, the Company acquired all outstanding stock of
Cambridge Diagnostics for a nominal value and concurrently acquired
substantially all of the assets and assumed certain liabilities of Cambridge
Diagnostics. As consideration, the Company paid $2,076,727 in cash (including
acquisition costs) and assumed $1,115,067 of liabilities. In connection with
this acquisition, the Company also acquired 49% of Cambridge Affiliate and
entered into various contractual agreements (see Note 10(c)). This transaction
was accounted for as a purchase, and accordingly, the results of Cambridge
Diagnostics since November 30, 1994 are included in the accompanying
consolidated financial statements. The aggregate purchase price of $3,191,794
was allocated based on the fair value of tangible assets acquired as follows:

<TABLE>
<S> <C>
Current assets........................................... $1,766,960
Property and equipment................................... 1,424,834
----------
$3,191,794
==========
</TABLE>

F-10
<PAGE> 110

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table presents selected pro forma financial information for
the Company and Cambridge Diagnostics assuming the companies had combined at the
beginning of 1994.

<TABLE>
<CAPTION>
1994
(UNAUDITED)
-----------
<S> <C>
Pro forma net revenues.................................. $ 5,254,806
-----------
Pro forma net loss...................................... $(5,229,494)
-----------
Pro forma net loss per common and common
equivalent share...................................... $ (.99)
-----------
Pro forma weighted average common and common equivalent
shares outstanding.................................... 5,284,957
-----------
</TABLE>

Pro forma results are not necessarily indicative of either actual results
of operations that would have occurred had the acquisition been made at the
beginning of 1994 or of future results. The results of Cambridge Diagnostics for
the year ended December 31, 1995 and the nine months ended September 30, 1996
are included in the Company's consolidated statements of operations.

(4) INVESTMENT IN INVERNESS MEDICAL LIMITED

On May 31, 1995, the Company invested approximately $1,588,000 to fund
initial operations and to acquire a 50% interest in Inverness. Inverness
(formerly named Hebocraft Limited) was founded on November 1, 1994 and had no
significant activities, assets or liabilities at the time of the Company's
investment. Inverness & Nairn Local Enterprise Company ("INLEC") holds the
remaining 50% interest in Inverness and also paid in $1,588,000 for its
interest. The Company holds 1,000,000 ordinary shares of stock, while INLEC
holds 1,000,000 shares of 6% Cumulative Redeemable Preference Shares (the
"Preference Shares"). This investment is consolidated by the Company due to its
ownership of 100% of Inverness' ordinary shares. The Preference Shares held by
INLEC (including cumulative dividend) are reflected in the accompanying
consolidated balance sheets as mandatorily redeemable preferred stock of a
subsidiary.

The Preference Shareholders are entitled to receive, out of funds legally
available, a cumulative annual dividend of approximately $0.095 per share,
payable annually on April 30, beginning in 1996. At the option of the Company
and subject to certain limitations on each redemption, the Preference Shares may
be redeemed for approximately $1.67 per share, plus any accrued and unpaid
dividends. The Company must redeem all 1,000,000 Preference Shares by May 31,
2000. If the Company cannot legally redeem the Preference Shares on that date,
it must redeem the shares as soon as legally permissible at a price of
approximately $1.91 per share plus any accrued and unpaid dividends. Upon
liquidation of Inverness, the Preference Shareholders are entitled to receive
approximately $1.59 per share, plus any accrued and unpaid dividends;
thereafter, the ordinary stockholders shall equally share with the Preference
Shareholders in the remaining assets to be distributed. The Preference
Shareholders do not hold any voting rights.

Under a related agreement, Highlands and Islands Enterprise ("HIE"), a
party related to INLEC, constructed a 50,000-square-foot production facility for
Inverness to use for manufacturing its products. Inverness has entered into a
20-year facility lease, with an option to purchase. The rent due under this
lease will be approximately $520,000 per year, subject to increases each five
years, dependent upon then-current market rates, as defined. Inverness is not
obligated to pay rent for the first two years of the lease. The Company is
guarantor to HIE for these payments if Inverness defaults on its payments.

INLEC has contracted to fund up to L2,100,000 British Pounds Sterling
(approximately $3,061,000 at September 30, 1996) to Inverness for the purpose of
outfitting the facility with required equipment, providing training for the
Inverness work force and certain other defined costs. These funds shall be
permanently invested in Inverness, so long as no events of default by Inverness
occur within five years of the funding.

F-11
<PAGE> 111

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Events of default are defined as the insolvency of Inverness, defined changes in
ownership of Inverness and certain other similar related criteria. Should a
default occur within five years of the funding by INLEC to Inverness, the
Company will be liable to INLEC for a declining portion, as defined, of the
amounts paid by INLEC. As of September 30, 1996, Inverness has received
approximately $2,673,000 from INLEC.

Inverness recognizes as revenue the funded amounts relating to the facility
and equipment over the estimated useful life of the facility and equipment and
amounts related to training and other costs based on when such costs are
incurred. Inverness recognized grant revenue of approximately $216,000, $0 and
$1,036,000 during the year ended December 31, 1995 and the nine months ended
September 30, 1995 and 1996, respectively, which are included in grants and
other revenues in the accompanying consolidated statements of operations.
Unearned amounts of approximately $1,637,000 at September 30, 1996 are included
in deferred revenue in the accompanying consolidated balance sheets

(5) INVESTMENT IN ORGENICS

On December 23, 1995, the Company and Orgenics entered into an Investment
and Loan Agreement whereby the Company purchased a $1,000,000, 18-month,
unsecured, interest-bearing debenture that is convertible into redeemable
preferred shares of Orgenics (the "Debenture"). Concurrent with the issuance of
the Debenture, the Company provided guaranties (in the form of letters of
credit) of $200,000 on the debt of Orgenics' French subsidiary to two French
banks, which is included in other assets in the accompanying consolidated
balance sheet. The Debenture accrues interest at the LIBOR rate (5 7/16% at
September 30, 1996) plus 2%. Upon a conversion event, as defined, the principal
amount together with accrued interest will convert into 20% of the then issued
and outstanding share capital of Orgenics.

Two investment limited partnerships, Medica Investment (Israel) L.P. and
Medica Investment (U.S.) L.P. (collectively "Medica"), contributed a total of
$500,000 in cash toward the purchase of the Debenture. A director of the Company
is a partner of MVP Ventures, which serves as the general partner of both Medica
Investment (Israel) L.P. and Medica Investment (U.S.) L.P. On April 25, 1996,
the Company exercised its right to acquire Medica's interest in the Debenture
for 135,421 shares of common stock; the Company issued such shares on May 7,
1996. Accordingly, the Company will receive all of the Orgenics shares upon
conversion of the Debenture. The Company has recorded the Orgenics Debenture as
an asset and had also recorded a convertible payable for $500,000 related to the
investment made by Medica as a long-term liability in the accompanying
consolidated balance sheet prior to the Company's acquisition of Medica's
interest in the Debenture.

The Company has also entered into option purchase agreements (the "Option
Agreements") with all of the individual stockholders of Orgenics and Orgenics
International Holdings B.V. ("Orgenics International"), a Dutch holding company
whose only material asset is its investment in Orgenics. Each Option Agreement
provides a put option on the part of the stockholders to sell to the Company and
a call option on the part of the Company to purchase from the stockholders (the
"Optionee"). The call option is exercisable at any time prior to August 7, 1999.
The put option shall not be exercisable until the closing of one or more public
offerings of the Company with aggregate gross proceeds of at least $15,000,000.
Upon exercise of either the put or call options discussed above, the Company
would effectively own 100% of Orgenics.

In October 1996, the Company acquired a 57.1% direct and indirect equity
interest in Orgenics as a result of the conversion of the Debenture and cash
payment of approximately $7,000,000 for the purchases of outstanding shares of
Orgenics and Orgenics International. The Company estimates that it will pay
additional consideration totaling approximately $9,307,000 in cash and common
stock for substantially all the remaining shares in Orgenics and Orgenics
International pursuant to the exercise of the Option Agreements.

F-12
<PAGE> 112

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

required to pay for each share of Orgenics that it acquires consideration equal
to 1.5 times Orgenics' gross revenues per share (on a fully diluted basis as of
the exercise date, giving effect to the conversion of the Debenture) during the
most recent four fiscal quarters immediately preceding the date of exercise
(December 31, 1996, based on the Company's current intentions). However, if
certain performance goals are met by Orgenics, the multiple would increase to
1.75 times. The Company believes these performance goals will be met during the
applicable period. Accordingly, the Company estimates that the amount of the
consideration payable for the Orgenics and Orgenics International shares
remaining to be acquired will be approximately $9,307,000. To the extent that
any put or call options under the Option Agreements are not exercised prior to
March 10, 1997, the gross revenues multiple will be increased as defined in the
agreement.

The consideration for the Orgenics shares purchased pursuant to the Option
Agreements is payable by the Company, at the election of each Optionee, entirely
in cash, entirely in common stock or 50% in cash and 50% in common stock. After
August 7, 1997, the consideration payable pursuant to a put or call would be 50%
in cash and 50% in common stock. Although the Company considers it likely that
the Orgenics Acquisition will be completed prior to March 31, 1997, the Company
is not able to predict when the acquisition will be completed. Moreover, because
the amount of the consideration to be paid pursuant to the Option Agreements is
a function of the date on which the options are exercised and the performance of
Orgenics during the four fiscal quarters preceding such exercise, the Company is
not presently able to determine the total amount of such consideration that will
be payable. Assuming the exercise of the call option prior to March 10, 1997 and
that the Orgenics and Orgenics International Stockholders elect to receive the
consideration in the form of 50% cash and 50% common stock, the Company would
pay approximately $4,654,000 in cash and issue approximately 368,600 shares of
common stock, (based on a market price of $12.625 per share of common stock and
Orgenics' estimated revenues for the four fiscal quarters ended December 31,
1996. In addition, the Company has granted options to purchase up to 85,800
shares of common stock having a fair market value of $1,056,000 (note 11(b)) and
will incur direct acquisition costs of approximately $100,000.

In the event that the Company does not exercise its call option prior to
March 10, 1997, the purchase price could be substantially greater, based on the
gross revenues of Orgenics, the multiple to be used in calculating the purchase
price or both. See "Business -- Strategic Transactions -- Orgenics Acquisition."
Accordingly, the Company may be required to raise additional financing, offer
additional shares to the Orgenics and Orgenics International stockholders or
both in order to pay the greater purchase price. There can be no assurance that
the Company will be able to raise such additional financing on terms favorable
to the Company, if at all. In addition, the per share price of the Company's
common stock could vary significantly from the market price of $12.625. Such
variations would impact the number of shares common stock the Company would be
required to issue as consideration.

The Company has granted certain registration rights with respect to the
shares of common stock issued pursuant to the Option Agreements.

For financial information reflecting the Orgenics Acquisition on a pro
forma basis, along with the Nutritional Supplement Lines Acquisition (see Note
18) and certain other events, see the Company's Unaudited Pro Forma Combined
Condensed Financial Statements beginning on page F-30.

(6) LINE OF CREDIT

During 1994, the Company entered into an agreement for a demand line of
credit with a bank. This line of credit was established to finance the
acquisition of Cambridge Diagnostics, as discussed in Notes 1 and 3. The Company
included a certificate of deposit as a component of its assets collateralizing
this line of credit. This certificate of deposit has been classified as
restricted cash as of December 31, 1994 in the accompanying consolidated balance
sheet. During November 1995, the Company paid off this line of credit with a
portion of the proceeds from the issuance of notes payable (see Note 7), and the
line subsequently expired. The President of the Company had personally
guaranteed the line of credit.

F-13
<PAGE> 113

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(7) NOTES PAYABLE

In 1995, the Company issued notes payable (the "Cambridge Diagnostics
Notes") and common stock warrants (the "Cambridge Diagnostics Warrants") to
individual investors for gross proceeds of $3,030,000. Of this amount,
$3,000,000 relates to the Cambridge Diagnostics Notes, which bear interest at
10% and are due on March 31, 1998. As of September 30, 1996, $825,000 of such
notes were due to certain directors and officers of the Company. Upon default by
the Company, as defined, and the vote of at least 51% (based on the total
principal value of the Cambridge Diagnostics Notes) of the noteholders, the
noteholders may demand full or partial payment of the notes plus accrued
interest. The Company closed on this financing in several installments from
March 1995 through August 1995.

The remaining $30,000 represents amounts paid to the Company in exchange
for warrants to purchase shares of common stock. The number of Cambridge
Diagnostics Warrants is calculated as 69% of the net sales of Cambridge
Diagnostics for the fiscal year preceding the repayment of the Cambridge
Diagnostics Notes divided by $32.87. The Company would have issued 1,142,635
shares of the Company's common stock based on net sales of Cambridge Diagnostics
for 1995, if the notes were repaid prior to December 31, 1996. On December 31,
1996, the Company entered into agreements with all the principal noteholders of
the Cambridge Diagnostics Notes, canceled the number of warrants that would have
been issued under the above formula and effectively fixed the ultimate number of
shares of the Company's common stock to be issued at 1,142,635, of which 314,226
will be exercisable by certain directors and officers of the Company. The
warrants may be exercised for no additional consideration upon the earlier of
January 15, 2000 or the date on which a change in control of the Company (as
defined) occurs. Accordingly, the Company has recorded noncash interest charges
of approximately $4,236,000, $2,901,000, and $14,096,000 for the year ended
December 31, 1995 and the nine months ended September 30, 1995 and 1996,
respectively, which represents the difference between the fair market value of
the underlying common stock and the exercise price of the Cambridge Diagnostics
Warrants. During the fourth quarter, the Company will reverse approximately
$3,856,000 of noncash interest expense related to the difference between the
fair market value of the common stock on the date that the terms of the
Cambridge Diagnostics Warrants became fixed ($12.625) and the fair market value
of the common stock as of September 30, 1996 ($16.00). The Company will also
record approximately $394,000 of interest expense relating to the additional
warrants to be issued, as discussed below, in accordance with SFAS No. 123,
Accounting for Stock-Based Compensation.

In order for the Company to obtain approval for listing of its common stock
on the American Stock Exchange, the Company entered into agreements with certain
holders of $2,750,000 in principal amounts of the Cambridge Diagnostic Notes,
pursuant to which such holders agreed that such aggregate principal amount,
together with any accrued but unpaid interest thereon, would automatically
convert into shares of common stock if the Company's stockholders' equity as of
November 30, 1996 is less than $4.0 million. If the Company met the
stockholders' equity threshold, the Cambridge Diagnostics Notes would be due and
payable on December 31, 1996. As consideration for the foregoing, each holder
who agreed to these terms will receive additional consideration in an amount
equal to 5.0% of the principal amount of the Cambridge Diagnostics Notes held by
such holder. The Company's stockholders' equity was greater than $4.0 million as
of November 30, 1996; accordingly, the $2,750,000 principal amount and $137,500
of additional consideration became due. On December 31, 1996, the Company
entered into an agreement with substantially all the principal holders of the
Cambridge Diagnostic Notes, pursuant to which such holders agreed to defer
repayment of the principal amount of their notes until January 15, 1998 and
effectively fix the ultimate number of shares of Common Stock to be issued. As
consideration for the foregoing, the Company agreed to issue five-year warrants
to purchase an aggregate of 54,090 shares of common stock that are fully
exercisable at an exercise price of $12.875 to such holders, of which 14,999
will be exercisable by certain directors and officers of the Company. If the
notes are not paid by June 30, 1997 and the Company has not sold shares of
common stock on or before June 30, 1997 pursuant to a registration statement on
form SB-2 (or a similar form), then the Company will issue additional five-year
warrants to purchase an aggregate of 27,046 shares of

F-14
<PAGE> 114

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

common stock that are fully exercisable at an exercise price of $12.875 to such
holders, of which 7,500 will be exercisable by certain directors and officers of
the Company.

In connection with Selfcare's financing of the acquisition of Cambridge
Diagnostics, Cambridge Diagnostics entered into a Guarantee and Debenture, dated
August 30, 1995, with USB '93 Technology, Inc. ("USB '93, Inc."), a corporation
whose president and chief executive officer is a director of the Company.
Pursuant to the Guarantee and Debenture, USB '93, Inc. became the guarantor of
an aggregate of $3.0 million in notes issued by SelfCare to certain investors.
In return for this guarantee, Cambridge Diagnostics granted USB '93, Inc. a
security interest in its machinery, equipment, securities, goodwill and uncalled
capital, patents, trademarks, patent applications, brand names, copyrights, any
and all rights acquired by Cambridge Diagnostics as a licensee or sub-licensee,
and all present and future benefit, right, title and interest in any and all
moneys, payments and proceeds of insurance presently maintained or obtained in
the future.

The Company issued 119,834 shares of common stock to U.S. Boston Capital
Corporation, the president of which is a director of the Company, for its
services as placement agent on the Cambridge Diagnostics Notes. Additionally,
the Company issued 92,950 shares of common stock to the Company's President for
his personal guarantee of these notes. The total fair value of the shares issued
to both the President and USB '93 ($101,000 and $79,000, respectively) have been
recorded as deferred financing costs, which are included in other assets in the
accompanying consolidated financial statements, and are being amortized over the
original life of the Cambridge Diagnostics Notes.

(8) LIFESCAN ALLIANCE

On November 10, 1995, the Company entered into a master agreement with JJDC
and LifeScan, an affiliate of JJDC (the "Master Agreement"). The Master
Agreement includes an equity investment agreement, a glucose distribution
agreement and a summary of terms to be included in other distribution
agreements.

The equity investment agreement calls for up to a total of $14,000,000 of
advances from JJDC. The advances convert into a maximum of 480,194 shares of the
Company's common stock, representing 5% of the Company's common stock on a fully
diluted basis, upon the occurrence of certain events. JJDC made the initial
advance of $7,000,000 upon closing, which the Company recorded as a convertible
advance in the accompanying consolidated balance sheets. On May 21, 1996, the
Company met certain Food and Drug Administration (the "FDA") filing criteria, as
set forth in the Master Agreement, and accordingly, the Company received
approximately $6,700,000 from the second advance. As of both December 31, 1995
and September 30, 1996, the Company had not met either of the two conversion
events nor had JJDC issued an acceleration notice; accordingly, the advances
have been recorded as a convertible advances in the accompanying consolidated
balance sheet in accordance with the repayment terms set forth in the agreement
(quarterly installments over a three-year period). There is no contractual
provision for interest on the advances unless the Company fails to make payments
on a timely basis.

The Master Agreement requires LifeScan to pay the Company an additional
$7,000,000 as a success fee when the Company receives clearance from the FDA
regarding the glucose system. LifeScan, as a condition of payment, may, at its
option, require the Company to enter into a glucose distribution agreement (the
"Distribution Agreement"). The glucose Distribution Agreement, which will run
through December 31, 2010, sets certain minimum purchase requirements which, if
not met by LifeScan, render the exclusivity provisions null and void.

In October 1996, the Company entered into a Distribution Agreement with
LifeScan pursuant to which LifeScan will distribute an advanced version of the
Company's proprietary electrochemical blood glucose monitoring system (the "New
System"). In connection with this Distribution Agreement, LifeScan paid the
Company the $7,000,000 success fee described above, and the convertible advances
converted into 201,622

F-15
<PAGE> 115

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

shares of common stock and the right to receive, for no additional
consideration, up to 278,572 additional shares based on the number of shares of
Common Stock issued pursuant to the exercise of those options and warrants that
were outstanding as of November 10, 1995. The New System must receive FDA
clearance before sales of the product can commence in the United States.

The Master Agreement also covers two other Company products. Upon FDA
acceptance of the Company's filing for each of these products, LifeScan may, at
its sole discretion, pay the Company $3,000,000 and require the Company to enter
into a distribution agreement for each product, under the terms set forth below.
If LifeScan elects to make the $3,000,000 payment and the product receives FDA
clearance, then LifeScan shall make an additional payment of $2,000,000. If
LifeScan makes the $3,000,000 payment and the Company does not receive FDA
clearance within one year of the payment, the $3,000,000 must be repaid in eight
quarterly installments without interest (provided payments are made in a timely
manner), and the related distribution agreement will terminate.

Under the Distribution Agreement, SelfCare has agreed to indemnify LifeScan
for any claims that the New System infringes on any patents. As a condition for
entering into the Distribution Agreement, LifeScan was entitled to receive and
received opinions of patent counsel (the "Patent Opinions") to the effect that
the New System does not infringe patents held by others. In entering into the
Distribution Agreement, LifeScan requested and the Company agreed that,
notwithstanding the Patent Opinions, the Company and LifeScan will jointly
pursue licensing negotiations with respect to one U.S. patent and its foreign
counterparts, and that LifeScan may, if it elects, obtain a license of these
patents. The Company intends to seek a judgment in one or more of the applicable
jurisdictions holding the patents invalid or not infringed by the New System.
Unless the Company obtains such a judgment within two years of the license date
and such judgment is not reversed on appeal, the Company will be obligated to
reimburse LifeScan for all royalties incurred under the license. Although the
Company believes that it will obtain such a judgment on a timely basis, there
can be no assurance of this.

(9) COMMITMENTS AND CONTINGENCIES

(a) Operating Leases

The Company has operating lease commitments for certain of its facilities
and equipment that expire through 2026. The following schedule outlines future
minimum annual rental payments under these leases at September 30, 1996:

<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
------------ ----------
<S> <C>
1996 (3 months ended)................................... $ 111,000
1997.................................................... 479,000
1998.................................................... 942,000
1999.................................................... 906,000
2000.................................................... 701,000
Thereafter.............................................. 12,728,000
-----------
$15,867,000
===========
</TABLE>

Rent expense relating to these operating leases was approximately $51,000,
$315,000, $209,000 and $257,000 for the years ended December 31, 1994, 1995 and
for the nine months ended September 30, 1995 and 1996, respectively.

(b) Industrial Development Authority of Ireland Grants

Prior to the Company's acquisition of Cambridge Diagnostics (Note 3),
Cambridge Diagnostics received certain capital expenditure and revenue grants
from the Industrial Development Authority of Ireland (the

F-16
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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

"IDA"). Cambridge Diagnostics recognizes revenue on the capital expenditure
grants over the estimated useful lives of the related assets and on revenue
grants as the related costs are incurred.

As a condition to retaining the grants, the IDA requires Cambridge
Diagnostics to maintain a certain number of employees in Ireland. The IDA also
prohibits the Company from disposing of assets or terminating business
activities that were funded by the grants within 10 years of such grants. As of
September 30, 1996, Cambridge Diagnostics was not in compliance with the
employment provisions of the grants. As a result, the IDA could require
Cambridge Diagnostics to repay capital expenditure and revenue grants totaling
774,000 Irish pounds (approximately $1,239,000 at September 30, 1996). The IDA
has not historically pursued its right to recoup these grants from Cambridge
Diagnostics and, as of September 30, 1996, Cambridge Diagnostics management
believes that the IDA is unlikely to in the near term. Accordingly, as
management believes that repayment is not probable, Cambridge Diagnostics has
not provided for a potential liability for the repayment of these grants.

If the IDA did pursue its rights to recoup these grants, it could have a
material adverse effect on the Company and Cambridge Diagnostics.

From time to time, the Company may be exposed to litigation arising out of
its products and operations. The Company is not engaged in any legal proceedings
that are expected, individually or in the aggregate, to have a material adverse
effect on the Company's financial condition or results of operations.

Pasteur Sanofi Diagnostics licensed the Pasteur HIV Technology to Cambridge
Biotech and its affiliates, including Cambridge Affiliate, relating to patents
and proprietary rights underlying the Company's HIV-related products. The
licenses of the Pasteur HIV Technologies to Cambridge Biotech are nonexclusive
and cover diagnostic test kits in finished form embodying the Pasteur HIV
Technologies. The territorial scope of the licenses is worldwide, with the
exception of exclusive rights which Pasteur Sanofi Diagnostics asserted to have
granted in the Pasteur HIV Technologies to Genetic Systems Corporation ("Genetic
Systems") in the United States, Canada, Mexico, Australia, New Zealand and India
(the "Excluded Countries"). However, the licenses provided that, to the extent
that Pasteur Sanofi Diagnostics recovers the right to practice the patents
underlying the Pasteur HIV Technologies in the Excluded Countries, Cambridge
Biotech is entitled to nonexclusive rights in such technology in such countries.
In 1990, Pasteur Sanofi Diagnostics acquired ownership of Genetic Systems,
whereupon Cambridge Biotech commenced selling products incorporating the Pasteur
HIV Technologies in the United States. These activities were challenged in a
patent infringement lawsuit filed in bankruptcy court in March 1995 by Institut
Pasteur, the minority stockholder of Pasteur Sanofi Diagnostics, and Genetic
Systems. In September 1995, the bankruptcy court ruled in favor of Cambridge
Biotech on this issue, and Institut Pasteur and Genetic Systems subsequently
filed an appeal in district court. The date for the appeal hearing is unknown.
If the bankruptcy court decision were reversed on appeal, the territories to
which Cambridge Affiliate could sell HIV-related products would be limited and
this could have a material adverse effect on the Company. See
"Business -- Patent and Patents and Proprietary Rights."

Pasteur Sanofi Diagnostics has notified Orgenics that as a result of
Orgenics' use of certain peptides, Orgenics may be liable for infringement of
certain patents held by Institut Pasteur and under which Pasteur Sanofi
Diagnostics holds an exclusive license. Orgenics has informed the Company that
it is not aware of any other threatened litigation that would have a material
adverse effect on Orgenics or its business.

F-17
<PAGE> 117

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

informed Enviromed that, due to the failure of Enviromed and Cranfield to
perform their obligations under the Disputed Enviromed Agreements, it disputes
Enviromed's ownership of the common stock held of record by Enviromed. On July
5, 1996, Enviromed filed suit against the Company and the representatives of the
underwriters of the Company's Initial Public Offering (the "IPO
Representatives") in United States District Court for the Southern District of
New York alleging breach of a registration rights agreement relating to the
common stock held of record by Enviromed. Enviromed claimed that its rights
under a registration rights agreement were breached in connection with the
Initial Public Offering and requested damages, injunctive relief and a
declaratory judgment that Enviromed is the lawful owner of the shares. The
Company has filed counterclaims against Enviromed arising out of the failure of
Enviromed and Cranfield to perform their obligations under the Disputed
Enviromed Agreement and is contesting Enviromed's claims vigorously. On October
18, 1996, the case was ordered transferred to the United States District Court
for the District of Massachusetts. The Company is not able to estimate the
amount of damages, if any, which might result from Enviromed's claims against
the Company, but believes that any such damages would not be in an amount that
would have a material adverse effect on the Company. The Company agreed to
indemnify the IPO Representatives for any losses they might incur, including
reasonable attorney's fees and expenses, as a result of the Enviromed lawsuit.
On November 15, 1996, Enviromed filed a dismissal without prejudice of its
claims against the IPO Representatives.

(d) Agreement with Princeton BioMeditech Corporation

On March 15, 1996, the Company entered into an agreement with Princeton
BioMeditech Corporation ("Princeton") that provides for the development of
certain specific infectious disease tests by Princeton for marketing by Selfcare
on a nonexclusive basis. The agreement also grants the Company an option to
market under its own brand name other infectious disease tests and certain other
types of tests developed by Princeton on terms to be agreed. Pursuant to the
agreement, the Company is also obligated to purchase $6,900,000 of certain test
kits from Princeton through 1998 and will provide $500,000 to finance the
purchase of equipment, which will remain the property of the Company, to be used
in producing test kits for the Company. As of September 30, 1996, the Company is
obligated to purchase up to $2,177,000 and $3,030,000 of certain test kits from
Princeton in 1997 and 1998, respectively. The Company has paid $250,000 of the
above-mentioned financing in August 1996, and the balance of the financing was
paid subsequent to September 30, 1996. The agreement also provides that the
Company will provide funding for the development by Princeton of a birth control
aid, with respect to which the Company will have exclusive worldwide marketing
rights.

(e) Agreement with Nova Biomedical

In September 1996, the Company entered into an agreement with Nova
Biomedical Corp., a Massachusetts corporation ("Nova"), pursuant to which Nova
will perform the final packaging of early pregnancy and ovulation test kits for
the Company. The initial term of the agreement expires on December 31, 1998 and
may be automatically renewed for additional and successive terms of one year
thereafter unless either party gives written notice of its intention not to
renew the agreement. Under the manufacturing agreement, the Company has agreed
to purchase a minimum quantity of specified products from Nova. The minimum
amount due under the agreement as of September 30, 1996 was $1,620,000.

(f) Employment Agreements

The Company has employee agreements with several of its executive officers.
The terms of the agreements cover option grants, noncompete provisions, and
severance arrangements.

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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(10) RESEARCH, MANAGEMENT AND MANUFACTURING AGREEMENTS

(a) U.S. Boston Technology Associates Limited Partnership

On December 30, 1993, the Company entered into a purchase and sale
agreement with USB '93 for the sale of the Company's core immuno-assay
technology (the "Technology") for $1,360,000. USB '93 is a limited partnership,
the general partner of which is USB '93 Inc., a corporation whose president and
chief executive officer is a director of the Company. This director beneficially
owns approximately 20% of the Company on a fully diluted basis. The Company may
repurchase the Technology for $6,000,000.

The Company and the USB '93 also entered into a license and development
agreement on December 30, 1993 whereby the Company leased back the rights to the
Technology from the USB '93 in consideration for three warrants to purchase up
to an aggregate of 438,750 shares of the Company's common stock (see Note 11(c))
and the payment of 1.5% of gross sales and 22.5% of royalty income, up to an
aggregate total payment of $6,000,000. This agreement is immediately void if the
Company decides to repurchase the rights to the Technology according to terms of
the Technology purchase and sale agreement noted above. Pursuant to this
agreement, the Company has charged approximately $35,000, $104,000, $73,000 and
$129,000 to cost of sales in the accompanying consolidated statements of
operations for the years ended December 31, 1994 and 1995 and the nine months
ended September 30, 1995 and 1996, respectively.

The income from the sale of technology has been included in deferred
revenue in the accompanying consolidated balance sheets and will be recognized
on the earlier of (1) a straight-line basis over a period of six years, the
Technology's estimated useful life, or (2) will be eliminated upon the
repurchase of the Technology, if the Company opts to repurchase the Technology,
as discussed above. The Company has recognized approximately $227,000, $227,000,
$170,000 and $170,000 as grants and other revenue in the accompanying
consolidated statement of operations for the years ended December 31, 1994 and
1995 and the nine months ended September 30, 1995 and 1996, respectively.
Accordingly, approximately $737,000 is included in deferred revenue in the
accompanying consolidated balance sheet as of September 30, 1996.

(b) University College of Wales/Aberystwyth

On February 10, 1992, the Company entered into a research and development
contract with University College of Wales/Aberystwyth, a corporation organized
and existing under the laws of England and Wales, whereby the Company obtained
the right to develop and market certain technology in consideration for a
royalty stream of 1.5% of gross revenues generated from the technology. The
agreement will remain in effect for the duration of the life of any patent
issued with respect to the technology, or any improvements thereof, unless
terminated pursuant to provisions of the agreement. As of September 30, 1996,
the Company had not generated any revenues related to this technology and,
therefore, did not incur any royalty expense for the year then ended.

In connection with the Company's November 30, 1994 acquisition of Cambridge
Diagnostics, the Company also acquired a 49% interest in Cambridge Affiliate for
$1.00. The Company is accounting for this investment under the equity method.
During the period from November 30, 1994 to December 31, 1994, Cambridge
Affiliate had no significant activity. As discussed in Note 3, the Company
entered into various agreements upon the closing of its purchase of Cambridge
Diagnostics and its investment in Cambridge Affiliate. Pursuant to these
agreements, Cambridge Diagnostics owes Cambridge Biotech royalties ranging from
4% to 6% of certain net sales, as defined. Under a manufacturing agreement
between Cambridge Diagnostics, Cambridge Affiliate and Cambridge Biotech,
Cambridge Diagnostics manufactures certain products for Cambridge Affiliate, for
which Cambridge Affiliate pays Cambridge Diagnostics 75% of the net proceeds of
manufactured products, less 110% of the royalty payments payable to Cambridge
Biotech by

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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Cambridge Diagnostics, as noted above. Royalty payments made by Cambridge
Diagnostics to Cambridge Biotech during the year end December 31, 1995 and nine
months ended September 30, 1995 and 1996 were approximately $45,000, $26,000 and
$40,000, respectively, and Cambridge Diagnostics received approximately
$1,914,000, $1,238,000 and $1,311,000 during the year ended December 31, 1995
and the nine months ended September 30, 1995 and 1996, respectively, from
Cambridge Affiliate under the manufacturing agreement.

Cambridge Diagnostics, Cambridge Biotech and Cambridge Affiliate have
entered into a management agreement whereby Cambridge Diagnostics receives from
Cambridge Affiliate 5% of Cambridge Affiliate's net proceeds from defined
products, less 110% of certain royalty payments, payable by Cambridge Biotech to
another third party under a previous arrangement. Cambridge Diagnostics received
approximately $128,000, $83,000, and $87,000 from Cambridge Affiliate during the
year ended December 31, 1995 and the nine months ended September 30, 1995 and
1996, respectively, under this management agreement. Cambridge Affiliate and
Cambridge Diagnostics have also entered into an agreement whereby Cambridge
Affiliate will pay to Cambridge Diagnostics defined commissions on Cambridge
Diagnostic's sales of defined products. Cambridge Diagnostics received
approximately $510,000, $330,000 and $349,000 from Cambridge Affiliate during
the year ended December 31, 1995 and the nine months ended September 30, 1995
and 1996, respectively, under this sales agreement.

On April 8, 1996, Cambridge Biotech announced that it had entered into an
agreement to sell its diagnostics business, including its interest in Cambridge
Affiliate, to bioMerieux Vitek, Inc. Recently, in its reorganization plan filed
with the bankruptcy court, Cambridge Biotech has indicated its intention to
exercise its rights under the Bankruptcy Code to assume two contracts and reject
one contract with Syva Company ("Syva"). One of the contracts proposed to be
assumed by Cambridge Biotech is a license that extends to Cambridge Affiliate
and covers certain technology used in the manufacture of the HIV rapid test
device ("RTD") produced by Cambridge Diagnostics. Syva has indicated its
intention to object to Cambridge Biotech's assumption of the license unless
Cambridge Biotech assumes all its contracts with Syva, or makes alternative
acceptable arrangements with Syva's parent, Behring Diagnostics, Inc. If the
license were terminated, the Company would be required to obtain a license
directly from Syva. The failure to obtain such license could have a material
adverse effect on the Company.

(d) Manufacturing Agreement

In September 1994, the Company entered into an agreement with a third party
(the "Licensor"), a subsidiary of Enviromed, a related party (see Note 2(a)),
under which it paid the Licensor approximately $468,000 in consideration for
receiving exclusive manufacturing rights to defined products. The Company
recorded this amount as an operating expense in the accompanying consolidated
statement of operations. The products manufactured under the agreement will be
sold to the Licensor at 95% of the fair market value of the products, the
remaining 5% reflecting a royalty that would otherwise be payable to the
Licensor based on the full fair market value of the net sales.

(11) STOCKHOLDERS' EQUITY

(a) Stock Option Plans

In 1992, the Company adopted the 1992 Stock Plan (the "1992 Plan"), which
provides for granting to directors, officers, employees and consultants of the
Company, at the discretion of the Board of Directors, incentive stock options,
nonqualified stock options and stock awards for the purchase of up to 10,725,000
shares of common stock under terms similar to those in the 1996 Plan, as
described below. In June 1996, the Company amended the 1992 Plan to provide that
no additional stock options would be granted under the 1992 Plan. As of
September 30, 1996, 382,239 options remain outstanding.

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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In 1994, the Company adopted the 1994 Incentive and Nonqualified Stock
Option Plan (the "1994 Plan"), which provides for the granting of up to
3,380,000 shares of common stock under terms similar to those in the 1996 Plan,
as described below. In June 1996, the Company amended the 1994 Plan to provide
that no additional stock options would be granted under the 1994 Plan. As of
September 30, 1996, 3,004,105 options remain outstanding.

In 1996, the Company adopted the 1996 Stock Option and Grant Plan (the
"1996 Plan"). The 1996 Plan may be administered by the Board of Directors or by
an Option Committee, as defined (in either case, the "Administrator"), to grant
incentive stock options, nonqualified stock options, restricted stock,
unrestricted stock, stock appreciation rights ("SAR"), performance share awards
and dividend equivalent rights. The Company has reserved a total of 1,000,000
shares of common stock for future grant under the 1996 Plan. As of September 30,
1996, 798,000 options remain outstanding. The key terms of the amended 1996 Plan
are as follows:

Incentive and Nonqualified Stock Options

The Administrator, at its discretion, may determine the number, term and
exercise price of each option to be granted, except that no option shall have a
term of greater than ten years. Also, incentive stock options may not be granted
at less than fair market value.

Stock Appreciation Right

The Administrator may award a freestanding award or in tandem with a stock
option. Upon exercise of the SAR, the holder will be entitled to receive an
amount equal to the excess of the fair market value on the date of exercise of
one share of common stock over the exercise price per share specified in the
related stock option (or, in the case of a freestanding SAR, the price per share
specified in such right, which price may not be less than 85% of the fair market
value of the common stock on the date of grant) times the number of shares of
common stock with respect to which the SAR is exercised. This amount may be paid
in cash, common stock, or a combination thereof, as determined by the
Administrator. If the SAR is granted in tandem with a stock option, exercise of
the SAR cancels the related option to the extent of such exercise.

Restricted Stock

The Administrator may award shares of common stock to officers, other
employees and key persons subject to such conditions and restrictions as the
Committee may determine. These conditions and restrictions may include the
achievement of certain performance goals and/or continued employment with the
Company through a specified restricted period. The purchase price of shares of
restricted stock will be determined by the Administrator. If the performance
goals and other restrictions are not attained, the employees will forfeit their
awards of restricted stock.

Unrestricted Stock

The Administrator may grant shares that are free from any restrictions
under the 1996 Plan. Unrestricted stock may be issued to employees and key
persons in recognition of past services or other valid consideration.

Performance Share Awards

The Administrator may grant performance share awards to employees or other
key persons entitling the recipient to receive shares of common stock upon the
achievement of individual or Company performance goals and such other conditions
as the Administrator shall determine.

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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Dividend Equivalent Rights

The Administrator may grant dividend equivalent rights, which entitle the
recipient to receive credits for dividends that would be paid if the grantee had
held specified shares of common stock. Dividend equivalent rights may be granted
as a component of another award or as a freestanding award. Dividend equivalents
credited under the 1996 Plan may be paid currently or be deemed to be reinvested
in additional shares of common stock, which may thereafter accrue additional
dividend equivalents at fair market value at the time of deemed reinvestment or
on the terms then governing the reinvestment of dividends under the Company's
dividend reinvestment plan, if any. Dividend equivalent rights may be settled in
cash, shares, or a combination thereof, in a single installment or installments,
as specified in the award. Awards payable in cash on a deferred basis may
provide for crediting and payment of interest equivalents.

Grants to Nonemployee Directors

Each nonemployee director of the Company as of the date of the IPO was
granted an option to purchase up to 12,000 shares of common stock at an exercise
price equal to the IPO price. In addition, each new nonemployee director elected
after the date of the IPO and before November 4, 1996 received an option to
purchase up to 12,000 shares of common stock upon such director's election to
the Board of Directors, at an exercise price equal to the fair market value of
the common stock on the date of grant. After November 4, 1996, options to
nonemployee directors may be granted at the sole discretion of the Board of
Directors. The exercise price of each such Nonqualified Option will be the fair
market value of the common stock on the date of grant. Each Nonqualified Option
granted to Independent Directors shall vest ratably over four years from the
date of grant.

Change of Control Provisions

The 1996 Plan provides that in the event of a "Change of Control" (as
defined in the 1996 Plan) of the Company, all stock options and stock
appreciation rights shall automatically become fully exercisable. In addition,
at any time prior to or after a Change of Control, the Administrator may
accelerate awards and waive conditions and restrictions on any awards to the
extent it may determine appropriate.

(b) Other Stock Options

On August 15, 1995, the Company entered into a stock option agreement (the
"Agreement") with the President of the Company. Under the Agreement, the
President received an option to acquire 520,000 shares of the Company's common
stock. The option vests and becomes exercisable, within a two-year period, if a
liquidity event, such as an initial public offering or the sale of the Company,
occurs; otherwise, the option expires. The exercise price per share is
determined by the liquidity price per share. The exercise price per share will
decrease $1 for every $1 that the liquidity price per share exceeds $5.38 per
share. Accordingly, upon completion of the IPO, the Company has recorded a
compensation charge of approximately $3,240,000 during the nine months ended
September 30, 1996 representing the difference between the exercise price per
share and the fair market value per share at the date of vesting.

On October 17, 1995, the Company entered into stock option agreements with
certain officers and key employees granting them options to acquire up to
253,500 shares of common stock at an exercise price of $1.54 per share. These
shares are exercisable after ten years of continuous employment or earlier if
certain milestones, such as meeting certain financial targets and the
effectiveness of an IPO, are achieved. At the date of grant, the fair market
value per share of the Company's common stock exceeded the exercise price of the
options; therefore, the Company recorded deferred compensation of $250,965
related to this difference at the date of grant. The Company is amortizing the
deferred compensation over one year, as the Company anticipates that such
milestones will be met in September 1996. During the year ended December 31,
1995 and the nine months ended September 30, 1996, the Company recorded
compensation expense of approxi-

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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

mately $52,000 and $188,000, respectively, related to these option grants in the
accompanying consolidated statement of operations.

During the nine months ended September 30, 1996, the Company recorded
compensation expense of approximately $680,000 related to stock options granted
to employees that were contingent on certain goals that have now been met. In
accordance with SFAS No. 123, the Company also recorded compensation expense of
$77,000 for options granted to nonemployees.

On December 29, 1995, the Company entered into stock option agreements with
certain officers and key employees of Orgenics granting them options to acquire
up to 85,800 shares of common stock at an exercise price of $3.69 per share.
These options vest over a four-year period but will not be considered to be
granted until the Company owns at least 51% of Orgenics, which occurred during
October 1996. The difference between the exercise price and the fair market
value price per share of $1,056,000 will be considered part of the purchase
price.

The following is a summary of all stock option activity during the three
years ended December 31, 1995 and the nine months ended September 30, 1996:

<TABLE>
<CAPTION>
NUMBER OF WTD AVG
SHARES OPTION PRICE OPTION PRICE
---------- ------------- ------------
<S> <C> <C> <C>
Options outstanding, December 31, 1993...... 668,473 $ .001-1.538 $1.134
Granted................................... 649,649 1.538-2.528 2.214
Exercised................................. (650) 1.538 1.538
Terminated................................ (189,865) 1.538-2.528 1.559
--------- ------------ ------
Options outstanding, December 31, 1994...... 1,127,607 .001-2.528 1.685
Granted................................... 2,591,056 .001-3.692 2.609
Exercised................................. (27,300) 2.528 2.528
Terminated................................ (308,919) .001-2.528 1.257
--------- ------------ ------
Options outstanding, December 31, 1995...... 3,382,444 .001-3.692 1.945
Granted................................... 205,900 3.690-9.000 8.687
--------- ------------ ------
Options outstanding, September 30, 1996..... 3,588,344 $ .001-9.000 $2.768
--------- ------------ ------
Options exercisable, September 30, 1996..... 2,109,497 $ .001-3.692 $2.190
========= ============ ======
</TABLE>

During the period from October 1, 1996 to December 31, 1996, the Company
granted options to acquire up to 625,000 shares of common stock at exercise
prices ranging from $12.625 to $15.375 per share. In addition, options and
warrants to purchase 51,896 shares of common stock at exercise prices ranging
from $1.538 to $2.528 per share were exercised. Included in the 625,000 options
granted subsequent to September 30, 1996 were 400,000 options granted to the
President of the Company at an exercise price of $13.875. The President's
options vest following seven years of additional employment with the Company.
However, such vesting is subject to acceleration if certain stock price goals
are achieved (as defined) or if the Company is acquired (as defined). Also
included in the 625,000 options granted subsequent to September 30, 1996 were
200,000 options granted at an exercise price of $13.875 to certain other
officers and key employees of the Company. These options will vest at the end of
seven years. These options contain certain performance goals, including goals
based on the Company's budget, stock price, sales, product releases, financing
and technology development, which, if substantially achieved, will cause the
vesting of such options to be accelerated (as defined) or if the Company is
acquired (as defined).

In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, which requires the measurement of the fair value of stock options or
warrants to be included in the statement of income or disclosed in the notes to
the financial statements. The Company has determined that it will continue to

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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

account for stock-based compensation for employees under Accounting Principles
Board Opinion No. 25 and elect the disclosure-only alternative under SFAS No.
123 for options granted in 1996 using the Black-Scholes option pricing model
prescribed by SFAS No. 123. The weighted average assumptions are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, -------------
1995 1995 1996
------------ ---- ----
<S> <C> <C> <C>
Risk-free interest rate................................. 6.3% 6.7% 6.5%

Expected dividend yield................................. -- -- --

Expected lives.......................................... 5 5 5

Expected volatility..................................... 60% 60% 60%
</TABLE>

Had compensation cost for these plans been determined consistent with SFAS
No. 123, the Company's net loss and loss per share would have been reduced to
the following pro forma amounts:

<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, ----------------------------
1995 1995 1996
------------ ----------- ------------
<S> <C> <C> <C> <C>
Net Loss:.................. As Reported $(10,096,903) $(6,612,938) $(26,126,913)
Pro Forma (11,517,942) (7,680,863) (27,895,994)

Net Loss Per Share:........ As Reported $ (1.66) $ (1.10) $ (4.25)
Pro Forma (1.90) (1.27) (4.54)
</TABLE>

Because the method prescribed by SFAS No. 123 has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.

On November 16, 1993, the Company issued a warrant to purchase 279,500
shares of common stock, at an exercise price of $1.54 per share, to the
President of the Company. This price was determined by the Company's Board of
Directors to be fair market value at the date of grant. This warrant was issued
in consideration of the President's guarantee of certain Company loans and is
fully exercisable through November 16, 2013.

As discussed in Note 10(a), on December 30, 1993, the Company issued to the
USB '93 warrants to purchase 438,750 shares of common stock at an exercise price
of $1.54 per share. This price was determined by the Company's Board of
Directors to be fair market value at the date of grant. The warrants are fully
exercisable up to 30 days after the time when the Company fulfills all of its
obligations under its agreements with the USB '93.

In connection with certain sales of common stock in 1994, the Company
issued five-year warrants to purchase up to 174,226 shares of common stock to
those individuals purchasing the common stock. These warrants are fully
exercisable at $2.53 per share.

As discussed in Note 7, on December 31, 1996, the Company entered into
agreement with all the principal noteholders of the Cambridge Diagnostics Notes
and fixed the number of warrants to be issued as 1,142,635 shares of the
Company's common stock, of which 314,226 will be exercisable by certain
directors and officers of the Company. The Cambridge Diagnostic Warrants are
exercisable for no additional consideration on the earlier of January 15, 2000
or the date on which a change in control of the Company (as defined) occurs. In
addition, the Company agreed to issue five-year warrants to purchase an
aggregate of 54,090 shares of common stock, which are fully exercisable at an
exercise price of $12.875 to such holders, of which 27,046 will be exercisable
by certain directors and officers of the Company. In accordance with SFAS No.
123, the Company will record interest expense of approximately $394,000 related
to the grant of these warrants. If the notes are not paid by June 30, 1997 and
the Company has not sold shares of common stock on

F-24
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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

or before June 30, 1997 pursuant to a registration statement on form SB-2 (or a
similar form), then the Company will issue additional five-year warrants to
purchase an aggregate of 27,273 shares of common stock, which are fully
exercisable at an exercise price of $12.875 to such holders, of which 7,499 will
be exercisable by certain directors and officers of the Company.

(d) Employee Stock Purchase Plan

Upon the consummation of the IPO, the Company adopted the Selfcare, Inc.
Employee Stock Purchase Plan (the "Stock Purchase Plan"). The Company has
reserved 250,000 shares of common stock for issuance under the Stock Purchase
Plan. Under the Stock Purchase Plan, eligible employees will be able to purchase
shares of the Company's common stock at 85% of fair market value, as defined,
subject to certain limitations. No shares have been issued under the Stock
Purchase Plan as of September 30, 1996.

(e) Undesignated Preferred Stock

The Board of Directors of the Company is authorized, without further action
of the stockholders of the Company, to issue up to 5,000,000 shares of preferred
stock in classes or series and to fix the designations, powers, preferences and
the relative, participating, optional or other special rights of the shares of
each series and any qualifications, limitations and restrictions thereon as set
forth in the Certificate of Incorporation. Any such preferred stock issued by
the Company may rank prior to the common stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
be convertible into shares of common stock.

In October 1996, the Board of Directors adopted a resolution authorizing
10,000 shares of Series A Convertible Preferred Stock, $.001 par value (the
"Series A Preferred Stock"). In October 1996, the Company sold 5,500 shares of
Series A Preferred Stock at a price of $1,000 per share to various non-U.S.
investors. The net proceeds of such sales of approximately $5.2 million were
used to purchase a portion of the Orgenics and Orgenics International shares.
The holders of Series A Preferred Stock generally are entitled to receive
cumulative quarterly dividends at the rate of six percent per year and their
shares of Series A Preferred Stock will become convertible into shares of the
Company's common stock in five equal installments over a 120-day period
beginning in December 1996. Shares of Series A Preferred Stock are convertible
at a discount of 14.5% from the average closing bid price per share of the
Company's common stock for the five trading days prior to their conversion,
subject to the following: (i) the maximum conversion price is $20 per share and
(ii) if the conversion price would otherwise be $12.00 or less, it shall instead
be $12.00; provided, however, if the average closing bid price is less than
$12.00, then the conversion price shall be equal to such price. Any shares of
Series A Preferred Stock not previously converted will automatically convert
into shares of the Company's common stock on October 15, 1998 at the closing bid
price at the time. Subsequent to September 30, 1996, 300 shares of Series A
Preferred Stock together with cumulative dividends were converted into 22,892
shares of common stock. The 5,200 remaining shares of Series A Preferred Stock
will convert into 439,400 shares of common stock assuming an average closing
market price of $12.325 per share at the time of conversion resulting in a
conversion price of $12.00 per share.

(12) INCOME TAXES

The Company provides for income taxes in accordance with the provisions of
SFAS No. 109, Accounting for Income Taxes. Accordingly, a deferred tax asset or
liability is determined based on the difference between the financial statement
and tax basis of assets and liabilities, as measured by the enacted tax rates
expected to be in effect when these differences reverse.

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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company provides deferred income taxes for temporary differences
between assets and liabilities recognized for financial reporting and income tax
purposes. The income tax effects of these temporary differences at December 31,
1994 and 1995 and September 30, 1996 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER
--------------------------- 30,
1994 1995 1996
----------- ----------- ------------
<S> <C> <C> <C>
Deferred tax assets --
Nondeductible reserves................... $ 116,000 $ 70,000 $ 443,000
Deferred revenue......................... 422,000 338,000 274,000
Net domestic and foreign operating loss
and tax credit carryforwards.......... 1,370,000 7,800,000 17,277,000
---------- ----------- ------------
1,908,000 8,208,000 17,994,000
---------- ----------- ------------
Deferred tax liabilities --
Depreciation............................. $ (1,300) $ (2,000) (19,000)
Other temporary differences.............. (5,000) (3,000) (1,000)
---------- ----------- ------------
(6,300) (5,000) (20,000)
---------- ----------- ------------
Valuation allowance...................... (1,901,700) (8,203,000) (17,974,000)
Net deferred tax asset................... $ -- $ -- $ --
========== =========== ============
</TABLE>

The Company has available domestic and foreign net operating loss
carryforwards of approximately $31,470,000 and $19,132,000, respectively, as of
September 30, 1996 and federal research and development credit carryforwards of
approximately $72,000 as of September 30, 1996 to reduce future income taxes, if
any. These carryforwards expire through 2010 and are subject to review and
possible adjustment by the appropriate taxing authorities.

The Internal Revenue Code contains provisions that limit the amount of
federal net operating loss and credit carryforwards that the Company may utilize
in any one year in the event of certain cumulative changes in ownership over a
three-year period in excess of 50%, as defined. The Company has recorded a 100%
valuation allowance against the deferred tax asset, as the realization of the
asset is uncertain.

(13) TRANSACTIONS WITH ENVIROMED AND EN PLC LIMITED PARTNERSHIP

In March 1994, the Company entered into a joint venture agreement with
Enviromed for the purpose of distributing diabetes and women's health products
in European Union countries. The joint venture activities were to be conducted
through a newly formed entity, Selfcare Europe Ltd. ("SCE"), in which the
Company and Enviromed each held 50% equity interests, but for which the Company
had sole management responsibility. The capital requirements of SCE were to be
funded 75% by Enviromed and 25% by Selfcare, in accordance with the agreed SCE
budgets. In connection with the formation of SCE, SCE entered into certain
distributorship agreements with Selfcare and affiliates of Enviromed, and
Enviromed purchased 593,528 shares of common stock in consideration for certain
manufacturing rights granted by an affiliate of Enviromed. In June 1995,
Selfcare notified Enviromed that Enviromed was in breach of its obligation to
make agreed payments to fund SCE's capital needs. In July 1995, Selfcare
notified Enviromed that, as a result of Enviromed's failure to cure this breach,
Enviromed's shares in SCE were deemed to be transferred to Selfcare pursuant to
the terms of SCE's charter and the joint venture agreement. For its part,
Enviromed informed Selfcare that it denied Selfcare's claims of breach and
claimed that Selfcare was in breach of the joint venture agreement in several
respects. SCE is currently classified as a wholly owned subsidiary in the
Company's financial statements (see Note 2). In April 1995, the Company's
President resigned as a director of Enviromed and his counterpart at Enviromed
resigned as a director of the Company. The Company does not consider SCE to be
material to its business or operations.

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SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In October 1995, EN PLC Limited Partnership ("EN PLC") was formed by the
Company's President and a group of investors for the purpose of purchasing
ordinary shares of Enviromed. As of May 1, 1996, EN PLC had acquired
approximately 27.0% of Enviromed's outstanding voting stock, but had not yet
succeeded in its attempts to change the management of Enviromed. The Company's
President shares control of EN PLC's general partner with another individual who
is not affiliated with the Company. The Company's President and two Company
directors are among EN PLC's limited partners. In October 1996, the Company
purchased 200,000 common shares of Enviromed and entered into an agreement with
EN PLC pursuant to which the Company purchased 7,961,386 shares of Enviromed
held by EN PLC for a promissory note with a principal amount of approximately
$3.8 million (the "EN PLC Note"). The EN PLC Note which is payable in eight
quarterly payments of principal and interest commencing in January 1997 and
bears interest at the Bank of Boston Prime Rate (8.25% at September 30, 1996)
plus 1.5%. In December 1996, the Company and EN PLC entered into an agreement
pursuant to which EN PLC agreed to defer 72.9% of the first four quarterly
principal payments (but not the related interest payments) under the EN PLC Note
until January 17, 1998. In consideration of this deferral, the Company agreed to
issue to EN PLC a warrant to purchase 15,401 shares of Common Stock at an
exercise price equal to $12.875 per share. The warrant is exercisable at any
time prior to January 1, 2002. In accordance with SFAS No. 123, the Company
recorded deferred financing costs of $107,000 related to the grant of these
warrants. The Company subsequently acquired an additional 100,000 shares of
Environmed, which increased the Company's equity interest in Enviromed to 28.9%.

(14) FINANCIAL INFORMATION BY GEOGRAPHIC AREA

Prior to the Company's acquisition of Cambridge Diagnostics in 1994,
substantially all of the revenues, net income, and identifiable assets of the
Company related to operations in the United States.

Revenues by geographic destination and as a percentage of total revenues
for the years ended December 31, 1994, 1995 and for the nine months ended
September 30, 1995 and 1996 are as follows:

<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------- -------------------------
DESTINATION 1994 1995 1995 1996
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
North America..................... $1,650,621 $2,993,249 $2,171,458 $4,985,515

Europe............................ 609,725 1,875,855 993,019 2,576,836

Africa............................ -- 275,200 633,698 573,294

Asia.............................. -- 800,000 444,869 462,129

Middle East....................... -- 1,075,200 228,164 233,447

Other............................. 61,579 408,008 335,712 266,796
---------- ---------- ---------- ----------
$2,321,925 $7,238,712 $4,806,920 $9,098,017
========== ========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
GEOGRAPHIC AREA BY ------------------------- -------------------------
DESTINATION 1994 1995 1995 1996
------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
North America..................... 71% 41% 45% 55%
Europe............................ 26 26 21 28
Africa............................ -- 1 13 6
Asia.............................. -- 11 9 5
Middle East....................... -- 15 5 3
Other............................. 3 6 7 3
--- --- --- ---
100% 100% 100% 100%
=== === === ===
</TABLE>

F-27
<PAGE> 127

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Revenues, net income, and identifiable assets for the Company's United
States, Irish, Scottish and other European operations are as follows:

<TABLE>
<CAPTION>
UNITED OTHER INTERCOMPANY
YEAR ENDED DECEMBER 31, STATES IRELAND SCOTLAND EUROPEAN ELIMINATIONS CONSOLIDATED
----------------------- ------------ ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1994 --
Revenues.................... $ 1,806,533 $ 515,392 $ -- $ -- $ -- $ 2,321,925
============ ========== =========== =========== =========== ===========
Net income (loss)........... (2,906,193) 154,956 -- (134,101) 100,575 (2,784,763)
============ ========== =========== =========== =========== ===========
Identifiable assets......... 3,734,362 3,784,775 -- -- (2,188,235) 5,330,902
============ ========== =========== =========== =========== ===========
1995 --
Revenues.................... $ 2,302,154 $4,187,104 $ -- $ 749,454 $ -- $ 7,238,712
============ ========== =========== =========== =========== ===========
Net loss.................... (7,339,808) (710,400) (519,661) (1,527,034) -- (10,096,903)
============ ========== =========== =========== =========== ===========
Identifiable assets......... 11,421,961 2,946,355 5,316,234 1,941,297 (7,933,499) 13,692,348
============ ========== =========== =========== =========== ===========
Nine Months Ended September
30, 1995 --
Revenues.................... $ 1,555,952 $2,930,053 $ -- $ 20,915 $ -- $ 4,806,920
============ ========== =========== =========== =========== ===========
Net loss.................... (4,921,760) (531,914) (151,838) (1,007,426) -- (6,612,938)
============ ========== =========== =========== =========== ===========
Identifiable assets......... 1,251,281 2,004,734 2,293,767 37,372 -- 5,587,154
============ ========== =========== =========== =========== ===========
1996 --
Revenues.................... $ 4,385,222 $3,155,502 $ 1,035,588 $ 521,705 $ -- $ 9,098,017
============ ========== =========== =========== =========== ===========
Net loss.................... (21,645,317) (693,993) (2,485,089) (1,302,514) -- (26,126,913)
============ ========== =========== =========== =========== ===========
Identifiable assets......... 25,532,849 3,381,056 3,804,977 2,971,127 (11,264,405) 24,425,604
============ ========== =========== =========== =========== ===========
</TABLE>

(15) SIGNIFICANT CUSTOMERS

The Company received revenues of greater than 10% of net product sales from
the following customers during the following periods.

<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
CUSTOMERS
SIGNIFICANT -------------------------------
CUSTOMERS A B C D
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995................ 1 10.0% --% --% --%

Nine months ended September 30, 1995........ 2 13.0 12.3 -- --

Nine months ended September 30, 1996........ 3 12.5 -- 10.6 12.2
</TABLE>

The Company had no significant customers in the year ended December 31,
1994.

(16) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following
at December 31, 1994, 1995 and September 30, 1996:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- SEPTEMBER 30,
1994 1995 1996
-------- ---------- -------------
<S> <C> <C> <C>
Compensation and compensation-related.......... $223,793 $ 326,271 $ 489,233

Professional fees.............................. 97,719 94,967 435,587

Product return reserve......................... -- 480,000 1,031,640

Other.......................................... 420,563 764,130 1,008,575
-------- ---------- ----------
$742,075 $1,665,368 $ 2,965,035
======== ========== ==========
</TABLE>

F-28
<PAGE> 128

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(17) VALUATION AND QUALIFYING ACCOUNTS

The following table sets forth activity in the Company's accounts
receivable reserve account:

<TABLE>
<CAPTION>
BALANCE AT OTHER UNCOLLECTIBLE BALANCE AT
BEGINNING PROVISION FOR ADDITIONS TO ACCOUNTS END OF
ALLOWANCE FOR DOUBTFUL ACCOUNTS OF PERIOD BAD DEBT ALLOWANCES(1) WRITTEN OFF PERIOD
- ----------------------------------- ---------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994....... -- -- 94,190 -- 94,190
Year Ended December 31, 1995....... 94,190 37,371 -- (38,184) 93,378
Nine Months Ended September 30,
1996............................. 93,378 160,966 -- (19,690) 234,654
</TABLE>

- ---------------
(1) Additions arising through the acquisition of Cambridge Diagnostics in 1994.

(18) NUTRITIONAL SUPPLEMENT LINES ACQUISITION

On January 14, 1997, the Company entered into the Nutritional Supplement
Lines Acquisition, pursuant to which a newly-formed subsidiary of the Company
(the "Acquisition Subsidiary") and the Company have agreed to acquire the
Nutritional Supplement Lines from AHP. At the Acquisition Closing, the
Acquisition Subsidiary will pay to AHP $30.0 million in cash and the Company
will issue to AHP the AHP Note. The Company anticipates that substantially all
of the purchase price will be allocated to intangible assets including goodwill.
The Company will fund the cash portion of purchase price with the AHP Term Loan
and AHP Bridge Loan. The AHP Note will be due on the first anniversary of the
Acquisition Closing, and will bear interest payable quarterly at the rate of
7.0% per annum. The Company may prepay the AHP Note at any time. The Company
currently intends to prepay the AHP Note and the AHP Bridge Loan with proceeds
from this offering; however, the Company may elect to refinance the AHP Note
and/or the AHP Bridge Loan from other sources. The Company has received a
non-binding Summary of Proposed Terms and Conditions from Fleet National Bank
("Fleet") which outlines the proposed terms of the AHP Term Loan and the AHP
Bridge Loan to be made to the Acquisition Subsidiary and guaranteed by the
Company (collectively, the "Proposed Acquisition Facility"). The Company has
paid Fleet an initial fee of $50,000 in connection with receiving Fleet's
non-binding proposal and Fleet's agreement to proceed with its approval process.
The AHP Term Loan would have a five-year term, with quarterly amortization of
principal, and would bear interest at the annual rate of LIBOR plus two percent,
or Fleet's Prime Rate. The Proposed Acquisition Facility would impose certain
financial covenants on the Acquisition Subsidiary, including (i) requirements to
maintain certain ratios of total indebtedness to EBITDA, (ii) limits on capital
expenditures, and (iii) a requirement of a positive net income for any fiscal
year. The Acquisition Subsidiary would also agree to restrictions on (i)
acquisitions without Fleet's consent, (ii) material asset sales and other
payments, and (iii) dividends and distributions. Further, the Company, as
guarantor of the Acquisition Subsidiary's debt under the Proposed Acquisition
Facility, will be subject to certain covenants and will be limited in its
ability to receive dividends and distributions from the Acquisition Subsidiary.
Subject to completion of its review and approval process, Fleet will prepare a
commitment letter which will further detail the terms of and conditions of the
Proposed Acquisition Facility. If such commitment letter is acceptable to the
Company, Fleet and the Company will proceed to complete definitive agreements
for the Acquisition Facility.

For financial information reflecting the Nutritional Supplement Lines
Acquisition on a Pro Forma basis, along with the Orgenics Acquisition (see Note
5) and certain other events, see the Company's Unaudited Pro Forma Combined
Condensed Financial Statements beginning on page F-30.

F-29
<PAGE> 129

SELFCARE, INC. AND SUBSIDIARIES

PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

OVERVIEW:

On December 23, 1995, the Company and Orgenics entered into an Investment
and Loan Agreement whereby the Company purchased a $1,000,000, 18-month,
unsecured interest-bearing Debenture that is convertible into redeemable
preferred shares of Orgenics. Medica contributed $500,000 in cash toward the
purchase of the Debenture. On April 25, 1996, the Company exercised its right to
acquire Medica's interest in the Debenture for 135,421 shares of Common Stock.

The Company has also entered into Option Agreements with a majority of the
individual stockholders of Orgenics and Orgenics International. Each Option
Agreement provides a put option on the part of the stockholders to sell to the
Company and a call option on the part of the Company to purchase from the
stockholder such shares of Orgenics and Orgenics International (the "Optionee").
The call option is exercisable at any time prior to August 7, 1999. The put
option shall not be exercisable until the closing of one or more public
offerings of the Company with aggregate gross proceeds of at least $15,000,000.
Upon exercise of either the put or call options discussed above, the Company
would effectively own 100% of Orgenics.

In October 1996, the Company acquired a 57.1% direct and indirect equity
interest in Orgenics, as a result of the conversion of the Debenture and cash
payment of approximately $7,000,000 for the purchases of outstanding shares of
Orgenics and Orgenics International. The Company estimates that it will pay
additional consideration totaling approximately $9,307,000 in cash and Common
Stock for all the remaining shares in Orgenics and Orgenics International
pursuant to the exercise of the Option Agreements.

Under the terms of the Option Agreements, assuming that the put or call
options under the Option Agreements are exercised prior to March 10, 1997 (as
the Company currently intends), the Company will be required to pay for each
share of Orgenics which it acquires, consideration equal to 1.50 times Orgenics'
gross revenues per share (on a fully diluted basis as of the exercise date,
giving effect to the conversion of the Debenture) during the most recent four
fiscal quarters immediately preceding the date of exercise (December 31, 1996
based on the Company's current intentions). However, if certain performance
goals are met by Orgenics, the multiple would increase to 1.75 times. The
Company believes these performance goals will be met during the applicable
period. Accordingly, the Company estimates that the amount of the consideration
payable for the Orgenics and Orgenics International shares remaining to be
acquired will be approximately $9,307,000. To the extent that any put or call
options under the Option Agreements are not exercised prior to March 10, 1997,
the gross revenues multiple will be increased as defined in the agreement.

The consideration for the Orgenics shares purchased pursuant to the Option
Agreements is payable by the Company, at the election of each Optionee entirely
in cash, entirely in Common Stock or 50% in cash and 50% in Common Stock. After
August 7, 1997, the consideration payable pursuant to a put or call would be 50%
in cash and 50% in Common Stock. Although the Company considers it likely that
the Orgenics Acquisition will be completed prior to March 31, 1997, the Company
is not able to predict when the acquisition will be completed. Moreover, because
the amount of the consideration to be paid pursuant to the Option Agreements is
a function of the date on which the options are exercised and the performance of
Orgenics during the four fiscal quarters preceding such exercise, the Company is
not presently able to determine the total amount of such consideration which
will be payable. Assuming the exercise of the call option prior to March 10,
1997 and that the Orgenics and Orgenics International Stockholders elect to
receive the consideration in the form of 50% cash and 50% Common Stock, the
Company would pay approximately $4,654,000 in cash and issue approximately
368,600 shares of Common Stock, based on a market price of $12.625 per share of
Common Stock and Orgenics' estimated revenues for the four fiscal quarters ended
December 31, 1996. In addition, the Company has granted options to purchase up
to 85,800 shares of Common Stock having a fair market value of $1,056,000 and
will incur direct acquisition costs of approximately $100,000.

F-30
<PAGE> 130

SELFCARE, INC. AND SUBSIDIARIES

PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

In the event that the Company does not exercise its call option to March
10, 1997, the purchase price could be substantially greater, based on the gross
revenues of Orgenics, the multiple to be used in calculating the purchase price
or both. See "Business -- Strategic Transactions -- Orgenics Acquisition."
Accordingly, the Company may be required to raise additional financing, offer
additional shares to the Orgenics and Orgenics International stockholders or
both in order to pay the greater purchase price. There can be no assurance that
the Company will be able to raise such additional financing on terms favorable
to the Company, if at all. In addition, the per share price of the Company's
Common Stock could vary significantly from the market price of $12.625. Such
variations would impact the number of shares of Common Stock the Company would
be required to issue as consideration.

The Company has granted certain registration rights with respect to the
shares of Common Stock issued pursuant to the Option Agreements.

The portion of the purchase price allocated to goodwill and other
intangible assets relates primarily to acquired technology, trade names and
goodwill and will be amortized on a straight-line basis over their estimated
useful lives of five years. The portion of the purchase price allocated to
in-process research and development projects that had not reached technological
feasibility and did not have a future alternative use, totaling $7,700,000, will
be charged to expense as of the acquisition date. The amount allocated to
in-process research and development projects represents the estimated fair value
related to these projects determined by an independent appraisal. Proven
valuation procedures and techniques were used in determining the fair market
value of each intangible asset. To bring these projects to technological
feasibility, high-risk development and testing issues will need to be resolved
which will require substantial additional effort and testing.

On January 14, 1997, the Company agreed to pay $36 million to acquire the
Nutritional Supplement Lines from American Home Products, Inc. ("AHP"), through
$25 million of bank debt and $11 million of proceeds from this offering. The
Company anticipates that the entire purchase price will be allocated to trade
names, goodwill and other intangible assets, and plans to amortize such assets
over their estimated useful lives of 20 years.

In October 1996, the Company entered into an agreement with EN PLC pursuant
to which the Company purchased 7,961,386 shares of Enviromed held by EN PLC for
approximately $3.8 million. The Company issued the EN PLC Note to EN PLC which
is payable in eight quarterly payments of principal and interest beginning in
October 1996 and bears interest at the Bank of Boston Prime Rate plus 1.5%. In
December 1996, the Company entered into an agreement pursuant to which EN PLC
agreed to defer 72.9% of the first four quarterly principal payments (but not
the related interest payments) under the EN PLC Note until January 17, 1998. In
consideration of this deferral, the Company agreed to issue to EN PLC a warrant
to purchase 15,401 shares of Common Stock at an exercise price equal to $12.875
per share. The warrant is exercisable at any time prior to January 1, 2002.

F-31
<PAGE> 131

SELFCARE, INC. AND SUBSIDIARIES

PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

pursuant to the exercise of rights to acquire Common Stock outstanding as of
November 10, 1995 (the total of all shares so issued, the "Conversion Shares").
The precise number of Conversion Shares depends on the number of shares of
Common Stock which the Company is required to issue in connection with the
vesting and exercise of options and warrants. However, the Company estimates
that the number of additional Conversion Shares which JJDC will acquire is
approximately 278,572, based on the number of shares of Common Stock issued
pursuant to the exercise of those options and warrants that were outstanding as
of November 10, 1995.

In 1995, the Company issued Cambridge Diagnostics Notes and Cambridge
Diagnostics Warrants to certain investors, officers and directors, resulting in
gross proceeds of $3,030,000, of which $30,000 related to the Cambridge
Diagnostics Warrants. The number of shares of Common Stock to be issued under
the terms of the Cambridge Diagnostic Warrants was variable, resulting in
cumulative non-cash interest charges of approximately $18,331,000 through
September 30, 1996. On December 31, 1996, the Company entered into an agreement
with the principle note and warrantholders, whereby the parties agreed to extend
the due date of the Cambridge Diagnostic Notes to January 15, 1998 and fix the
number of Cambridge Diagnostic Warrants at 1,142,635. As a result, the Company
will reverse approximately $3,463,000 of such non-cash interest charges net of
the non-cash charge for additional warrants issued at that time.

In October 1996, the Company sold 5,500 Series A Preferred Shares to
certain non-U.S. investors, yielding net proceeds to the Company of $5.2
million. The Series A Preferred Shares are convertible into an estimated 462,292
shares of Common Stock, assuming an average market price of $12.325 and a
resulting conversion price of $12.00.

The following unaudited pro forma combined condensed financial statements
are presented in U.S. dollars, are in accordance with generally accepted
accounting principles and give effect to the proposed offering of the Company's
Common Stock and the transactions described above. The unaudited pro forma
combined condensed statements combine the historical consolidated balance sheets
of the Company and Orgenics as of September 30, 1996 and the statement of assets
acquired of the Nutritional Supplement Lines as of November 30, 1995 and combine
the historical consolidated statements of operations of the Company and Orgenics
for the year ended December 31, 1995 and the nine months ended September 30,
1996 and the statements of revenues and expenses of the Nutritional Supplement
Lines for the year ended November 30, 1995 and the nine months ended August 31,
1996 assuming that Orgenics and the Nutritional Supplement Lines acquisitions
were consummated on January 1, 1995 using proceeds from the Company's initial
public offering and anticipated secondary public offering and after giving
effect to certain adjustments. The unaudited pro forma combined condensed
financial statements were prepared assuming that the exercise of the Company's
options under the Option Agreements become effective on or prior to March 10,
1997; accordingly, the purchase price has been calculated using 1.75 times
Orgenics gross revenues per share (on a fully-diluted basis as of the exercise
date, and after giving effect to the conversion of the Debentures) based upon
the estimated revenues for the four fiscal quarters ended December 31, 1996. The
unaudited pro forma combined condensed financial statements do not reflect
additional consideration that will be paid if the Company does not complete the
Orgenics Acquisition on or prior to March 31, 1997 insofar as it relates to
determining the most recent four fiscal quarters immediately preceding the date
of exercise, or prior to March 10, 1997 insofar as it relates to the gross
revenues multiple to be used in the calculation of the purchase price. The
unaudited pro forma combined condensed financial statements do not purport to be
indicative of the results which would actually have been reported if the
acquisitions of Orgenics and the Nutritional Supplement Lines had been effected
at those dates or which may be reported in the future. These unaudited pro forma
combined condensed financial statements should be read in conjunction with the
accompanying notes and the respective historical financial statements and
related notes of the Company, Orgenics and the Nutritional Supplement Lines.

F-32
<PAGE> 132

SELFCARE, INC. AND SUBSIDIARIES

PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
ACTUAL
----------------------------------------- PRO FORMA
NUTRITIONAL -------------------------------
SUPPLEMENT COMBINED
THE COMPANY ORGENICS(1) LINES ADJUSTMENTS COMPANY
------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................... $14,552,714 $ 1,433,000 $ -- $ 23,135,000(2) $ 27,965,625
(11,753,533)(3)
(11,350,000)(5)
(129,056)(7)
7,000,000(8)
5,215,000(10)
(137,500)(12)
Accounts receivable........................... 2,315,713 2,085,000 -- -- 4,400,713
Inventory..................................... 1,367,640 1,022,000 -- -- 2,389,640
Prepaid and other current assets.............. 352,271 1,081,000 -- -- 1,433,271
----------- ------------ ----------- ------------ -----------
Total current assets.................... 18,588,338 5,621,000 -- 11,979,911 36,189,249
----------- ------------ ----------- ------------ -----------
PROPERTY AND EQUIPMENT, NET..................... 4,524,160 1,469,000 -- -- 5,993,160
IN PROCESS RESEARCH AND DEVELOPMENT............. -- -- -- 7,700,000(4) --
(7,700,000)(4)
GOODWILL AND OTHER INTANGIBLE ASSETS............ 313,106 520,000 13,822,000 7,644,108(4) 44,933,943
22,528,000(6)
106,729(7)
INVESTMENT IN SUBSIDIARIES...................... 1,000,000 200,000 -- (1,000,000)(4) 4,132,608
3,932,608(7)
----------- ------------ ----------- ------------ ------------
$24,425,604 $ 7,810,000 $13,822,000 $ 45,191,356 $ 91,248,960
=========== ============ =========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.............................. $ 2,638,787 $ 861,000 $ -- $ -- $ 3,499,787
Accrued expenses and other current
liabilities................................. 2,965,035 1,300,000 1,443,000 (1,443,000)(6) 4,265,035
Current portion of deferred revenue........... 1,128,420 -- -- -- 1,128,420
Current portion of long-term debt............. -- 1,610,000 -- 4,000,000(5) 6,125,590
515,590(7)
----------- ------------ ----------- ------------ ------------
Total current liabilities................... 6,732,242 3,771,000 1,443,000 3,072,590 15,018,832
----------- ------------ ----------- ------------ ------------
LONG-TERM LIABILITIES
Deferred revenue, net of current portion...... 1,437,110 -- -- 3,000,000(8) 4,437,110
Long-term debt, net of current portion........ 3,011,796 1,768,000 -- (1,000,000)(4) 28,067,758
21,000,000(5)
3,287,962(7)
Convertible advance, net of current portion... 13,693,548 -- -- (13,693,548)(9) --
----------- ------------ ----------- ------------ ------------
Total long-term liabilities................. 18,142,454 1,768,000 -- 12,594,714 32,504,868
MINORITY INTEREST............................... -- 152,000 -- -- 152,000
----------- ------------ ----------- ------------ ------------
MANDATORILY REDEEMABLE PREFERRED STOCK OF A
SUBSIDIARY.................................... 1,724,768 -- -- -- 1,724,768
----------- ------------ ----------- ------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT):
6(10)
Series A preferred stock...................... -- -- -- (6)(10) --

Common stock.................................. 5,688 66,000 -- 2,000(2) 8,999
369(3)
(66,000)(4)
480(9)
462(10)
Additional paid-in capital.................... 38,508,574 13,141,000 12,379,000 23,133,000(2) 82,978,473
4,653,206(3)
1,056,000(3)
(13,141,000)(4)
(12,379,000)(6)
106,729(7)
13,693,068(9)
5,214,995(10)
75,643(10)
(3,462,742)(11)
Deferred compensation......................... (10,740) -- -- -- (10,740)
Less -- Treasury stock, at cost............... (15,200) -- -- -- (15,200)
Accumulated deficit........................... (40,802,947) (11,158,000) -- 4,000,000(8) (41,253,805)
(7,700,000)(4)
11,158,000(4)
(76,100)(10)
3,462,742(11)
(137,500)(12)
Cumulative translation adjustment............. 140,765 70,000 -- (70,000)(4) 140,765
----------- ------------ ----------- ------------ ------------
Total stockholders' equity (deficit)........ (2,173,860) 2,119,000 12,379,000 29,524,352 41,848,492
----------- ------------ ----------- ------------ ------------
$24,425,604 $ 7,810,000 $13,822,000 $ 45,191,356 $ 91,248,960
=========== ============ =========== ============ ============
</TABLE>

F-33
<PAGE> 133

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1996

The accompanying unaudited pro forma combined condensed balance sheet has
been prepared by combining the historical results of the Company and Orgenics as
of September 30, 1996 and the Nutritional Supplement Lines as of November 30,
1996 and reflects the following pro forma adjustments:

<TABLE>
<C> <S> <C>
(1) The Orgenics historical balance sheet, which is stated in New Israeli
Shekel, has been translated into U.S. dollars for these unaudited pro
forma combined condensed financial statements. The Orgenics balance
sheet is translated at the exchange rate in effect at September 30,
1996, which was 3.197 U.S. dollars per New Israeli Shekel.
(2) Represents the receipt of the net proceeds from the Company's secondary
public offering of 2,000,000 shares of Common Stock at the public
offering price of $12.625 per share..................................... $23,135,000
(3) Represents the payment of consideration in connection with the Orgenics
Acquisition in the form of the Debenture Conversion, cash consideration
of $11,753,532 (including $100,000 in acquisition costs), the issuance
of 368,600 shares of Common Stock having a fair market value of
$4,653,575 and the issuance of 85,800 Common Stock options having a fair
market value of $1,056,000.............................................. 17,462,738
(4) Represents the Orgenics Acquisition purchase price allocation to
in-process research and development and goodwill and other intangible
assets, charge to operations the estimated fair values of the in-process
research and development and the elimination of the Orgenics equity
accounts................................................................ --
(5) Represents the payment of consideration in connection with the
Nutritional Supplement Lines Acquisition in the form of cash
consideration of $11,350,000 (including acquisition costs of $350,000)
and bank debt of $25,000,000............................................ 36,350,000
(6) Represents the Nutritional Supplement Lines Acquisition purchase price
allocation to goodwill and other intangible assets and the elimination
of the Nutritional Supplement Lines equity account...................... 22,528,000
(7) Represents the payment of consideration in connection with the Company's
29.8% investment in Enviromed in the form of a $3,803,552 note payable
to EN PLC and cash consideration of $129,056 paid to unrelated parties.
Also includes the incurrence of $106,729 in deferred financing costs
associated with the issuance of warrants to EN PLC...................... 4,039,337
(8) Represents LifeScan's payment of the $7,000,000 success fee to the
Company, of which Company management estimates it will defer revenue
recognition on $3,000,000............................................... 7,000,000
(9) Represents the conversion of the convertible advances to the Company of
$13,693,548 into 201,622 shares of common stock and the right to
receive, for no additional consideration, up to a maximum of 278,572
additional shares based on the number of shares of Common Stock issued
pursuant to the exercise of those options and warrants that were
outstanding as of November 10, 1995..................................... --
(10) Represents the sale of 5,500 Series A Preferred Shares and the receipt
of net proceeds of $5,215,000 therefrom and the conversion into 462,292
shares of Common Stock based on an average market price of $12.325 and a
resulting conversion price of $12.00.................................... 5,215,000
(11) Represents reversal of non-cash interest charge for Cambridge
Diagnostics Warrants issued to noteholders, the terms of which became
fixed on December 31, 1996, net of additional interest expense of
$393,651 incurred in connection with the issuance of additional
warrants................................................................ 3,462,742
(12) Represents the payment of additional cash consideration of $137,500 to
certain holders of the Cambridge Diagnostic Notes....................... 137,500
</TABLE>

F-34
<PAGE> 134

SELFCARE, INC. AND SUBSIDIARIES

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)

<TABLE>
<CAPTION>
ACTUAL
-------------------------------------------- PRO FORMA
NUTRITIONAL -------------------------------
SUPPLEMENT COMBINED
THE COMPANY ORGENICS(1) LINES(2) ADJUSTMENTS COMPANY
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net product sales.............................. $ 6,722,625 $10,173,000 $25,986,000 $ -- $ 42,881,625
Grants and other revenue....................... 516,087 -- -- -- 516,087
------------- ----------- ----------- ------------ ------------
Net revenue.................................. 7,238,712 10,173,000 25,986,000 -- 43,397,712
Cost of sales.................................. 5,564,438 3,074,000 7,809,000 780,900(3) 17,228,338
------------- ----------- ----------- ------------ ------------
Gross profit................................. 1,674,274 7,099,000 18,177,000 (780,900) 26,169,374
Operating Expenses:
Research and development..................... 1,532,496 991,000 210,000 -- 2,733,496
Selling, general and administrative.......... 5,649,781 5,073,000 7,588,000 73,000(3) 21,730,103
1,528,822(4)
1,817,500(6)
Charge for in process research and
development................................ -- -- -- 7,700,000(5) --
(7,700,000)(11)
Noncash compensation charge.................. 52,000 -- -- -- 52,000
------------- ----------- ----------- ------------ ------------
Total operating expenses................... 7,234,277 6,064,000 7,798,000 3,419,322 24,515,599
------------- ----------- ----------- ------------ ------------
Operating income (loss).................... (5,560,003) 1,035,000 10,379,000 (4,200,222) 1,653,775
Other expense, net............................. -- (185,000) -- -- (185,000)
Interest expense, net.......................... (4,481,320) (600,000) -- (1,875,000)(7) (18,131,855)
(351,829)(8)
(53,364)(9)
(10,770,342)(10)
Income (loss) before minority interest and
dividends and accretion on preferred stock of
subsidiary and provision for income taxes.... (10,041,323) 250,000 10,379,000 (17,250,757) (16,663,080)
Minority interest in subsidiary's loss......... -- (60,000) -- -- (60,000)
Dividends and accretion on mandatorily
redeemable preferred stock of a subsidiary... (55,580) -- -- -- (55,580)
------------- ----------- ----------- ------------ ------------
Income (loss) before provision for income
taxes........................................ (10,096,903) 190,000 10,379,000 (17,250,757) (16,778,660)
Provision for income taxes..................... -- (62,000) -- -- (62,000)
------------- ----------- ----------- ------------ ------------
Net income (loss).......................... $(10,096,903) $ 128,000 $10,379,000 $(17,250,757) $(16,840,660)
============= =========== =========== ============ ============
Pro forma net loss per share:
Net loss per common and common equivalent
share...................................... $ (1.66) $ (1.55)
============= ============
Shares used to compute pro forma net loss per
share...................................... 6,071,799 4,806,086(12) 10,877,885
============= ============ ============
</TABLE>

F-35
<PAGE> 135

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

The accompanying unaudited pro forma combined condensed statement of
operations has been prepared by combining the historical results of the Company
and Orgenics for the year ended December 31, 1995 and the Nutritional Supplement
Lines for the year ended November 30, 1995 and reflects the following pro forma
adjustments:

<TABLE>
<C> <S> <C>
(1) The Orgenics historical statement of operations for the 12 months ended
December 31, 1995 has been translated into U.S. dollars for this unaudited
pro forma combined condensed statement of operations. The Orgenics
statement of operations is translated at the average exchange rate in
effect for the 12 months ended December 31, 1995, which was 3.016 U.S.
dollars per New Israeli Shekel.
(2) The Nutritional Supplement Lines data presented herein reflect only the
revenues and direct expenses; it does not reflect actual AHP Corporate
overhead allocations of $3,586,000
(3) Represents incremental costs of goods sold and selling, general and
administrative expenses that the Company estimates it will incur following
the Nutritional Supplement Lines Acquisition. Does not reflect additional
revenues, if any, which may result from increased promotional spending. $ 853,900
(4) Reflects amortization expense on goodwill and other intangible assets
acquired as a part of the Orgenics Acquisition based on their estimated
useful life of five years. $1,528,822
(5) Represents charge to operations for the estimated fair values of certain
in-process research and development projects. 7,700,000
(6) Represents amortization expense on goodwill and other intangible assets
acquired as a part of the Nutritional Supplement Lines Acquisition based on
their estimated useful life of 20 years. 1,817,500
(7) Represents interest in connection with the bank debt associated with the
Nutritional Supplement Lines acquisition, assuming an annual interest rate
of 7.5%. 1,875,000
(8) Represents interest in connection with the note payable issued to EN PLC in
connection with the Company's investment in Enviromed. 351,829
(9) Represents amortization expense associated with deferred financing costs in
connection with the Company's investment in Enviromed, in the form of
warrants granted to EN PLC. 53,364
(10) Represents additional non-cash interest charge for Cambridge Diagnostics
Warrants issued to noteholders net of non-cash charge for additional
warrants issued, the term of which became fixed on December 31, 1996 and
additional cash consideration of $137,500. 10,770,342
(11) Represents reversal of nonrecurring charges, in accordance with Securities
and Exchange Commission regulations.
(12) Pro forma net loss per share is computed assuming the 1,495,000, 2,000,000,
480,194, 462,292 and 368,600 shares issued in connection with the initial
public offering, proposed public offering, convertible advance, conversion
of Series A Preferred Shares and Orgenics Acquisition, respectively, were
outstanding for the entire period. 4,806,086
</TABLE>

F-36
<PAGE> 136

SELFCARE, INC. AND SUBSIDIARIES

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
ACTUAL
-------------------------------------------- PRO FORMA
NUTRITIONAL -----------------------------
SUPPLEMENT COMBINED
THE COMPANY ORGENICS(1) LINES(2) ADJUSTMENTS COMPANY
------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net product sales............... $ 7,856,775 $9,431,000 $18,477,000 $ -- $35,764,775
Grants and other revenue........ 1,241,242 -- -- -- 1,241,242
------------ ---------- ----------- ----------- -----------
Net revenues.................. 9,098,017 9,431,000 18,477,000 -- 37,006,017
Cost of sales................... 6,477,303 2,878,000 5,526,000 552,600(3) 15,433,903
------------ ---------- ----------- ----------- -----------
Gross profit.................. 2,620,714 6,553,000 12,951,000 (552,600) 21,572,114
------------ ---------- ----------- ----------- -----------
Operating Expenses:
Research and development...... 4,161,445 835,000 140,000 -- 5,136,445
Selling, general and
administrative.............. 6,241,131 4,612,000 3,655,000 2,319,750(3) 19,337,622
1,146,616(4)
1,363,125(5)
Non-cash compensation charge.... 4,184,697... -- -- (3,240,000)(10) 944,697
------------ ---------- ----------- ----------- -----------
Total operating expenses...... 14,587,273 5,447,000 3,795,000 1,589,491 25,418,764
------------ ---------- ----------- ----------- -----------
Operating income (loss)....... (11,966,559) 1,106,000 9,156,000 (2,142,091) (3,846,650)
Other income (expense), net..... 269,515 (38,000) -- -- 231,515
Interest expense, net........... (14,348,681) -- -- (1,406,250)(6) (1,963,242)
(263,871)(7)
(40,024)(8)
14,095,584(9)
Income (loss) before minority
interest and dividends and
accretion on preferred stock
of subsidiary and provision
for income taxes.............. (26,045,725) 1,068,000 9,156,000 10,243,348 (5,578,377)
Minority interest in
subsidiary's loss............. -- (81,000) -- -- (81,000)
Dividends and accretion on
mandatorily redeemable
preferred stock of a
subsidiary.................... (81,188) -- -- -- (81,188)
------------ ---------- ----------- ----------- -----------
Income (loss) before provision
for income taxes.............. (26,126,913) 987,000 9,156,000 10,243,348 (5,740,565)
------------ ---------- ----------- ----------- -----------
Provision for income taxes...... -- 42,000 -- -- 42,000
------------ ---------- ----------- ----------- -----------
Net income (loss)............. $(26,126,913) $ 945,000 $ 9,156,000 $10,243,348 $(5,782,565)
============ ========== =========== =========== ===========
Pro forma net loss per share:
Net loss per common and common
equivalent share............ $ (4.25) $ (.54)
============ ===========
Shares used to compute pro
forma net loss per share.... 6,146,821 4,545,137(11) 10,691,958
============ =========== ===========
</TABLE>

F-37
<PAGE> 137

SELFCARE, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)

The accompanying unaudited pro forma combined condensed statement of
operations has been prepared by combining the historical results of the Company
and Orgenics for the nine months ended September 30, 1996 and the Nutritional
Supplement Lines for the nine months ended August 31, 1996 and reflects the
following pro forma adjustments:

<TABLE>
<C> <S> <C>
(1) The Orgenics historical statement of operations for the nine months ended
September 30, 1996 has been translated into U.S. dollars for this unaudited
pro forma combined condensed statement of operations. The Orgenics
statement of operations is translated at the average exchange rate in
effect for the nine months ended September 30, 1996 which was 3.170 U.S.
dollars per New Israeli Shekel.
(2) The Nutritional Supplement Lines data presented herein reflect only the
revenues and direct expenses; it does not reflect actual AHP corporate
overhead allocations of $2,641,000.
(3) Represents incremental costs of goods sold and selling, general and
administrative expenses that the Company estimates it will incur following
the Nutritional Supplement Lines Acquisition. Does not reflect additional
revenues, if any, which may result from increased promotional spending. $ 2,872,350
(4) Reflects amortization expense on goodwill and other intangible assets
acquired as a part of the Orgenics Acquisition based on their estimated
useful life of five years. 1,146,616
(5) Represents amortization expense on goodwill and other intangible assets
acquired as a part of the Nutritional Supplement Lines Acquisition based on
their estimated useful life of 20 years. 1,363,125
(6) Represents interest in connection with the bank debt associated with the
Nutritional Supplement Lines acquisition, assuming an annual interest rate
of 7.5%. 1,406,250
(7) Represents interest in connection with the note payable issued to EN PLC in
connection with the Company's investment in Enviromed. 263,871
(8) Represents amortization expense associated with deferred financing costs in
connection with the Company's investment in Enviromed, in the form of
warrants granted to EN PLC. 40,024
(9) Represents the reversal of non-cash interest expense incurred in 1996 in
connection with the Cambridge Diagnostic Warrants; on a pro forma basis,
all such interest expense net of non-cash charge of additional warrants
issued has been recorded in the year ended December 31, 1995. 14,095,584
(10) Represents reversal of nonrecurring charges, in accordance with Securities
and Exchange Commission regulations.
(11) Pro forma net loss per share is computed assuming the 1,495,000, 2,000,000,
480,194, 462,292 and 368,600 shares issued in connection with the initial
public offering, proposed public offering, convertible advance, conversion
of Series A Preferred Shares and Orgenics Acquisition, respectively, were
outstanding for the entire period. 4,545,137
</TABLE>

F-38
<PAGE> 138

REPORT OF INDEPENDENT AUDITORS

To the Shareholders of ORGENICS LTD.

We have audited the consolidated balance sheets of Orgenics Ltd. ("the
Company") as of September 30, 1996 and December 31, 1995 and 1994, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for the nine month period ended September 30, 1996 and for each
of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of CPEI Orgenics LTDA, a
consolidated subsidiary as of September 30, 1996 and December 31, 1995 and for
the nine month period ended September 30, 1996 and for the year ended December
31, 1995 which statements reflect total assets constituting 7% and 8%
respectively of total consolidated assets and total revenues for the nine month
period ended September 30, 1996 and the year ended December 31, 1995,
constituting 23% and 21% respectively of total consolidated revenues. These
statements were audited by other auditors whose reports have been furnished to
us, and our opinion, as it relates to the amounts included for CPEI Orgenics
LTDA, is based solely on the reports of the other auditor.

We conducted our audits in accordance with generally accepted auditing
standards in Israel, including those prescribed by the Israeli Auditors'
Regulations (Mode of Performance), 1973 which do not differ significantly from
generally accepted auditing standards in the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, either
originating within the financial statements themselves, or due to any misleading
statement included therein. 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 and the reports of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly in all
material respects the consolidated financial position of the Company as of
September 30, 1996 and December 31, 1995 and 1994 and the consolidated results
of their operations and cash flows for the nine month period ended September 30,
1996 and for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles in Israel. For a
description of the differences between generally accepted accounting principles
in Israel and United States generally accepted accounting principles as
applicable in these financial statements see Notes 2n and 2c.

KOST LEVARY AND FORER
Certified Public Accountants (Israel)
a Member of Ernst & Young
International

Tel-Aviv, Israel
November 14, 1996

F-39
<PAGE> 139

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
CPEI ORGENICS LTDA

We have examined the accompanying balance sheet of CPEI ORGENICS LTDA, at
September 30, 1996 and the related statements of income, changes in
stockholders' equity and cash flow for the nine months period then ended. These
financial statements are the responsibility of the entity management. Our
responsibility is to express an opinion on these financial statements.

We conduct our auditing in accordance with the generally accepted auditing
standard in Brazil and in the United States of America. These standards require:
(a) assignment planning, considering the balance materiality, the volume of the
transactions, and the accounting system and internal controls of the entity, (b)
verifying on test basis evidence supporting the amounts and accounting
information, and (c) the evaluation of the practices and significant accounting
estimate made by the management of the entity, as well the presentation of the
financial statements.

In our opinion, the financial statements referred to above represent
fairly, in all material respects, the financial position of CPEI ORGENICS LTDA
at September 30, 1996 and the results of their operation and their cash flow for
the nine months period then ended, in conformity with accounting principles
accepted in Brazil and in the United States of America.

Our examination also comprehended the translation of Brazilian real amounts
into US dollar amounts and in our opinion, such translation has been made in
conformity with the basis stated in note 1. Such US dollar amounts are presented
solely for the convenience of readers outside Brazil.

SAO PAULO, DECEMBER 10TH, 1996

GALLORO & ASSOCIADOS
AUDITORES INDEPENDENTES S/C
CRC-SP N degrees 05.851

VICTOR DOMINGOS GALLORO
SOCIO-DIRETOR
CT-CRC-SP N degrees 44.278

F-40
<PAGE> 140

ORGENICS LTD.

CONSOLIDATED BALANCE SHEETS
U.S. DOLLARS (IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1994 1995 1996
-------- -------- -------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 2c).................... $ 752 $ 886 $ 1,373
Marketable securities (Note 2d)........................ 78 81 60
Accounts receivable -- trade (Notes 2e and 3).......... 2,131 2,052 2,085
Other accounts receivable and prepaid expenses (Note
4).................................................. 475 451 1,081
Inventories (Notes 2f and 5)........................... 1,167 1,238 1,022
------- -------- --------
Total current assets........................... 4,603 4,708 5,621
------- -------- --------
INVESTMENTS (Notes 2g and 6)............................. 175 206 200
------- -------- --------
FIXED ASSETS (Notes 2h and 7):
Cost................................................... 3,163 3,289 3,484
Less -- accumulated depreciation....................... 1,396 1,772 2,015
------- -------- --------
1,767 1,517 1,469
------- -------- --------
OTHER ASSETS (Notes 2i and 8)............................ 535 525 520
------- -------- --------
$ 7,080 $ 6,956 $ 7,810
======= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank debt (Note 9).......................... $ 1,936 $ 1,702 $ 1,240
Current maturities of long-term debt (Note 11)......... 973 639 370
Trade payables......................................... 773 1,208 861
Accrued expenses and other payables (Note 10).......... 1,197 1,348 1,300
------- -------- --------
Total current liabilities...................... 4,879 4,897 3,771
------- -------- --------
LONG-TERM DEBT, net of current maturities (Note 11)...... 1,117 683 542
------- -------- --------
ACCRUED SEVERANCE PAY, NET (Note 12)..................... 108 129 181
------- -------- --------
MINORITY INTEREST........................................ -- 71 152
------- -------- --------
CONVERTIBLE DEBENTURE (Note 15c)......................... -- -- 1,045
------- -------- --------
SHAREHOLDERS' EQUITY (Note 15b):
Share capital.......................................... 66 66 66
Additional paid-in capital............................. 13,114 13,114 13,141
Cumulative translation adjustment...................... 27 99 70
Accumulated deficit.................................... (12,231) (12,103) (11,158)
------- -------- --------
Total stockholders' equity..................... 976 1,176 2,119
------- -------- --------
$ 7,080 $ 6,956 $ 7,810
======= ======== ========
</TABLE>

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

F-41
<PAGE> 141

ORGENICS LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. DOLLARS (IN THOUSANDS)
(EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------ ---------------------
1993 1994 1995 1995(*) 1996
------ ------- ------- --------- -------
AUDITED UNAUDITED AUDITED
<S> <C> <C> <C> <C> <C>
Revenues (Notes 2j and 18a)................ $6,307 $ 7,562 $10,173 $7,078 $ 9,431
Cost of revenues (Note 18c)................ 2,105 2,192 3,074 2,243(*) 2,878
------ ------- ------- ------ ------
Gross profit............................... 4,202 5,370 7,099 4,835 6,553
------ ------- ------- ------ ------
Research and development expenses (Notes 2k
and 18d)................................. 829 1,563 1,409 909 1,499
Less royalty bearing grants (Notes 21 and
14a)..................................... 273 780 418 228 664
------ ------- ------- ------ ------
Research and development expenses, net..... 556 783 991 681 835
Selling expenses (Note 18c)................ 1,335 1,583 2,377 1,878(*) 2,387
General and administrative expenses (Note
18f)..................................... 1,773 1,946 2,696 1,842 2,225
------ ------- ------- ------ ------
Operating income........................... 538 1,058 1,035 434 1,106
Financial expenses, net (Note 18g)......... (367) (319) (600) (440) (38)
Other income (expenses), net (Note 18h).... (6) 45 15 (6) --
Aborted initial public offering expenses... -- (1,125) (200) (200) --
------ ------- ------- ------ ------
Income (loss) before taxes on income....... 165 (341) 250 (212) 1,068
Taxes on income (Note 16).................. 6 15 62 38 42
------ ------- ------- ------ ------
159 (356) 188 (250) 1,026
Minority share in income of subsidiary..... -- -- (60) (45) (81)
------ ------- ------- ------ ------
Net income (loss).......................... $ 159 $ (356) $ 128 $ (295) $ 945
====== ======= ======= ====== ======
Earning (loss) per share (Note 2o)......... $ 0.25 $ (0.44) $ 0.16 $(0.37) $ 1.04
====== ======= ======= ====== ======
Weighted average number of shares
outstanding during the year (in
thousands)............................... 635 801 801 801 1,000
====== ======= ======= ====== ======
</TABLE>

- ---------------
(*) Reclassified -- see Note 2t.

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

F-42
<PAGE> 142

ORGENICS LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

U.S. DOLLARS (IN THOUSANDS)

<TABLE>
<CAPTION>
NUMBER OF ADDITIONAL CUMULATIVE TOTAL
SHARES SHARE PAID-IN TRANSLATION ACCUMULATED SHAREHOLDERS'
OUTSTANDING CAPITAL CAPITAL ADJUSTMENT DEFICIT * EQUITY
----------- ------- ---------- ---------- ----------- --- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of January 1, 1993.......... 518,997 $46 $ 9,166 $ 60 $ (12,034) $ $ (2,762)
Issuance of shares................... 221,714 20 3,528 -- -- 3,548
Foreign currency translation
adjustments........................ -- -- -- 80 -- 80
Amortization of compensation in stock
options issued to employees........ -- -- 93 -- -- 93
Waiver of interest by related
party.............................. -- -- 268 -- -- 268
Net income........................... -- -- -- -- 159 159
------- --- ------- ---- -------- --- -------
Balance as of December 31, 1993........ 740,711 66 13,055 140 (11,875) 1,386
Foreign currency translation
adjustment......................... -- -- -- (113) -- (113)
Amortization of compensation in stock
options issued to employees........ -- -- 59 -- -- 59
Net loss............................. -- -- -- -- (356) (356)
------- --- ------- ---- -------- --- -------
Balance as of December 31, 1994........ 740,711 66 13,114 27 (12,231) 976
Foreign currency translation
adjustment......................... -- -- -- 72 -- 72
Net income........................... -- -- -- -- 128 128
------- --- ------- ---- -------- --- -------
Balance as of December 31, 1995........ 740,711 66 13,114 99 (12,103) 1,176
Issuance of shares................... 70,923 -- -- -- -- --
Deferred compensation (Note
15b(3))............................ -- -- 62 -- -- 62
Payments to optionees for waiving
stock options (Note 15a(2))........ -- -- (35) -- -- (35)
Foreign currency translation
adjustment......................... -- -- -- (29) -- (29)
Net income........................... -- -- -- -- 945 945
------- --- ------- ---- -------- --- -------
Balance as of September 30, 1996....... 811,634 $66 $ 13,141 $ 70 $ (11,158) $ $ 2,119
======= === ======= ==== ======== === =======
</TABLE>

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

F-43
<PAGE> 143

ORGENICS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. DOLLARS (IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------- -------------------
1993 1994 1995 1995 1996
----- ----- ------ --------- -------
AUDITED UNAUDITED AUDITED
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................. $ 159 $(356) $ 128 $(295) $ 945
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating
activities:
Minority share in income of subsidiary......... -- -- 60 45 81
Loss (gain) on sale of fixed assets and other
investments.................................. 4 (30) 8 8 --
Depreciation and amortization.................. 225 260 595 469 331
Increase in accrued severance pay, net......... 44 21 21 14 52
Amortization of unearned compensation in stock
options issued to employees.................. 93 59 -- -- 31
Decrease (increase) in accounts
receivable -- trade.......................... (218) (620) 140 341 (79)
Decrease (increase) in other accounts
receivable................................... (160) (103) 13 21 (682)
Decrease (increase) in inventories............. (339) (462) (54) 46 203
(Decrease) increase in trade payables.......... 79 185 419 (174) (323)
(Decrease) increase in accrued expenses and
other payables............................... 391 30 205 146 (1)
Decrease (increase) in marketable securities,
net.......................................... (645) 567 (3) (5) 21
Accrued interest on convertible debenture...... -- -- -- -- 45
----- ----- ------ ----- -----
Net cash provided by (used in) operating
activities..................................... (367) (449) 1,532 616 624
----- ----- ------ ----- -----
Cash flows from investing activities:
Purchase of fixed assets....................... (271) (525) (118) (118) (242)
Purchase of other assets....................... -- (200) (341) (9) (30)
Proceeds from sale of fixed assets............. 58 86 20 13 11
Proceeds from sale of other investments........ 34 -- -- -- --
Purchase of other investments.................. (81) (36) -- -- --
----- ----- ------ ----- -----
Net cash used in investing activities............. (260) (675) (439) (114) (261)
----- ----- ------ ----- -----
</TABLE>

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

F-44
<PAGE> 144

ORGENICS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. DOLLARS (IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------ -------------------
1993 1994 1995 1995 1996
------ ------- ----- --------- -------
AUDITED UNAUDITED AUDITED
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Payment to optionees for waiving stock options.... -- -- -- -- (35)
Repayment of short-term debt to a related party... (957) -- -- -- --
Long-term debt -- undertaken...................... 461 509 65 -- 65
Issuance of shares in a private placement......... 3,548 -- -- -- --
Issuance of shares by a subsidiary................ -- -- 11 11 --
Repayment of long-term debt....................... (415) (1,008) (777) (662) (472)
Increase (decrease) in short-term bank debt....... (807) 959 (266) 140 (429)
Issuance of convertible debenture................. -- -- -- -- 1,000
------ ------- ----- ----- ------
Net cash provided by (used in) financing
activities........................................ 1,830 460 (967) (511) 129
------ ------- ----- ----- ------
Net increase (decrease) in cash and cash
equivalents....................................... 1,203 (664) 126 (9) 492
Effect of exchange rate changes on cash............. (3) 13 8 7 (5)
Cash and cash equivalents at the beginning of the
year.............................................. 203 1,403 752 752 886
------ ------- ----- ----- ------
Cash and cash equivalents at the end of the year.... $1,403 $ 752 $ 886 $ 750 $ 1,373
====== ======= ===== ===== ======
Cash paid during the year for:
Interest.......................................... $ 300 $ 338 $ 159 $ 335 $ 213
====== ======= ===== ===== ======
Taxes on income................................... $ 5 $ 15 $ 62 $ 41 $ 46
====== ======= ===== ===== ======
</TABLE>

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

F-45
<PAGE> 145

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: GENERAL

a. Organization:

Orgenics Ltd. (hereinafter "Orgenics") is an Israeli corporation which is
engaged in the development, manufacturing and marketing of diagnostic test kits
for infectious diseases and genetic markers.

As of September 30, 1996, approximately 63.9% of the ordinary shares of
Orgenics Ltd. were owned by Orgenics International Holdings B.V. ("OIH"), a
holding company with no business activity.

During November 1996, Selfcare Inc. of Boston USA purchased from the
stockholders of Orgenics approximately 6.5% of Orgenics shares and acquired
direct ownership of 26.8% (after converting the debenture -- see Note 15c).

Following these transactions, 50.7% of Orgenics shares are directly held by
OIH.

PBS S.A. ("PBS"), a French corporation engaged in the marketing of
diagnostic devices in France was, through December 1993, also a wholly-owned
subsidiary of OIH. In December 1993, OIH transferred all of its holdings in PBS
to Orgenics. The acquisition of PBS by Orgenics represents a reorganization of
entities under common control and has been accounted for in a manner similar to
a pooling of interests. Accordingly, the financial statements for prior years
have been restated to give effect to this transaction.

CPEI ORGENICS LTDA ("CPEI"), a Brazilian corporation engaged in the
marketing of diagnostic devices in Brazil, is 55% owned by Orgenics. Beginning
April 1, 1995 CPEI has been accounted for as a consolidated subsidiary of
Orgenics (on April 1, 1995 CPEI started its activity).

The Company and its subsidiaries sell their products throughout the world,
mainly in France and South America. For the nine months ended September 30, 1996
98.5% and for the three years ended December 31, 1995, approximately 95.9%,
96.8% and 98.1%, respectively, of the Group's total revenues were derived from
sales to customers outside of Israel.

b. Principles of consolidation:

The consolidated financial statements include the financial statements of
Orgenics and its subsidiaries, PBS and CPEI.

Significant intercompany balances and transactions have been eliminated in
the consolidation.

Hereinafter, Orgenics and its consolidated subsidiaries are collectively
referred to as the "Company".

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

a. Financial statements in U.S. dollars:

The accompanying financial statements have been prepared in U.S. dollars.

Approximately 98% of the sales of the Company are made outside Israel. In
1996, 34.6% of the Company's consolidated revenues were in U.S. dollars, 1.4%
were in NIS and 64% were in other currencies, primarily the French Franc.

The U.S. dollar has been determined to be the functional currency for the
Company and its subsidiaries except for the French subsidiary.

The functional currency for PBS is the French Franc. Accordingly, the
financial statements of PBS have been translated into dollars in accordance with
the principles set forth in Statement No. 52 of the Financial Accounting
Standards Board of the United States (FASB). Gains and losses resulting from
translation are reflected in stockholders' equity under the caption "cumulative
translation adjustments".

F-46
<PAGE> 146

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

If the Company was to declare a dividend, it would be paid in NIS to
Israeli and foreign stockholders.

b. Rates of Exchange:

The amounts stated for assets and liabilities in currencies other than the
functional currency of the Company and its subsidiaries, or linked to foreign
currencies are remeasured into the appropriate functional currency using the
representative exchange rates prevailing at the balance sheet dates.

The exchange rates of the dollar in relation to the New Israeli Shekel and
to the French Franc were as follows:

<TABLE>
<S> <C>
September 30, 1996...................... U.S.$1 = NIS 3.220 = F.FR. 5.17
September 30, 1995...................... U.S.$1 = NIS 2.995 = F.FR. 4.90
December 31, 1995....................... U.S.$1 = NIS 3.135 = F.FR. 4.89
December 31, 1994....................... U.S.$1 = NIS 3.018 = F.FR. 5.35
December 31, 1993....................... U.S.$1 = NIS 2.986 = F.FR. 5.90
December 31, 1992....................... U.S.$1 = NIS 2.764 = F.FR. 5.51
</TABLE>

c. Cash equivalents:

Cash equivalents are short-term highly liquid investments that are readily
convertible to cash and with maturities when purchased of three months or less,
such as short-term deposits.

d. Marketable securities:

Marketable securities are accounted for in accordance with FASB Statement
No. 115. The Company designated its marketable securities as trading and
therefore are presented at their market value at the balance sheet date and
resulting realized and unrealized gains and losses are included in financial
income and expenses.

e. Allowance for doubtful accounts:

The allowance for doubtful accounts is determined with respect to specific
debts which are of doubtful collection.

f. Inventories:

Inventories are stated at the lower of cost or market value.

Cost is determined as follows:

Raw materials -- on the basis of weighted average.

Work in process and finished products of Orgenics -- on the basis of
computed manufacturing costs.

Finished products purchased by PBS and CPEI from third parties -- on the
"first-in, first-out" method.

g. Investments:

The investment in affiliate is accounted for using the equity method of
accounting. Other investments are stated at cost.

h. Fixed assets:

Fixed assets are stated at cost, net of related investment grants received
(see Note 14b).

F-47
<PAGE> 147

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Depreciation is computed by the straight-line method over the estimated
useful lives of the assets.

The annual depreciation rates are as follows:

<TABLE>
<CAPTION>
%
------------------
<S> <C>
Laboratories and equipment............................... 7-20 (mainly 7)
Motor vehicles........................................... 15-25 (mainly 15)
Computers and peripheral equipment....................... 20-25 (mainly 20)
Leasehold improvements................................... 10
</TABLE>

i. Other assets:

Purchased know-how and patent registration costs are stated at cost.
Amortization is computed on the straight-line method over the estimated useful
lives of the assets 5-8 years.

j. Revenue recognition:

Sales are recognized upon shipment.

k. Research and development expenses:

Research and development expenses, net of related research grants, are
charged to income as incurred.

l. Royalty-bearing grants:

Royalty-bearing grants from the Government of Israel for funding approved
research projects, are recognized of the time the Company is entitled to such
grants, on the basis of the related costs incurred, and are netted from such
costs in the statement of operations.

m. Advertising expenses:

Advertising costs are expensed as incurred.

n. Taxes on income:

The Company follows the asset and liability method of accounting for income
taxes in accordance with Israeli accounting principles. Under Israeli accounting
principles, deferred income taxes are provided for differences resulting from
changes in the Israeli Consumer Price Index (CPI) (the basis for the Company's
tax reporting) and changes in the exchange rate of the NIS to the U.S. dollar.
FAS No. 109, "Accounting for Income Taxes", does not allow deferred income taxes
to be recognized for these differences which with respect to the Company's
financial statements, are immaterial.

o. Earnings per share:

Earnings per share are computed based on the weighted average number of
shares outstanding during the year, in accordance with Opinion No. 55 of the
Institute of Certified Public Accountants in Israel. The effect of applying APB
15 (U.S. GAAP) on earnings per share is immaterial.

p. Accounting for stock issued to employees:

The Company accounts for stock-based compensation in accordance with the
requirements of APB 25 and intends to continue to do so.

F-48
<PAGE> 148

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

q. Use of estimates:

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

r. Concentrations of credit risks:

The Company performs ongoing credit valuations of its debtors. In
management's opinion, the allowance for doubtful accounts adequately covers all
anticipated losses with respect to concentration of credit risks of trade
receivables.

s. Unaudited information:

The financial statements include the unaudited results of operations and
cash flows for the nine months ended September 30, 1995. This unaudited
information has been prepared by the Company on the same basis as the audited
consolidated financial statements and, in management's opinion, reflects all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the financial information in accordance with generally
accepted accounting principles for the period presented when read in conjunction
with the Company's audited consolidated financial statements and notes thereto.

t. Reclassification:

Prior years amounts have been reclassified to conform to the September 30,
1996 presentation.

NOTE 3: ACCOUNTS RECEIVABLE -- TRADE

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
Accounts receivable.................................. $2,169 $2,103 $ 2,155
Less allowance for doubtful accounts................. 38 51 70
------ ------ ------
$2,131 $2,052 $ 2,085
====== ====== ======
</TABLE>

NOTE 4: OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1994 1995 1996
---- ---- -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
Prepaid expenses........................................ $236 $267 $ 427
V.A.T. receivable....................................... 47 52 183
Accrued income receivable............................... 192 104 416
Other receivables....................................... -- 28 55
---- ---- ------
$475 $451 $1,081
==== ==== ======
</TABLE>

F-49
<PAGE> 149

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5: INVENTORIES

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
Raw materials and work in process.................... $ 820 $ 692 $ 700
Finished products manufactured by Orgenics........... 332 503 270
Finished products purchased by subsidiaries.......... 15 43 52
------ ------ ------
$1,167 $1,238 $1,022
====== ====== ======
</TABLE>

NOTE 6: INVESTMENTS

<TABLE>
<CAPTION>
DECEMBER 31,
------------- SEPTEMBER 30,
1994 1995 1996
---- ---- -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
Cost of investment in 50%-owned Japanese joint
venture -- Orgenics Takra Co. Ltd..................... $ 25 $ 25 $ 25
Equity in post-acquisition earnings..................... 7 7 7
Cumulative translation adjustments...................... 27 27 27
---- ---- ----
59 59 59
Orgenics International Holding shares(1)................ 84 101 95
Other investments at cost............................... 32 46 46
---- ---- ----
$175 $206 $200
==== ==== ====
</TABLE>

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

(1) In December 1993, PBS bought 24,474 Orgenics International Holding ("OIH")
shares from the former general manager of PBS, as part of a transaction
following his resignation.

In January 1994, PBS bought 1,000 OIH shares from its former marketing
manager, as part of a transaction following his resignation.

F-50
<PAGE> 150

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7: FIXED ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
a. Cost:
Laboratories and equipment......................... $2,094 $2,116 $2,153
Motor vehicles..................................... 186 164 209
Computers and peripheral equipment................. 364 417 527
Leasehold improvements............................. 519 592 595
------ ------ ------
$3,163 $3,289 $3,484
====== ====== ======
b. Accumulated depreciation:
Laboratories and equipment......................... $ 876 $1,074 $1,171
Motor vehicles..................................... 46 63 77
Computers and peripheral equipment................. 245 294 363
Leasehold improvements............................. 229 341 404
------ ------ ------
$1,396 $1,772 $2,015
====== ====== ======
c. For assets pledged -- see Note 13.
</TABLE>

NOTE 8: OTHER ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
Deferred expenses.................................... $200 $ -- $ --
Purchased know-how and patent registration costs..... 391 642 672
---- ---- ----
591 642 672
Less accumulated amortization........................ 56 117 152
---- ---- ----
$535 $525 $520
==== ==== ====
</TABLE>

NOTE 9: SHORT-TERM BANK DEBT

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
French Franc bank overdraft.......................... $ 365 $ 614 $ 5
Israeli NIS bank overdraft........................... 475 500 529
Short-term loans (linked to the U.S. dollar)......... 1,096 588 706
------ ------ ------
$1,936 $1,702 $1,240
====== ====== ======
</TABLE>

F-51
<PAGE> 151

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10: ACCRUED EXPENSES AND OTHER PAYABLES

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
1994 1995 1996
------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
Employee payroll and accrued vacation pay............ $ 446 $ 554 $ 616
Government institutions.............................. 35 89 287
Royalties payable to the Chief Scientist of the
Ministry of Trade of Israel........................ 39 65 60
Royalties in respect of production and know-how
licenses........................................... 28 73 16
Royalties payable to the Fund for Encouragement of
Marketing Activity................................. 49 -- --
Other accrued expenses............................... 600 567 321
------ ------ ------
$1,197 $1,348 $1,300
====== ====== ======
</TABLE>

NOTE 11: LONG-TERM DEBT

a. Linkage terms and rates of interest:

<TABLE>
<CAPTION>
INTEREST
RATE DECEMBER 31, SEPTEMBER
TERMS OF -------- ----------------- 30,
LINKAGE % 1994 1995 1996
------------- -------- ------ ------ ------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Bank debt(1)................ NIS 20 $ 136 $ 28 $ 75
U.S. Dollar 5- 9 1,495 1,131 682
French Franc 7-12 280 -- --
------ ------ ----
1,911 1,159 757
Government loans(2)......... French Franc 0 179 163 155
------ ------ ----
2,090 1,322 912
Less current maturities................................ 973 639 370
------ ------ ----
$1,117 $ 683 $542
====== ====== ====
</TABLE>

b. Aggregate maturities of long-term debt are as follows:

<TABLE>
<S> <C> <C> <C>
First year -- (current maturities)..................... $ 973 $ 639 $370
------ ------
Second Year............................................ 374 375 403
Third Year............................................. 367 308 139
Fourth Year............................................ 376 -- --
------ ------ ----
Long-term debt, net of current maturities.............. 1,117 683 542
------ ------ ----
$2,090 $1,322 $912
====== ====== ====
</TABLE>

c. For assets pledged -- see Note 13.
- ---------------

(1) Including state-guaranteed loans in the amount of $101 thousand.

(2) An interest free loan of $155 thousand (F.FR.800,000) received by PBS from
the Government of France Agency for the Encouragement of Innovation
("ANVAR"). Under the provisions of the loan, and provided the Company
complies with the conditions, if the innovation project is not considered a
technical success, the Company will only be required to refund F.FR.490,000.
The Company is presently

F-52
<PAGE> 152

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

negotiating with this Agency to obtain total waiver of this debt following
the technical failure of the project.

During 1994, ANVAR agreed to convert an interest-free loan of $138 thousand
(F.FR.740,000) to a research grant.

NOTE 12: ACCRUED SEVERANCE PAY

a. Orgenics' liability for severance pay, pursuant to Israeli law, is provided
by managers' insurance policies and by severance pay funds.

Since the insurance policies are owned by the Company, the cash value of
these policies at each period end is recorded as an asset of the Company and
included in Severance Pay Funds in the Company's balance sheet.

According to U.S. GAAP the amounts deposited should have been presented
under Investments.

Following are the amounts of accrued severance pay, and amounts deposited
as presented in the balance sheets:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------- SEPTEMBER 30,
1994 1995 1996
----- ----- -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C>
Accrued severance pay................................... $441 $421 $529
Less amounts deposited.................................. 333 292 348
---- ---- ----
$108 $129 $181
==== ==== ====
</TABLE>

Severance pay expenses for the nine months ended September 30, 1996 and for
the three years ended December 31, 1995 were $109, $248, $156 and $210,
respectively.

b. France has a State-run mandatory pension plan to which contributions are made
monthly by both the employee and employer based on the gross monthly salary.
The liability is fully covered by these contributions.

In addition, pursuant to industry employment agreements, a lump sum
indemnity is payable upon retirement to employees still in the service of PBS at
the date of retirement. Full accrual has been made for this obligation.

NOTE 13: CHARGES (ASSETS PLEDGED)

As collateral for Orgenics' liabilities to banks and to others in Israel,
Orgenics has granted liens on certain assets, including fixed assets, insurance
rights, share capital and goodwill.

NOTE 14: CONTINGENT LIABILITIES AND COMMITMENTS

a. Royalty Commitments:

1. Royalty commitments to the Chief Scientist:

Orgenics finances its research and development expenditures in Israel under
programs sponsored by the Chief Scientist of the Ministry of Trade of Israel,
for the support of research and development projects. In the event that
development of the products in which the Chief Scientist participation is
successful, Orgenics will be obligated to pay royalties at the rate of 2%-5% of
the sales of products developed with funds provided by the Chief Scientist, up
to an amount equal to 100% of the Chief Scientist's research and development
grants to such projects.

F-53
<PAGE> 153

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The maximum contingent royalty as at September 30, 1996 was approximately
$1.6 million.

2. Royalties in respect of production and know-how licenses:

Orgenics entered into several agreements for the license of know-how. Under
these agreements, Orgenics is committed to make royalty payments at rates
varying between 3.5%-8% of sales of the products which were manufactured using
such know-how. The minimum annual royalties payable is $10,500.

b. Commitments in respect of government loans:

See Note 11(2)

c. Lease commitments:

Orgenics and its subsidiaries have leased offices and other facilities
under operating leases for periods through 2006.

Minimum annual rentals payables under non-cancellable operating leases at
rates in effect as of September 30, 1996, are as follows:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, U.S. DOLLARS
-------------------------------------------------------------------- --------------
(IN THOUSANDS)
<S> <C>
1996................................................................ $ 114
1997................................................................ 266
1998 until 2006 ($235 each year).................................... 1,880
------
Total..................................................... $2,260
======
</TABLE>

d. Patent dispute:

Pasteur Sanofi Diagnostics S.A. ("Sanofi Diagnostics") has asserted that it
holds patents to certain peptides purchased by the Company from Biochem
ImmunoSystems Inc. for use in diagnostic products for HIV, but has not brought a
claim against the Company with respect to the Company's use of such peptides.
However, if the Company were found to be infringing upon patents of Sanofi
Diagnostics, it might be required to pay damages, develop alternate sources of
supply or identify alternate peptides, any of which could have a material
adverse effect upon the Company. At this time, the Company is unable to estimate
the probability of Sanofi Diagnostics making a claim against the Company or the
possible liability of the Company, if any, to Sanofi Diagnostics for the use of
such peptides. In June 1996, the Company signed a toll manufacturing contract
with Sanofi Diagnostic, whereby Orgenics is becoming a toll manufacturer for
rapid HIV kits for Sanofi Diagnostics.

e. Subsidy granted by ANVAR

In 1988, PBS obtained a subsidy from "ANVAR" amounting to $33,900 to share
the costs of a new scientist. "ANVAR" might request a refund on dismissal of
this employee, which occurred when the Company ceased its research and
development activity during 1992. Management considers that it is unlikely that
such a request will be made.

F-54
<PAGE> 154

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 15: SHAREHOLDERS' EQUITY

a. Share Capital:

1. In February 1994, all classes of shares were converted into one class of
ordinary shares, NIS 0.1 par value each, and the authorized share capital of
Orgenics was increased to 20,000,000 Ordinary Shares of NIS 0.1 par value each.

<TABLE>
<CAPTION>
ORDINARY SHARES OF NIS 0.1
PAR VALUE EACH
--------------------------
NUMBER OF SHARES
--------------------------
ISSUED AND
AUTHORIZED OUTSTANDING
---------- -----------
<S> <C> <C>
September 30, 1996........................................... 20,000,000 811,634
========== =======
December 31, 1995 and 1994................................... 20,000,000 740,711
========== =======
</TABLE>

2. In September 1993, Orgenics issued 110,855 shares by a private
placement. Within the private placement agreement, the investors were guaranteed
a minimal rate of return in the event the Company effected a public offering.
For this purpose, the Company has allocated 110,859 additional shares to a
trustee, at the date of the private placement.

During the reported period and following an agreement signed between the
Company and Selfcare Inc. (see c. below), the Company transferred the 110,859
shares from the trustee to the private investors, and allocated to those
investors 59,681 additional shares, all in return for the private investors
waiving future rights to a minimal rate of return.

Within the framework of the private placement and as part of the consulting
agreement, the private placement consultants were granted an option to purchase
3.45% of the Company's share capital in an amount equivalent to 10% of the
proceeds raised in the private placement.

During August 1996, the private placement consultants waived their option
against a one-time payment of $35 thousand.

This amount was charged in the financial statements to share premium.

3. The number of shares used in the computation of earnings per share in
prior years was restated in order to reflect the issue of additional shares to
the private investors.

b. Employee Stock Option Plans:

1. During 1992 and 1993, certain employees of Orgenics and PBS were granted
options for the purchase of shares of OIH. As of December 31, 1994 and 1995, all
such options have been exercised or cancelled.

2. In January 1995, the Company granted to Max Herzberg, under the 1994
option plan, options to purchase 11,242 of the Company's ordinary shares, at an
exercise price equal to the par value of the shares. During the reported period,
these stock options were exercised. The exercise increment amounted to $300.

3. 1995 Stock Option Plan:

The Company's stock option plan (the "1995 plan") provides that stock
options of the Company may be granted to employees, officers, directors and
consultants of the Company or any subsidiary. An aggregate of 200,000 ordinary
shares of the Company are reserved for issuance under the 1995 plan. Any options
which are canceled or not exercised within the option period will become
available for future grants. The 1995 plan will terminate in 2004, unless
previously terminated by the Board of Directors.

F-55
<PAGE> 155

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The 1995 plan will be administered by the Board of Directors or an option
committee which may be appointed by the Board, which has the authority to
determine the persons to whom options will be granted, the number of ordinary
shares to be covered by each option, the time or times at which options will be
granted or exercised, and the terms and provisions of the options.

Options granted under the 1995 plan will generally be exercisable in
installments during the option term. These options will not be transferable by
an optionee other than by will or by laws of descent and distribution and,
during an option holder's lifetime, will be exercisable only by such option
holder or by his or her legal representative. Options granted under the 1995
plan will terminate at such time and under such circumstances as the Board or
option committee determines.

During January 1996, the Company granted to certain employees options,
under the 1995 plan, to purchase 6,392 ordinary shares. These options were
granted on the condition that the employee still be an employee of the company
in January 1998 and at exercises prices representing a discount of 40% on the
share value attributed at the time of the exchange with Selfcare Inc. or 40% of
a company valuation basis of $15 million on a fully diluted basis whatever the
lowest for the employee.

According with U.S. GAAP, the Company accrued deferred compensation in the
amount of $62,000. This amount reflects the excess of the market price over the
exercise price at the date of the grant.

This amount is amortized over the period from January 1996 through January
1998.

c. Convertible debenture

On February 7, 1996, the Company signed an agreement with Selfcare Inc. of
Boston USA by which Selfcare invested $1 million in the Company. The investment
was made in the form of a convertible debenture.

During November 1996, the debenture was converted into 20% of the shares of
Orgenics.

d. In November 1993, a related party agreed to waive $268,356 in interest
payable and the Company repaid the remaining balance of the loan. This waiver of
this debt has been accounted for in "stockholders' equity" as a contribution to
additional paid-in capital.

NOTE 16: TAXES ON INCOME

a. Tax benefits under the Law for the Encouragement of Capital Investments,
1959, as amended (hereafter -- "the Law"):

1. The production facilities of the Company have been granted an
"Approved Enterprise" status under the Law.

Income derived from an "Approved Enterprise" is subject, in the case
of Orgenics qualifying as a "foreign investment company," to corporate tax
at the rate of 20% (rather than the regular corporate tax), during a period
of ten years from the year in which such enterprise first earns taxable
income (limited to twelve years from commencement of production or to
fourteen years from the year in which the approval was granted, whichever
is earlier).

The period of benefits in respect of this approval will expire in
1997.

2. Further, an expansion program of Orgenics' enterprise engaged in
the production of diagnostic kits, has been granted an "Approved
Enterprise" status under the Law.

Investments under this program were made in 1991-1994. The Company has
not yet received a final operating approval for this program.

F-56
<PAGE> 156

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

According to the provisions of the Law, Orgenics has chosen, in
respect of this program, to enjoy "alternative benefits" -- waiver of
grants in return for tax exemption.

Accordingly, income derived from such program will be tax exempt for a
period of two years and will be subject to corporate tax at a rate of 20%
for the following eight years (limited to twelve or fourteen years, as
mentioned in 1. above).

The benefit period for this expansion program has not yet commenced.

Since Orgenics is operating under more than one approved program and
since part of its taxable income is not entitled to tax benefits under the
above-mentioned law and is taxed at regular rates (1993 -- 39%,
1994 -- 38%, 1995 -- 37% and 1996 -- 36%), its effective tax rate is the
result of a weighted combination of the various applicable rates or tax
exemptions. The computation is made for income derived from each project on
the basis of formulas specified in the Law and in the approvals.

3. The Law also grants the right to claim accelerated depreciation on
equipment used by the "Approved Enterprise".

b. Tax benefits under the Law for the Encouragement of Industry (Taxation),
1969:

Orgenics is an "Industrial Company" under the above law, and, as such, is
entitled to certain tax benefits, including accelerated depreciation at
increased rates and the deduction of the purchase price of know-how, over a
period of eight years.

c. Measurement of results of Orgenics for tax purposes:

Results of Orgenics for tax purposes are measured in terms of earnings in
NIS after certain adjustments for increases in the Israeli Consumer Price Index
("CPI"). As explained in Note 2a, the financial statements are presented in
United States dollars. The difference between the annual change in the Israeli
CPI and in the NIS/Dollar exchange rate causes a difference between taxable
income and the income before taxes in the financial statements.

d. Taxes on income in France:

Income taxes in France are computed, for fiscal years beginning on January
1, 1996, at a standard rate of 36.66% of taxable income (for the previous fiscal
years the standard rate was 33.33%). Ordinary tax losses can be carried forward
to offset taxable income for five years. Tax losses resulting from depreciation
can be carried forward with no time limit.

e. Taxes on income in Brazil:

Taxes on income in Brazil are computed for fiscal years beginning on
January 1. Commencing in 1996, the standard rate for taxable income will be 15%
(for the previous fiscal year the standard rate was 25%).

f. Carryforward tax losses:

Orgenics has a carryforward tax loss with no time limit amounting to
approximately $8.1 million (NIS 26 million) as of December 31, 1995. Losses in
NIS are linked to the Israeli CPI.

F-57
<PAGE> 157

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. PBS has a carryforward tax loss amounting to approximately $4.4 million
as of September 30, 1996.

Tax losses expire as follows:

<TABLE>
<CAPTION>
U.S. DOLLARS
----------------
(IN THOUSANDS)
<S> <C>
1996................................................... $ 531
1997................................................... --
1998................................................... 476
With no time limit..................................... 3,436
------
$4,443
======
</TABLE>

g. Tax assessments:

1. Orgenics has received final tax assessments up to and including the year
1990.

2. PBS has received final tax assessments up to and including the year
1991. Fiscal years remaining open for a tax audit are the years ended December
31, 1995, 1994 and 1993. However, in the event of utilization of carryforward
losses from previous years, the tax authorities are entitled to reassess the
years in which the tax loss originated.

h. A reconciliation of the theoretical tax expense assuming all income is taxed
at the statutory rate and the actual tax expense is as follows:

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------ SEPTEMBER 30,
1993 1994 1995 1996
----- ----- ---- -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Theoretical tax expense (income tax benefit) computed
at the statutory rate applicable to corporations in
Israel(1)........................................... $ 64 $(130) $ 93 $ 384
Increase (decrease) in income taxes resulting from:
Tax adjustments in respect of inflation in Israel... 63 (110) (18) (171)
Non-deductible expenses............................. 52 470 94 17
Different tax rate resulting from lower tax rate in
France and Brazil................................ (53) (5) (25) (44)
Tax benefits realized from use of loss carryforwards
not previously recorded as deferred tax
benefit.......................................... (120) (210) (82) (144)
----- ----- ---- -----
Taxes on income in the statements of operations(2).... $ 6 $ 15 $ 62 $ 42
===== ===== ==== =====
</TABLE>

(1) Computed at the rate of 39% for the year 1993, 38% for the year 1994, 37%
for the year 1995, and 36% for the year 1996.

(2) Represents the minimum taxes paid by PBS and CPEI pursuant to the French and
the Brazilian law.

F-58
<PAGE> 158

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Domestic (Israel)....................... $ 423 $(420) $ 16 $ 525
Foreign................................. (258) 79 234 543
----- ----- ---- ------
$ 165 $(341) $250 $1,068
===== ===== ==== ======
</TABLE>

j. Deferred income taxes:

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------------- SEPTEMBER 30,
1993 1994 1995 1996
------- ------- ------- -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
The Company's deferred income taxes
consist of the following:
Various accrued liabilities........... $ 32 $ 39 $ 105 $ 120
Carryforward losses................... 3,226 3,449 4,464 3,927
Intercompany unrealized income
currently taxable.................. 14 18 15 17
------ ------ ------- -------
3,272 3,506 4,584 4,064
Less valuation allowance(1)........... (3,272) (3,506) (4,584) (4,064)
------ ------ ------- -------
$ -- -- -- --
====== ====== ======= =======
</TABLE>

(1) In 1993, 1994 and 1995, the Company has provided a 100% valuation allowance
against the deferred tax assets, in respect of those tax loss carryforwards
and other temporary differences, due to uncertainty of future results and
its ability to realize these deferred tax assets.

F-59
<PAGE> 159

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 17: TRANSACTIONS WITH RELATED PARTIES

a. In September 1993, an employment agreement was signed between Orgenics and
its Chairman of the Board and Chief Executive Officer ("the Employee"). It was
agreed that from January 1, 1993, the Employee will be entitled annually to
participate in the profit of the Company at a rate of 2% of the net income of
the Company, subject to the condition that the net income of the Company be at
least 10% of total sales of the Company in the same year. The agreement will
expire after four years beginning from September 1993 unless one of the two
parties gives expiration notice earlier.

In January 1995, the Company, under the 1994 option plan, granted to the
Employee options to purchase 11,242 of the Company's ordinary shares (see Note
15b).

b. Transactions with related parties are included in the following items in the
statement of operations:

<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS
DECEMBER 31, ENDED
------------------- SEPTEMBER 30,
1993 1994 1995 1996
--- --- --- -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Legal fees and other expenses to OIH....................... $30 $16 $50 $ 165
Revenues from a Company owned by the minority stockholder
of CPEI.................................................. -- -- -- $ 305
</TABLE>

c. CPEI-ORGENICS LTDA -- local management neglected to apply for a permit to
conduct business in the State of Sao Paulo and this company received a warning
from the Health Authorities of that State that it is precluded from selling
products until full documentation is obtained.

Management believes that such a permit will be obtained soon, provided
CPEI-ORGENICS LTDA's local management makes efforts to receive it. In the
meantime, Orgenics Ltd. gave authorization to a related company to sell its
products for a period of three months in the Brazilian market through
CPEI-ORGENICS LTDA.

Management believes that CPEI-ORGENICS LTDA's local management is acting in
conflict of interest and have been notified by the Company to that effect.
Management believes that sales in Brazil could be temporarily affected by 10-20%
in 1997 if a dispute with a local partner would force the Company to establish
alternative distribution channels.

NOTE 18: SELECTED STATEMENT OF OPERATIONS DATA

a. Sales classified by geographical destination:

<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS
DECEMBER 31, ENDED
----------------------------- SEPTEMBER 30,
1993 1994 1995 1996
------ ------ ------- -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
France............................................ $3,139 $3,054 $ 4,182 $ 6,401
South America..................................... 1,117 1,675 3,310 2,153
United States..................................... 448 199 132 287
Europe (excluding France)......................... 522 1,027 701 36
Israel............................................ 258 245 192 137
Other countries................................... 823 1,362 1,656 417
------ ------ ------- ------
Total revenues.......................... $6,307 $7,562 $10,173 $ 9,431
====== ====== ======= ======
Including exchange rate insurance revenues (net of
premium)........................................ $ 42 $ -- $ -- $ --
====== ====== ======= ======
</TABLE>

F-60
<PAGE> 160

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

b. Information about the Company's operations in different geographical areas:

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
--------------------------------------------------------------
ADJUSTMENTS
AND
ISRAEL FRANCE BRAZIL ELIMINATIONS CONSOLIDATED
------ ------ ------ ------------ ------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers......... $3,264 $4,014 $2,153 $ -- $ 9,431
Transfers between geographic areas...... 1,814 -- -- (1,814) --
------ ------ ------ ------- -------
Total sales................... $5,078 $4,014 $2,153 $ (1,814) $ 9,431
====== ====== ====== ======= =======
Operating income........................ $ 532 $ 486 $ 132 $ (44) $ 1,106
====== ====== ====== =======
Financial expenses, net................. (38)
Other expenses, net..................... --
-------
Income before taxes on income........... $ 1,068
=======
Identifiable and total assets at
September 30, 1996.................... $6,444 $1,756 $ 597 $ (987) $ 7,810
====== ====== ====== ======= =======
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------
ADJUSTMENTS
AND
ISRAEL FRANCE BRAZIL ELIMINATIONS CONSOLIDATED
------ ------ ------ ------------ ------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers......... $3,838 $4,182 $2,153 $ -- $ 10,173
Transfers between geographic areas...... 1,857 -- -- (1,857) --
------ ------ ------ ------- -------
Total sales................... $5,695 $4,182 $2,153 $ (1,857) $ 10,173
====== ====== ====== ======= =======
Operating income........................ $ 583 $ 321 $ 221 $ (90) $ 1,035
====== ====== ====== ======= =======
Financial expenses, net................. (600)
Other expenses, net..................... (185)
-------
Income before taxes on income........... $ 250
=======
Identifiable and total assets at
December 31, 1995..................... $5,274 $1,976 $ 562 $ (856) $ 6,956
====== ====== ====== ======= =======
</TABLE>

F-61
<PAGE> 161

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
---------------------------------------------------
ADJUSTMENTS
AND
ISRAEL FRANCE ELIMINATIONS CONSOLIDATED
------ ------ ------------ ------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Sales to unaffiliated customers.................. $4,463 $3,099 $ -- $ 7,562
Transfers between geographic areas............... 1,079 -- (1,079) --
------ ------ -------- --------
Total sales............................ $5,542 $3,099 $ (1,079) $ 7,562
====== ====== ======== ========
Operating income................................. $1,026 $ 13 $ 19 $ 1,058
====== ====== ========
Financial expenses, net.......................... (319)
Other expenses, net.............................. (1,080)
--------
Loss before taxes on income...................... $ (341)
========
Identifiable and total assets at December 31,
1994........................................... $6,972 $1,749 $ (1,641) $ 7,080
====== ====== ======== ========
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
---------------------------------------------------
ADJUSTMENTS
AND
ISRAEL FRANCE ELIMINATIONS CONSOLIDATED
------ ------ ------------ ------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Sales to unaffiliated customers.................. $3,079 $3,228 $ -- $ 6,307
Transfers between geographic areas............... 1,080 150 (1,230) --
------ ------ -------- --------
Total sales............................ $4,159 $3,378 $ (1,230) $ 6,307
====== ====== ======== ========
Operating income (loss).......................... $ 558 $ (62) $ 42 $ 538
====== ====== ========
Financial expenses, net.......................... (367)
Other expenses, net.............................. (6)
--------
Income before taxes on income.................... $ 165
========
Identifiable and total assets at December 31,
1993........................................... $7,291 $2,746 $ (3,848) $ 6,189
====== ====== ======== ========
</TABLE>

c. Cost of revenues:

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
---------------------------- SEPTEMBER 30,
1993 1994 1995 1996
------ ------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Materials consumed................................. $812 $1,149 $1,231 $1,009
Salaries and related employee benefits............. 350 456 535 460
Royalties.......................................... 246 129 111 195
Other manufacturing costs.......................... 231 190 114 194
Depreciation and amortization...................... 112 91 185 106
------ ------ ------ ------
1,751 2,015 2,176 1,964
Decrease (increase) in finished products and work
in process manufactured by Orgenics.............. (87) (188) (111) 179
------ ------ ------ ------
1,664 1,827 2,065 2,143
Commercial activities -- cost of purchased products
sold............................................. 441 365 1,009 735
------ ------ ------ ------
$2,105 $2,192 $3,074 $2,878
====== ====== ====== ======
</TABLE>

F-62
<PAGE> 162

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

d. Research and development expenses:

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
---------------------------- SEPTEMBER 30,
1993 1994 1995 1996
------ ------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Salaries and related employee benefits............. $475 $ 765 $ 961 $ 889
Materials consumed................................. 111 528 314 280
Subcontractors and others.......................... 197 215 74 172
Depreciation and amortization...................... 46 55 60 158
---- ------ ------ ------
$829 $1,563 $1,409 $1,499
==== ====== ====== ======
</TABLE>

e. Selling expenses:

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
---------------------------- SEPTEMBER 30,
1993 1994 1995 1996
------ ------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Salaries and related employee benefits............. $ 591 $ 787 $1,179 $1,098
Transportation and deliveries...................... 281 313 409 556
Advertising........................................ 138 138 418 166
Depreciation....................................... 6 30 32 10
Other selling expenses............................. 319 315 339 557
------ ------ ------ ------
$1,335 $1,583 $2,377 $2,387
====== ====== ====== ======
</TABLE>

f. General and administrative expenses:

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
---------------------------- SEPTEMBER 30,
1993 1994 1995 1996
------ ------ ------ -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Salaries and related employee benefits............. $ 881 $ 931 $1,221 $ 999
Rental expense and municipal taxes................. 219 380 230 227
Other general and administrative expenses.......... 613 550 1,156 942
Depreciation....................................... 60 85 89 57
------ ------ ------ ------
$1,773 $1,946 $2,696 $2,225
====== ====== ====== ======
</TABLE>

F-63
<PAGE> 163

ORGENICS LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

g. Financial expenses, net

<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS
DECEMBER 31, ENDED
---------------------- SEPTEMBER 30,
1993 1994 1995 1996
---- ---- ---- -------------
U.S. DOLLARS (IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest on short-term debt............................. $208 $204 $377 $ 168
Interest on long-term debt.............................. 135 162 203 45
Foreign translation differences......................... 105 (39) 88 (196)
Interest on short-term investments and others........... (32) (70) (62) --
Loss (gain) from marketable securities.................. (49) 62 (6) 21
---- ---- ---- -----
Financial expenses, net................................. $367 $319 $600 $ 38
==== ==== ==== =====
</TABLE>

h. Other income (expenses) net

<TABLE>
<S> <C> <C> <C> <C>
Gain (loss) on sale of fixed assets and other
investments........................................... $(4) $30 $(8) $ --
Other income (expenses)................................. (2) 15 23 --
--- --- --- ----
$(6) $45 $15 $ --
=== === === ====
</TABLE>

NOTE 19: SUBSIDIARIES INCLUDED IN THE CONSOLIDATION

<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF THE COMPANY OWNERSHIP
----------------------------------------------------------------- -----------------------
<S> <C>
PBS S.A.......................................................... 99.98%
Orgenics International Corporation
(wholly-owned by PBS S.A.)..................................... 99.98%
CPEI ORGENICS LTDA (CPEI)........................................ 55.00%
</TABLE>

F-64
<PAGE> 164

CAMBRIDGE DIAGNOSTICS IRELAND LIMITED

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
Cambridge Diagnostics Ireland Limited :

We have audited the accompanying statement of revenues and expenses of
Cambridge Diagnostics Ireland Limited (formerly Cambridge Biotech Limited)
("Cambridge") for the eleven month period ended November 30, 1994 (expressed in
Irish Pounds). This statement is the responsibility of the Company's management.
Our responsibility is to express an opinion on this statement based on our
audit.

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

As indicated in Note 1, the system of management and control which were in
place during the 1992 accounting period, when certain non bona fide transactions
were recorded by the Company, continued in place during a part of the eleven
month period ended November 30, 1994.

The accompanying statement has been prepared on a going-concern basis of
accounting. As discussed in Note 1, during 1994 an Examiner was appointed to the
Company, a scheme of arrangement was agreed and Selfcare Inc. ("Selfcare")
purchased the entire share capital of the Company. The Directors have received
written confirmation of Selfcare's intention to continue to support the Company
for the foreseeable future. The statement does not include any adjustments that
would be necessary in the absence of continued financial support from Selfcare.

In our opinion, the statement referred to above, expressed in Irish Pounds,
presents fairly in all material respects, the revenue and expenses of Cambridge
for the eleven month period ended November 30, 1994, in conforming with
generally accepted accounting principles in the United States of America.

ARTHUR ANDERSEN
Chartered Accountants
Dublin, Ireland
Date : 10 May, 1996

F-65
<PAGE> 165

CAMBRIDGE DIAGNOSTICS IRELAND LIMITED
(FORMERLY CAMBRIDGE BIOTECH LIMITED)

STATEMENT OF REVENUES AND EXPENSES
FOR THE ELEVEN MONTH PERIOD ENDED NOVEMBER 30, 1994

<TABLE>
<CAPTION>
IR[Pounds]
----------
<S> <C>
Total Revenues................................................................... 1,898,887
----------
Expenses
Cost of sales............................................................... (2,139,779)
Administrative expenses..................................................... (1,102,113)
Development expenditure..................................................... (467,057)
Other expenses.............................................................. (112,221)
----------
Total Expenses................................................................... (3,821,170)
----------
Operating loss before other income and income taxes (1,922,283)
Other Income
Examinership credit (Note 1)................................................ 457,940
Interest income, net........................................................ 4,974
----------
Net Loss Before Income Taxes..................................................... (1,459,369)
Income taxes (Note 3)....................................................... (2,400)
----------
Net Loss......................................................................... (1,461,769)
==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-66
<PAGE> 166

CAMBRIDGE DIAGNOSTICS IRELAND LIMITED
(FORMERLY CAMBRIDGE BIOTECH LIMITED)

NOTES TO THE STATEMENT OF REVENUES AND EXPENSES
FOR THE ELEVEN MONTH PERIOD ENDED NOVEMBER 30, 1994

1. THE COMPANY

The principal activity of the Company is the marketing and sales of
licensed diagnostic products for a range of infectious human diseases.

During 1994, as a consequence of discovery of non bona fide transactions in
the 1992 accounting period, the resignation of certain directors and the
withdrawal of financial support from the parent company, Cambridge Biotech
Corporation, with serious implications for the Company, the Board petitioned the
High Court for the appointment of an Examiner under the provisions of the Irish
Companies Act, 1990. Although the system of control and management which were in
place during the 1992 accounting period continued in place during a part of the
eleven month period ended November 30, 1994, no non bona fide transactions were
discovered in this period.

A scheme of arrangement was agreed resulting in IR[Pounds]12,016,783 of
amounts due by the Company being written off. Of this IR[Pounds]457,940 which
relates to third party creditors has been credited to the statement of revenue
and expenses. The remaining IR[Pounds]11,558,843 relates to the write-off of
amounts due by the Company to Cambridge Biotech Corporation and is treated as a
capital contribution. Selfcare Inc. purchased the entire share capital of the
Company from Cambridge Biotech Corporation on November 30, 1994.

The Directors have received written confirmation of Selfcare's intention to
continue to support the Company for the foreseeable future and accordingly are
satisfied that it is appropriate to prepare the statement on the going concern
basis.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The statement has been presented in accordance with generally accepted
accounting principles (GAAP) as applied in the U.S.

The specific accounting policies adopted in preparing the statement are set
forth below.

Revenue

Revenue represents the invoiced amounts of goods shipped to customers
stated net of value added tax, returns and allowances.

Pension Costs

The Company provides pensions to certain employees through contributions to
a defined contribution pension scheme. Contributions to the Scheme are expensed
as incurred.

Research and Development

Research and development expenditure is written off to the statement of
revenues and expenses as it is incurred.

Royalties

Royalties are payable in respect of a number of licences and are charged to
the statement of revenues and expenses in the same period in which the revenues
are recognised.

Leases

Assets held under capital leases, which transfer substantially all the
risks and rewards of ownership to the Company, are initially recorded at their
fair value at the inception of the leases. The equivalent liability,

F-67
<PAGE> 167

CAMBRIDGE DIAGNOSTICS IRELAND LIMITED
(FORMERLY CAMBRIDGE BIOTECH LIMITED)

NOTES TO THE STATEMENT OF REVENUES AND EXPENSES -- CONTINUED
FOR THE ELEVEN MONTH PERIOD ENDED NOVEMBER 30, 1994

categorised as appropriate, is included under creditors due within and after one
year. Assets are depreciated over the shorter of the lease term and their useful
economic lives. Finance lease interest charges are allocated over the periods of
the leases to produce constant rates of return on the outstanding balances.

Rentals under operating leases are charged on a straight-line basis over
the lease term.

Foreign Currencies

Transactions denominated in foreign currencies are recorded in Irish Pounds
at actual exchange rates at the date of transaction. Monetary assets and
liabilities denominated in foreign currencies are translated using the rates of
exchange prevailing at the balance sheet date. Gains and losses arising from
changes in exchange rates subsequent to the dates of transactions are included
as exchange gains or losses in the statement of revenues and expenses.

Income Taxes

Corporation tax payable is provided on taxable profits at current rates.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is calculated in order to write off the cost of each
asset in equal annual instalments over the estimated useful lives of the assets
as follows:

<TABLE>
<S> <C>
Leasehold premises.............................................. 20 years
Laboratory equipment............................................ 5 years
Computer equipment.............................................. 3 years
Other equipment................................................. 3 years
</TABLE>

Inventory

Inventory is valued on the first in, first out basis, at the lower of cost
or net realisable value. Cost includes all expenditures incurred in bringing
each product to its present location and condition.

Net realisable value is based on estimated normal selling price less
further costs expected to be incurred to completion and disposal. Inventory
which is known to be obsolete at the balance sheet date are written off to the
profit and loss account and a provision is made for stocks which may become
obsolete in the future.

Government Grants

Capital grants received or receivable in respect of qualifying property,
plant and equipment acquired are deferred and them amortised to the statement of
revenues and expenses on the same basis as the related assets are depreciated.
Revenue based grants are credited to the statement of revenues and expenses in
the period in which the related expense is incurred.

3. TAXATION

Income tax of IR[Pounds]2,400 arises on interest income earned by the
Company during the period.

The Company had tax losses carried forward of c. IR[Pounds]10 million at
November 30, 1994. There were no time limit restrictions on the utilisation of
these losses.

F-68
<PAGE> 168

CAMBRIDGE DIAGNOSTICS IRELAND LIMITED
(FORMERLY CAMBRIDGE BIOTECH LIMITED)

NOTES TO THE STATEMENT OF REVENUES AND EXPENSES -- CONTINUED
FOR THE ELEVEN MONTH PERIOD ENDED NOVEMBER 30, 1994

4. PENSION

The Company operates a defined contribution pension scheme which is funded
over the qualifying employees' periods of service by way of contributions to a
unit linked fund scheme. The Company's contributions are charged in the period
to which they relate. The payments amounted to IR[Pounds]58,000 in the eleven
month period ended November 30, 1994.

5. GUARANTEES AND OTHER FINANCIAL COMMITMENTS

Capital Commitments

At November 30, 1994 the Company had no capital commitments.

Lease Commitments

At November 30, 1994 the Company had annual commitments under
non-cancellable 35 year operating leases of IR[Pounds]54,805 and
IR[Pounds]58,500 which commenced on October 1, 1993 and February 17, 1992
respectively.

Contingent Liabilities

The agreements between the Company and the Industrial Development Authority
of Ireland ("IDA") requires the Company to maintain a certain number of
employees in Ireland. As of November 30, 1994 the Company is in breach of this
contractual condition. As a result or if certain other circumstances occur (such
as the disposal of grant aided assets or the termination of grant aided
activities within ten years) the IDA could require the Company to repay capital
expenditure and revenue grants totalling IR[Pounds]775,000. To date the IDA has
not pursued its right to recoup these grants from the Company. As management
believe that repayment is not probable the Company has not provided for the
potential liability for the repayment of these grants.

Legal Proceedings

Institut Pasteur and Genetic Systems Corporation, the holders of a patent
relating to the technology underlying the Company's HIV-related products, filed
a patent infringement lawsuit in March 1995 against Cambridge Biotech
Corporation challenging Cambridge Biotech Corporation's use of such technology.
At issue in the lawsuit are certain territory rights covered by the license held
by Cambridge Biotech Corporation and by extention, Cambridge Affiliate
Corporation, the company for which Cambridge Diagnostics Ireland Limited has
contract manufactured its HIV-related products since November 30, 1994. In
September 1995, the court ruled in favour of Cambridge Biotech Corporation on
this issue, although the plaintiffs subsequently filed an appeal. The date for
the appeal hearing is unknown and, if the lower-court decision were reversed on
appeal, the territories to which Cambridge Affiliate Corporation could sell
HIV-related products would be limited and this would materially and adversely
affect the operations of the Company.

F-69
<PAGE> 169

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To American Home Products Corporation:

We have audited the accompanying statement of net assets to be sold of
American Home Products Corporation's Whitehall-Robins Healthcare
Division-Certain Domestic Vitamin and Nutritional Supplement Consumer Healthcare
Brands (Nutritional Supplement Lines) as of November 30, 1996, and the related
statements of net revenues in excess of direct expenses for the years ended
November 30, 1995 and 1996. These statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

These statements have been prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission for inclusion in
the Form SB-2 of Selfcare, Inc., as described in Note 1 and are not intended to
be a complete presentation of the Nutritional Supplement Line's assets and
liabilities and revenues and expenses.

In our opinion, the statements referred to above present fairly, in all
material respects, the net assets to be sold as of November 30, 1996, and net
revenues in excess of direct expenses of the Nutritional Supplement Lines for
the years ended November 30, 1995 and 1996, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

Roseland, New Jersey
December 30, 1996

F-70
<PAGE> 170

AMERICAN HOME PRODUCTS CORPORATION

WHITEHALL-ROBINS HEALTHCARE DIVISION -- CERTAIN DOMESTIC VITAMIN
AND NUTRITIONAL SUPPLEMENT CONSUMER HEALTHCARE BRANDS
(NUTRITIONAL SUPPLEMENT LINES)

STATEMENT OF NET ASSETS TO BE SOLD
AS OF NOVEMBER 30, 1996
(IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<S> <C>
INTANGIBLES, net................................................................... $13,822

ACCRUED EXPENSES................................................................... (1,443)
-------
Net assets to be sold.................................................... $12,379
=======
</TABLE>

The accompanying notes are an integral part of this statement.

F-71
<PAGE> 171

AMERICAN HOME PRODUCTS CORPORATION

WHITEHALL-ROBINS HEALTHCARE DIVISION -- CERTAIN DOMESTIC VITAMIN
AND NUTRITIONAL SUPPLEMENT CONSUMER HEALTHCARE BRANDS
(NUTRITIONAL SUPPLEMENT LINES)

STATEMENTS OF NET REVENUES IN EXCESS OF DIRECT EXPENSES
FOR THE YEARS ENDED NOVEMBER 30, 1995 AND 1996
(IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
NET REVENUES........................................................... $25,986 $24,449
------- -------

DIRECT COSTS AND EXPENSES:
Cost of sales........................................................ 7,809 7,246
Direct marketing expenses............................................ 6,543 3,847
Direct selling, general and administrative expenses.................. 1,255 1,161
------- -------
Net revenues in excess of direct expenses.................... $10,379 $12,195
======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-72
<PAGE> 172

AMERICAN HOME PRODUCTS CORPORATION

WHITEHALL-ROBINS HEALTHCARE DIVISION -- CERTAIN DOMESTIC VITAMIN
AND NUTRITIONAL SUPPLEMENT CONSUMER HEALTHCARE BRANDS
(NUTRITIONAL SUPPLEMENT LINES)

NOTES TO STATEMENTS

(1) BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accompanying statements were prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission for
inclusion in the Form SB-2 of Selfcare, Inc., and are not intended to be a
complete presentation of the American Home Products Corporation's
Whitehall-Robins Healthcare Division -- Certain Domestic Vitamin and Nutritional
Supplement Consumer Healthcare Brands (the Nutritional Supplement Lines) assets
and liabilities and revenues and expenses. Pursuant to a draft Purchase
Agreement between American Home Products Corporation (the Parent), American
Cyanamid Company, A.H. Robins Company, Inc. and Selfcare, Inc., certain
intangible assets and certain liabilities (see accrued expenses) will be
acquired by Selfcare, Inc. for $30,000,000 cash and $6,000,000 in the form of a
note payable with an annual interest rate of 7%, due one year after closing. All
other assets and liabilities of the Nutritional Supplement Lines have been
excluded in accordance with the draft Purchase Agreement.

The statement of net assets to be sold has been derived from the financial
statements of Domestic Whitehall-Robins Healthcare, a division of American Home
Products Corporation (the Division). The products (the Brands) subject to the
draft Purchase Agreement are --

-- Allbee(R)
-- Beminal(R)
-- Ferro Sequels(R)
-- Gevral(R)-T
-- Gevrabon(R)
-- Posture(R)
-- Protegra(R)
-- Stresstabs(R)
-- Z-Bec(R)

The statements of net revenues in excess of direct expenses excludes
charges which are allocated to the Nutritional Supplement Lines by the Division
or the Parent. These allocations include, among other things, support services
such as research and development, legal, finance, treasury, tax, pension and
group insurance, insurance, environmental, safety, public relations, audit and
executive management advisory functions, as well as quality control, warehousing
and administrative costs. Interest income or expense attributable to borrowings
required to finance the Nutritional Supplement Lines' operations have also been
excluded.

Intangibles, Net

No specific historical costs had been recorded relative to the intangible
assets subject to the draft Purchase Agreement. Certain of the Brands were
acquired as part of American Home Products Corporation's acquisition of American
Cyanamid Company, which occurred effective December 1, 1994. The intangible
assets to be sold pursuant to the draft Purchase Agreement represent these
brands' proportionate share of the excess of the cost over the fair value of the
net assets acquired in that acquisition of American Cyanamid and are being
amortized on the straight-line method over 40 years. The allocation has been
made based upon the relative brand profit of the products to the total brand
profit of the Consumer Health division of American Cyanamid Company. At November
30, 1996, the accumulated amortization was $728,000.

F-73
<PAGE> 173

AMERICAN HOME PRODUCTS CORPORATION

WHITEHALL-ROBINS HEALTHCARE DIVISION -- CERTAIN DOMESTIC VITAMIN
AND NUTRITIONAL SUPPLEMENT CONSUMER HEALTHCARE BRANDS
(NUTRITIONAL SUPPLEMENT LINES)

NOTES TO STATEMENTS -- (CONTINUED)

Accrued Expenses

Accrued expenses represents the liabilities for returns and other price
adjustments and promotional accruals on sales occurring on or before November
30, 1996. The Company provides for these accruals at the time of sale based on
historical percentages.

Net Revenues and Direct Expenses

Net revenues, cost of sales, marketing and selling, general and
administrative direct expenses are based on the actual amounts recorded by the
Division associated with the Nutritional Supplement Lines. Amortization of
intangibles was $364,000 for each of the years ended November 30, 1995 and 1996
and is included in selling, general and administrative expenses.

(2) COMMITMENTS AND CONTINGENCIES:

In accordance with the draft Purchase Agreement, American Home Products
Corporation and its subsidiaries and divisions will be required to provide
certain transition supplies of the Brands and manufacturing capacity for the
Brands to the buyer.

F-74
<PAGE> 174

[Description of Inside Back Cover's Graphic: The graphic depicts the
packaging of the Company's early pregnancy tests and early ovulation
predictor and certain private label pregnancy tests and ovulation
predictors supplied by the Company. The packaging of each such product
generally contains photographic or other graphic depiction of the product
as well as the product's name.]
<PAGE> 175

===============================================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT 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 OR THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HERE UNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 21
Use of Proceeds....................... 21
Price Range of Common Stock and
Dividend Policy..................... 22
Capitalization........................ 23
Dilution.............................. 25
Selected Consolidated Financial
Data................................ 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations .... 28
Business.............................. 37
Management............................ 71
Certain Transactions.................. 83
Principal Stockholders................ 86
Description of Capital Stock.......... 88
Shares Eligible for Future Sale....... 92
Underwriting.......................... 95
Legal Matters......................... 96
Experts............................... 96
Additional Information................ 97
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

===============================================================================

2,000,000 SHARES

[Selfcare LOGO]

COMMON STOCK

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

PROSPECTUS
, 1997

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

LEHMAN BROTHERS

DILLON, READ & CO. INC.

A.G. EDWARDS & SONS, INC.

===============================================================================
<PAGE> 176

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

In accordance with Section 145 of the General Corporation Law of the State
of Delaware, Article VII of the Company's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") provides that no director of
the Company shall be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases, or (iv)
for any transaction from which the director derived an improper personal
benefit. In addition, the Certificate of Incorporation provides that if the
Delaware General Corporation Law is amended to authorize the further elimination
or limitation of the liability of directors, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest extent permitted
by the Delaware General Corporation Law, as so amended.

Article V of the Company's Amended and Restated By-laws (the "By-laws")
provide for indemnification by the Company of its officers and certain
non-officer employees under certain circumstances against expenses (including
attorneys fees, judgments, fines and amounts paid in settlement) reasonably
incurred in connection with the defense or settlement of any threatened, pending
or completed legal proceeding in which any such person is involved by reason of
the fact that such person is or was an officer or employee of the Company, if
such person acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to
criminal actions or proceedings, if such person had no reasonable cause to
believe his or her conduct was unlawful.

Under Section 8 of the Underwriting Agreement filed as Exhibit 1.1 hereto,
the Underwriters have agreed to indemnify, under certain conditions, the
Company, its directors, certain officers and persons who control the Company
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), against certain liabilities.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION(1)

The following table sets forth the estimated expenses payable by the
Company in connection with this offering (excluding underwriting discounts and
commissions):

<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
- -------------------------------------------------------------------------------- -----------
<S> <C>
SEC Registration Fee............................................................ $ 8,802.73
NASD Filing Fee................................................................. 3,403.75
American Stock Exchange Listing Fee............................................. 17,500.00
Accounting Fees and Expenses.................................................... *
Legal Fees and Expenses......................................................... *
Printing Expenses............................................................... *
Blue Sky Qualification Fees and Expenses........................................ *
Transfer Agent's Fee............................................................ *
Miscellaneous................................................................... $ *
----------
TOTAL................................................................. $600,00.00
</TABLE>

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

(1) The amounts set forth above, except for the SEC, NASD and American Stock
Exchange fees, are in each case estimated.

* To be filed by amendment.

II-1
<PAGE> 177

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, the Company has issued unregistered securities
to a limited number of persons, as described below. No underwriters or
underwriting discounts or commissions were involved. There was no public
offering in any such transaction, and the Company believes that each transaction
(with the exception of the transactions described in paragraphs 7, 10, 18 and 20
below) was exempt from the registration requirements of the Securities Act, by
reason of Section 4(2) thereof, based on the private nature of the transactions
and the financial sophistication of the purchasers, all of whom had access to
complete information concerning the Company and acquired the securities for
investment and not with a view to the distribution thereof. The Company believes
that the transactions described in paragraphs 7, 10, 18 and 20 below were exempt
from the registration requirements of the Securities Act by reason of Rule 701
promulgated thereunder, because the issuance of the options described was
pursuant to a written compensatory benefit plan of the Company, a copy of which
was given to each participant in the plan, and the aggregate offering price did
not exceed the limit prescribed by Rule 701.

1. On December 29, 1993, pursuant to a private placement and the
Technology Purchase Agreements, the Company issued warrants to purchase
438,750 shares of Common Stock to USB '93 Technology Associates Limited
Partnership ("USB '93") at an exercise price of $1.54 per share.

2. On February 18, 1994, the Company issued an aggregate of 169,650
shares of Common Stock for an aggregate purchase price of $261,000 to
certain existing stockholders, employees and other investors acquainted
with of the Board of Directors or management.

3. On March 22, 1994, the Company issued an aggregate of 26,000 shares
of Common Stock for an aggregate purchase price of $40,000 to David Scott.

4. On March 22, 1994, the Company issued an aggregate of 32,500 shares
of Common Stock for an aggregate purchase price of $50,000 to P & T
Consulting in consideration for consulting services performed.

5. On April 5, 1994, pursuant to a Stock Purchase Agreement and Joint
Venture Agreement by and among Selfcare, Inc., Enviromed plc and Ron
Zwanziger, the Company issued an aggregate of 593,528 shares of Common
Stock to Enviromed plc for an aggregate purchase price of $1,500,712.72 and
other consideration.

6. On June 10, 1994, the Company issued an aggregate of 26,000 shares
of Common Stock for an aggregate purchase price of $40,000 to David Scott.

7. On August 8, 1994, pursuant to Joanna Malenfant's exercise of a
partially vested option granted on December 12, 1992 under the 1992 Plan to
purchase up to 2,600 shares of Common Stock, the Company issued an
aggregate of 650 shares of Common Stock for an aggregate purchase price of
$1,000 to Ms. Malenfant.

8. On September 15, 1994, the Company issued warrants to purchase
174,226 shares of Common Stock to certain existing stockholders at an
exercise price of $2.53 per share. On December 20, 1996, the Company issued
221 shares of Common Stock to one such holder upon the exercise of such
holder's warrants. On January 10, 1997, the Company issued 390 shares of
Common Stock to another such holder upon the exercise of such holder's
warrants.

9. On November 23, 1994, the Company issued an aggregate of 208,260
shares of Common Stock for an aggregate purchase price of $526,592 to
certain existing stockholders of the Company, who were offered the
opportunity to purchase additional shares of Common Stock in proportion to
their current ownership of Common Stock.

10. On November 23, 1994, pursuant to Piet Moerman's exercise of a
partially vested option granted on April 6, 1994 under the 1994 Plan to
purchase up to 19,500 shares of Common Stock, the Company issued an
aggregate of 3,965 shares of Common Stock for an aggregate purchase price
of $10,025 to Mr. Moerman.

II-2
<PAGE> 178

11. On December 22, 1994, pursuant to a Subscription Agreement between
Selfcare, Inc. and Enviromed, plc and a Manufacturing Agreement by and
between Cranfield Biotechnology Limited and Selfcare Israel Limited dated
September 30, 1994, the Company issued an aggregate of 185,094 shares of
Common Stock to Enviromed, plc for an aggregate purchase price of $468,003
and other consideration.

12. On December 1, 1994, the Company issued an aggregate of 7,800
shares of Common Stock for an aggregate purchase price of $19,722 to David
Tavenner.

13. On January 1, 1995, the Company, in connection with the Company's
issuance of the Cambridge Diagnostics Notes to finance the Cambridge
Diagnostics Acquisition, issued an aggregate of 119,834 shares of Common
Stock to USB '93 as consideration for its services as placement agent for
the Cambridge Diagnostic Notes.

14. On January 31, 1995, the Company, in connection with the Cambridge
Diagnostics Acquisition, issued an aggregate of 92,950 shares of Common
Stock to Ron Zwanziger in consideration of Mr. Zwanziger's personal
guarantee of the Cambridge Diagnostic Notes.

15. On February 1, 1995, the Company issued an aggregate of 27,690
shares of Common Stock for an aggregate purchase price of $70,013 to
certain existing stockholders in connection with the Company's outstanding
November 23, 1994 offer to sell additional shares of Common Stock.

16. On March 1, 1995, the Company issued an aggregate of 13,000 shares
of Common Stock for an aggregate purchase price of $32,870 to James
Yafrate.

17. On March 30, 1995, the Company, in connection with the Company's
financing of the Cambridge Diagnostics Acquisition through the issuance of
the Cambridge Diagnostics Notes, issued the Cambridge Diagnostics Warrants
to the purchasers of the Cambridge Diagnostic's Notes, including Mr.
Zwanziger, Dr. Scott and Mr. Umphrey, for an aggregate purchase price of
$30,000. The number of shares of Common Stock issuable pursuant to the
Cambridge Diagnostics Warrants is calculated based on the net sales of
Cambridge Diagnostics for the fiscal year preceding the repayment of the
Cambridge Diagnostics Notes, divided by $32.87. On December 31, 1996, the
Company agreed to issue, for no additional consideration, 1,133,113 shares
of Common Stock upon the earlier to occur of January 15, 2000 or a change
in control of the Company, in exchange for the termination and cancellation
of the Cambridge Diagnostic Warrants which, if exercisable as of December
31, 1996, would have been exercisable for 1,133,113 shares of Common Stock.

18. On October 15, 1995, the Company granted options to purchase up to
118,508 shares of Common Stock to certain employees in lieu of salary at an
exercise price of $2.53 per share.

19. On December 1, 1995, the Company issued an aggregate of 14,365
shares of Common Stock for an aggregate purchase price of $36,315 to
certain employees of the Company.

20. On December 1, 1995, pursuant to Jim Walsh's exercise of a
partially vested option granted on November 11, 1994 under the 1994
Incentive and Non-Qualified Stock Option Plan to purchase up to 39,000
shares of Common Stock and a fully vested option granted on November 11,
1994 to purchase up to 19,500 shares of Common Stock, the Company issued an
aggregate of 27,300 shares of Common Stock for an aggregate purchase price
of $69,027 to Mr. Walsh.

21. On December 29, 1995, the Company issued an aggregate of 2,028
shares of Common Stock for an aggregate purchase price of $5,128 to Geoff
Hall.

22. On May 7, 1996, the Company issued an aggregate of 135,421 shares
of Common Stock to Medica Investments (Israel) L.P. and Medica Investments
(U.S.) L.P. in connection with the Company's exercise of its right to
acquire their interest in the $1.0 million debenture issued by Orgenics
Ltd.

23. On October 7, 1996, the Company issued 201,622 shares of Common
Stock to Johnson & Johnson Development Corporation in connection with the
LifeScan Alliance.

II-3
<PAGE> 179

24. On October 10, 1996, the Company issued an aggregate of 3,000
Series A Preferred Shares to certain non-U.S. investors for an aggregate of
$3,000,000.

25. On October 14, 1996, the Company issued 1,000 Series A Preferred
Shares to Societe Generale for $1,000,000.

26. On October 17, 1996, the Company issued 500 Series A Preferred
Shares to Gifford Fund Ltd for $500,000.

27. On October 24, 1996, the Company issued 500 Series A Preferred
Shares to Privatinvest Bank AG for $500,000. On December 20, 1996 the
Company issued 22,892 shares of Common Stock to Privatinvest Bank AG
pursuant to the conversion of 300 Senior A Preferred Shares.

28. On October 28, 1996, the Company issued 500 Series A Preferred
Shares to Selfcare Holdings, Ltd. for $500,000.

29. On November 8, 1996, pursuant to Christopher Covington's exercise
of vested options granted on September 3, 1993 and April 30, 1993 under the
1992 Stock Plan, the Company issued an aggregate of 45,500 shares of Common
Stock for an aggregate purchase price of $70,000 to Mr. Covington.

ITEM 27. EXHIBITS

(a) Exhibits. The following is a complete list of Exhibits filed as part of
this Registration Statement.

II-4
<PAGE> 180

<TABLE>
<C> <S>
10.7 Indemnification Agreement dated as of November 30, 1994, by and between,
Cambridge Biotech Corporation and Cambridge Biotech Limited (Cambridge
Diagnostics Ireland Limited) (incorporated by reference to Exhibit 10.7 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.8 License Agreement [CAPILLUS], dated November 30, 1994, between Cambridge
Biotech Corporation and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.8 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.9 License Agreement [HIV 1/2 EIA], dated November 30, 1994, between Cambridge
Biotech Corporation and and Cambridge Biotech Limited (Cambridge
Diagnostics Ireland Limited) (incorporated by reference to Exhibit 10.9 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.10 License Agreement [HIV 1/2 RTD], dated November 30, 1994, between Cambridge
Biotech Corporation and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.10 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.11 License Agreement [LYME], dated November 30, 1994, between Cambridge
Biotech Corporation and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.11 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.12 License Agreement [RAPID TEST], dated November 30, 1994, between Cambridge
Biotech Corporation and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.12 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.13 License Agreement [HEP D], dated November 30, 1994, between Cambridge
Biotech Limited (Cambridge Diagnostics Ireland Limited) and Cambridge
Biotech Corporation (incorporated by reference to Exhibit 10.13 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.14 Shareholders' Agreement, dated November 30, 1994, by and among Selfcare,
Inc.,Cambridge Biotech Corporation and Cambridge Biotech Affiliated
Corporation) (Cambridge Affiliate Corporation) (incorporated by reference
to Exhibit 10.14 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.15 Management Agreement, dated November 30, 1994, between Cambridge Biotech
Affiliated Corporation (Cambridge Affiliate Corporation) and Cambridge
Biotech Limited (Cambridge Diagnostics Ireland Limited) (incorporated by
reference to Exhibit 10.15 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.16 Manufacturing Agreement, dated November 30, 1994, between Cambridge Biotech
Affiliated Corporation (Cambridge Affiliate Corporation) and Cambridge
Biotech Limited (Cambridge Diagnostics Ireland Limited) (incorporated by
reference to Exhibit 10.16 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.17 Sales Agent Agreement, dated November 30, 1994, between Cambridge Biotech
Affiliated Corporation (Cambridge Affiliate Corporation) and Cambridge
Biotech Limited (Cambridge Diagnostics Ireland Limited) (incorporated by
reference to Exhibit 10.17 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.18 Stock Purchase Agreement, dated as of March 8, 1994, among Selfcare, Inc.,
Ron Zwanziger and Enviromed plc (incorporated by reference to Exhibit 10.18
to the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.19 Registration Rights Agreement, dated April 5, 1994, between Selfcare, Inc.,
USB '93 Technology Associates Limited Partnership and Enviromed plc
(incorporated by reference to Exhibit 10.19 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
</TABLE>

II-5
<PAGE> 181

<TABLE>
<C> <S>
10.20 Shareholders' Agreement, dated as of March 15, 1994, among Selfcare, Inc.,
USB '93 Technology Associates Limited Partnership, Enviromed plc and the
Ron Zwanziger Family Trust (incorporated by reference to Exhibit 10.20 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.21 Technology Purchase and Sale Agreement, dated as of December 29, 1993,
between Selfcare, Inc. and USB '93 Technology Associates Limited
Partnership (incorporated by reference to Exhibit 10.21 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
10.22 Technology License and Development Agreement, dated as of December 29,
1993, between Selfcare, Inc. and USB '93 Technology Associates Limited
Partnership (incorporated by reference to Exhibit 10.22 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
10.23 Guarantee and Debenture, dated August 30, 1995, between Cambridge Biotech
Limited (Cambridge Diagnostics Ireland Limited) and USB '93 Technology,
Inc. (incorporated by reference to Exhibit 10.23 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
10.24 Guarantee of Selfcare, Inc., dated June 11, 1995, in favor of Highlands and
Islands Enterprises (incorporated by reference to Exhibit 10.24 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.25 Guarantee of Selfcare, Inc., dated June 11, 1995, in favor of Inverness and
Nairn Enterprise Company (incorporated by reference to Exhibit 10.25 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.26 Investment and Loan Agreement, dated December 24, 1995, by and between
Orgenics Ltd. and Selfcare, Inc. (incorporated by reference to Exhibit
10.26 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.27 Form of Option Agreement by and between Selfcare, Inc. and stockholders of
Orgenics, Ltd. and Orgenics International Holdings, B.V., together with
letter amendment thereto dated July 11, 1996. (incorporated by reference to
Exhibit 10.27 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.28 Grant Agreement, dated February 21, 1992, among The Industrial Development
Authority of Ireland, Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) and Cambridge Biotech Corporation (incorporated by
reference to Exhibit 10.28 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.29 Grant Agreement, dated October 2, 1992, among The Industrial Development
Authority of Ireland, Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) and Cambridge Biotech Corporation (incorporated by
reference to Exhibit 10.29 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.30 Grant Agreement, dated December 5, 1995, among The Industrial Development
Authority of Ireland, Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) and Cambridge Biotech Corporation (incorporated by
reference to Exhibit 10.30 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.31 Employment Agreement, dated October 15, 1991, between Superior Sensors,
Inc. (Selfcare, Inc.) and Kenneth D. Legg, Ph.D. (incorporated by reference
to Exhibit 10.31 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.32 Employment Agreement, dated June 15, 1992, between Superior Sensors, Inc.
(Selfcare, Inc.) and Richard Pinkowitz, Ph.D. (incorporated by reference to
Exhibit 10.32 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.33 Employment Agreement, dated November 13, 1994, between Selfcare
International GmbH and Otto Wahl (incorporated by reference to Exhibit
10.33 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.34 Selfcare, Inc. 1992 Stock Plan (incorporated by reference to Exhibit 10.34
to the Company's registration statement on Form SB-2, No. 333-4830-NY)
</TABLE>

II-6
<PAGE> 182

<TABLE>
<C> <S>
10.35 Selfcare, Inc. 1994 Incentive and Non-qualified Stock Option Plan
(incorporated by reference to Exhibit 10.35 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
10.36 Amended and Restated Selfcare, Inc. 1996 Stock Option and Grant Plan
(incorporated by reference to Exhibit 4.1 to the Company's registration
statement on Form S-8, No. 333-15583)
10.37 Selfcare, Inc. Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.37 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.38 Standard form Commercial Lease, dated July 15, 1992, between Superior
Sensors, Inc. (Selfcare, Inc.) and Nova Realty Associates (incorporated by
reference to Exhibit 10.38 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.39 Lease, dated February 21, 1992, between The Industrial Development
Authority of Ireland and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.39 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.40 Form of lease between Highlands and Islands Enterprises and Hebocraft
Limited (Inverness Medical Limited) (incorporated by reference to Exhibit
10.40 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.41 Joint Venture Agreement, dated March 8, 1994, between Enviromed Plc. and
Selfcare, Inc. (incorporated by reference to Exhibit 10.41 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
10.42 Lease for Selfcare, Inc.'s facility in Brussels, Belgium (incorporated by
reference to Exhibit 10.42 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.43 Lease for Selfcare International GmbH's facility in Munich, Germany
(incorporated by reference to Exhibit 10.43 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
10.44 Form of Cambridge Diagnostics Note, together with schedule of noteholders
10.45 Manufacturing Agreement, dated June 3, 1996, between Nova Biomedical
Corporation and Selfcare, Inc. (incorporated by reference to Exhibit
to the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.46 Form of Cambridge Diagnostics Warrants, together with schedule of
warrantholders
10.47 Agreement between Inverness Medical Limited (formerly, Hebocraft Limited)
and Highlands and Islands Enterprise, dated May 31, 1995 (incorporated by
reference to Exhibit 10.47 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.48 Agreement between Inverness Medical Limited (formerly, Hebocraft Limited)
and Inverness & Nairn Local Enterprise Company, dated May 31, 1995
(incorporated by reference to Exhibit 10.48 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
10.49 Form of Letter Agreement by and between Selfcare, Inc. and certain holders
of Cambridge Diagnostics Notes dated July 19, 1996 (incorporated by
reference to Exhibit 10.49 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.50 Supply Agreement dated August 27, 1996, by and between Selfcare, Inc.,
Selfcare International GmbH and A. Menarini Industrie Parmaceutiche Riunite
S.r.L. (incorporated by reference to Exhibit 10.50 to the Company's
quarterly report on Form 10-QSB for the period ended September 30, 1996)
10.51 Manufacturing Agreement for Pregnancy and Ovulation Stick/Cassette Test
Kits, dated September 7, 1996, by and between Nova BioMedical Corp. and
Selfcare, Inc. (incorporated by reference to Exhibit 10.51 to the Company's
quarterly report on Form 10-QSB for the period ended September 30, 1996)
</TABLE>

II-7
<PAGE> 183

<TABLE>
<C> <S>
+10.52 Development and Distribution Agreement dated as of December 31, 1996
between ChemTrak Incorporated and Selfcare, Inc.
+10.53 Asset Purchase Agreement dated as of January 14, 1997 by and between
American Home Products Corporation, American Cyanamid Company, A.H. Robins
Company, Incorporated and Selfcare, Inc. and Selfcare Acquisition Corp.
+10.54 Agreement between EN PLC Limited Partnership and Selfcare, Inc. dated
October 17, 1996
*11.1 Statement re: computation of per share earnings
21.1 Schedule of Subsidiaries of Registrant
+23.1 Consent of Counsel (included in Exhibit 5.1 hereto)
*23.2 Consent of Arthur Andersen LLP
*23.3 Consent of Kost Levary and Forer
*23.4 Consent of Galloro & Associados
24.1 Power of Attorney (included on signature page of Registration Statement as
filed)
+99.1 Form of Lock-up Letter Agreement by and between the Underwriters and
certain stockholders of Selfcare, Inc.
99.2 Judgment and Opinion of U.S. Bankruptcy Court (D. Mass. W. Division), In
re: Cambridge Biotech Corporation, Chapter 11 Case No. 94-43054-JFQ,
entered September 1, 1995. (incorporated by reference to Exhibit 99.2 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
99.3 Order of Approval of Scheme of Arrangement by The High Court of Ireland
(incorporated by reference to Exhibit 99.3 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
99.4 Order of U.S. Bankruptcy Court (D. Mass. W. Division), In re: Cambridge
Biotech Corporation, Chapter 11 Case No. 94-43054-JFQ, entered November 18,
1994 (incorporated by reference to Exhibit 99.4 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
</TABLE>

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

* Filed herewith.

+ To be filed by amendment.

ITEM 28. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer 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 small business issuer 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.

II-8
<PAGE> 184

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

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

II-9
<PAGE> 185

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Boston,
State of Massachusetts, on January 16, 1997.

SELFCARE, INC.

By: /s/ RON ZWANZIGER
------------------------------------
Ron Zwanziger
Chairman, President and Chief
Executive Officer

POWER OF ATTORNEY

KNOWN ALL MEN BY THESE PRESENTS that we, the undersigned officers and
directors of Selfcare, Inc. hereby severally constitute Ron Zwanziger, and
Anthony H. Hall and each of them singly, our true and lawful attorneys with full
power to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, the Registration Statement filed herewith and any
and all amendments to said Registration Statement (or any registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act), and generally to do all such things in our
names and in our capacities as officers and directors to enable Selfcare, Inc.
to comply with the provisions of the Securities Act, and all requirements of the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto.

Pursuant to the requirements of the Securities Act, this Amendment to this
Registration Statement has been signed below by the following persons on behalf
of the registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ---------------------------------- -----------------
<C> <C> <S>

/s/ RON ZWANZIGER President, Chief Executive Officer January 16, 1997
- ---------------------------------------- and Director (Principal Executive
Ron Zwanziger Officer)

/s/ ANTHONY H. HALL Chief Financial Officer (Principal January 16, 1997
- ---------------------------------------- Financial Officer and Principal
Anthony H. Hall Accounting Officer)
/s/ JONATHAN J. FLEMING Director January 16, 1997
- ----------------------------------------
Jonathan J. Fleming

/s/ CAROL R. GOLDBERG Director January 16, 1997
- ----------------------------------------
Carol R. Goldberg

/s/ EDWARD B. ROBERTS Director January 16, 1997
- ----------------------------------------
Edward B. Roberts

/s/ WILLARD LEE UMPHREY Director January 16, 1997
- ----------------------------------------
Willard Lee Umphrey

/s/ PETER TOWNSEND Director January 16, 1997
- ----------------------------------------
Peter Townsend

/s/ JOHN F. LEVY Director January 16, 1997
- ----------------------------------------
John F. Levy
</TABLE>

II-10
<PAGE> 186

EXHIBIT INDEX

<TABLE>
<C> <S>
+1.1 Form of Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
+3.2 Certificate of Designation for the Series A Convertible Preferred Stock
3.3 Amended and Restated By-laws (incorporated by reference to Exhibit 3.2 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
4.1 Specimen certificate for shares of Common Stock, par value $.001 per share,
of the Company (incorporated by reference to Exhibit 4.1 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
+5.1 Opinion of Goodwin, Procter & Hoar LLP
9.1 Voting Agreement, dated May 13, 1996, by and among the stockholders of
Selfcare, Inc. who are signatories thereto. (incorporated by reference to
Exhibit 9.1 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.1 Agreement, dated March 22, 1996, between Selfcare, Inc. and Princeton
BioMeditech Corporation (incorporated by reference to Exhibit 10.1 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.2 Master Agreement, dated as of November 10, 1995, by and among Johnson &
Johnson Development (incorporated by reference to Exhibit 10.2 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.3 Corporation, LifeScan, Inc. and Selfcare, Inc. Form of Sales Distribution
Agreement for Testing System for Blood Glucose between LifeScan, Inc. and
Selfcare, Inc. (incorporated by reference to Exhibit 10.3 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
10.4 Investment Agreement, dated as of November 10, 1995, by and between Johnson
& Johnson and Selfcare, Inc. (incorporated by reference to Exhibit 10.4 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.5 Master Agreement, dated as of November 30, 1994, among Selfcare, Inc.,
Cambridge Biotech Limited (Cambridge Diagnostics Ireland Limited) and
Cambridge Biotech Corporation (incorporated by reference to Exhibit 10.5 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.6 Sale and Subscription Agreement, dated as of November 30, 1994, between
Cambridge Biotech Limited (Cambridge Diagnostics Ireland Limited),
Cambridge Biotech Corporation and Selfcare, Inc. (incorporated by reference
to Exhibit 10.6 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.7 Indemnification Agreement dated as of November 30, 1994, by and between,
Cambridge Biotech Corporation and Cambridge Biotech Limited (Cambridge
Diagnostics Ireland Limited) (incorporated by reference to Exhibit 10.7 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.8 License Agreement [CAPILLUS], dated November 30, 1994, between Cambridge
Biotech Corporation and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.8 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.9 License Agreement [HIV 1/2 EIA], dated November 30, 1994, between Cambridge
Biotech Corporation and and Cambridge Biotech Limited (Cambridge
Diagnostics Ireland Limited) (incorporated by reference to Exhibit 10.9 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.10 License Agreement [HIV 1/2 RTD], dated November 30, 1994, between Cambridge
Biotech Corporation and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.10 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
</TABLE>
<PAGE> 187

<TABLE>
<C> <S>
10.11 License Agreement [LYME], dated November 30, 1994, between Cambridge
Biotech Corporation and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.11 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.12 License Agreement [RAPID TEST], dated November 30, 1994, between Cambridge
Biotech Corporation and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.12 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.13 License Agreement [HEP D], dated November 30, 1994, between Cambridge
Biotech Limited (Cambridge Diagnostics Ireland Limited) and Cambridge
Biotech Corporation (incorporated by reference to Exhibit 10.13 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.14 Shareholders' Agreement, dated November 30, 1994, by and among Selfcare,
Inc.,Cambridge Biotech Corporation and Cambridge Biotech Affiliated
Corporation) (Cambridge Affiliate Corporation) (incorporated by reference
to Exhibit 10.14 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.15 Management Agreement, dated November 30, 1994, between Cambridge Biotech
Affiliated Corporation (Cambridge Affiliate Corporation) and Cambridge
Biotech Limited (Cambridge Diagnostics Ireland Limited) (incorporated by
reference to Exhibit 10.15 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.16 Manufacturing Agreement, dated November 30, 1994, between Cambridge Biotech
Affiliated Corporation (Cambridge Affiliate Corporation) and Cambridge
Biotech Limited (Cambridge Diagnostics Ireland Limited) (incorporated by
reference to Exhibit 10.16 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.17 Sales Agent Agreement, dated November 30, 1994, between Cambridge Biotech
Affiliated Corporation (Cambridge Affiliate Corporation) and Cambridge
Biotech Limited (Cambridge Diagnostics Ireland Limited) (incorporated by
reference to Exhibit 10.17 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.18 Stock Purchase Agreement, dated as of March 8, 1994, among Selfcare, Inc.,
Ron Zwanziger and Enviromed plc (incorporated by reference to Exhibit 10.18
to the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.19 Registration Rights Agreement, dated April 5, 1994, between Selfcare, Inc.,
USB '93 Technology Associates Limited Partnership and Enviromed plc
(incorporated by reference to Exhibit 10.19 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
10.20 Shareholders' Agreement, dated as of March 15, 1994, among Selfcare, Inc.,
USB '93 Technology Associates Limited Partnership, Enviromed plc and the
Ron Zwanziger Family Trust (incorporated by reference to Exhibit 10.20 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.21 Technology Purchase and Sale Agreement, dated as of December 29, 1993,
between Selfcare, Inc. and USB '93 Technology Associates Limited
Partnership (incorporated by reference to Exhibit 10.21 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
10.22 Technology License and Development Agreement, dated as of December 29,
1993, between Selfcare, Inc. and USB '93 Technology Associates Limited
Partnership (incorporated by reference to Exhibit 10.22 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
10.23 Guarantee and Debenture, dated August 30, 1995, between Cambridge Biotech
Limited (Cambridge Diagnostics Ireland Limited) and USB '93 Technology,
Inc. (incorporated by reference to Exhibit 10.23 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
</TABLE>
<PAGE> 188

<TABLE>
<C> <S>
10.24 Guarantee of Selfcare, Inc., dated June 11, 1995, in favor of Highlands and
Islands Enterprises (incorporated by reference to Exhibit 10.24 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.25 Guarantee of Selfcare, Inc., dated June 11, 1995, in favor of Inverness and
Nairn Enterprise Company (incorporated by reference to Exhibit 10.25 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
10.26 Investment and Loan Agreement, dated December 24, 1995, by and between
Orgenics Ltd. and Selfcare, Inc. (incorporated by reference to Exhibit
10.26 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.27 Form of Option Agreement by and between Selfcare, Inc. and stockholders of
Orgenics, Ltd. and Orgenics International Holdings, B.V., together with
letter amendment thereto dated July 11, 1996. (incorporated by reference to
Exhibit 10.27 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.28 Grant Agreement, dated February 21, 1992, among The Industrial Development
Authority of Ireland, Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) and Cambridge Biotech Corporation (incorporated by
reference to Exhibit 10.28 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.29 Grant Agreement, dated October 2, 1992, among The Industrial Development
Authority of Ireland, Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) and Cambridge Biotech Corporation (incorporated by
reference to Exhibit 10.29 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.30 Grant Agreement, dated December 5, 1995, among The Industrial Development
Authority of Ireland, Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) and Cambridge Biotech Corporation (incorporated by
reference to Exhibit 10.30 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.31 Employment Agreement, dated October 15, 1991, between Superior Sensors,
Inc. (Selfcare, Inc.) and Kenneth D. Legg, Ph.D. (incorporated by reference
to Exhibit 10.31 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.32 Employment Agreement, dated June 15, 1992, between Superior Sensors, Inc.
(Selfcare, Inc.) and Richard Pinkowitz, Ph.D. (incorporated by reference to
Exhibit 10.32 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.33 Employment Agreement, dated November 13, 1994, between Selfcare
International GmbH and Otto Wahl (incorporated by reference to Exhibit
10.33 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.34 Selfcare, Inc. 1992 Stock Plan (incorporated by reference to Exhibit 10.34
to the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.35 Selfcare, Inc. 1994 Incentive and Non-qualified Stock Option Plan
(incorporated by reference to Exhibit 10.35 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
10.36 Amended and Restated Selfcare, Inc. 1996 Stock Option and Grant Plan
(incorporated by reference to Exhibit 4.1 to the Company's registration
statement on Form S-8, No. 333-15583)
10.37 Selfcare, Inc. Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.37 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.38 Standard form Commercial Lease, dated July 15, 1992, between Superior
Sensors, Inc. (Selfcare, Inc.) and Nova Realty Associates (incorporated by
reference to Exhibit 10.38 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.39 Lease, dated February 21, 1992, between The Industrial Development
Authority of Ireland and Cambridge Biotech Limited (Cambridge Diagnostics
Ireland Limited) (incorporated by reference to Exhibit 10.39 to the
Company's registration statement on Form SB-2, No. 333-4830-NY)
</TABLE>
<PAGE> 189

<TABLE>
<C> <S>
10.40 Form of lease between Highlands and Islands Enterprises and Hebocraft
Limited (Inverness Medical Limited) (incorporated by reference to Exhibit
10.40 to the Company's registration statement on Form SB-2, No.
333-4830-NY)
10.41 Joint Venture Agreement, dated March 8, 1994, between Enviromed Plc. and
Selfcare, Inc. (incorporated by reference to Exhibit 10.41 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
10.42 Lease for Selfcare, Inc.'s facility in Brussels, Belgium (incorporated by
reference to Exhibit 10.42 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.43 Lease for Selfcare International GmbH's facility in Munich, Germany
(incorporated by reference to Exhibit 10.43 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
10.44 Form of Cambridge Diagnostics Note, together with schedule of noteholders
10.45 Manufacturing Agreement, dated June 3, 1996, between Nova Biomedical
Corporation and Selfcare, Inc. (incorporated by reference to Exhibit
to the Company's registration statement on Form SB-2, No. 333-4830-NY)
10.46 Form of Cambridge Diagnostics Warrants, together with schedule of
warrantholders
10.47 Agreement between Inverness Medical Limited (formerly, Hebocraft Limited)
and Highlands and Islands Enterprise, dated May 31, 1995 (incorporated by
reference to Exhibit 10.47 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.48 Agreement between Inverness Medical Limited (formerly, Hebocraft Limited)
and Inverness & Nairn Local Enterprise Company, dated May 31, 1995
(incorporated by reference to Exhibit 10.48 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
10.49 Form of Letter Agreement by and between Selfcare, Inc. and certain holders
of Cambridge Diagnostics Notes dated July 19, 1996 (incorporated by
reference to Exhibit 10.49 to the Company's registration statement on Form
SB-2, No. 333-4830-NY)
10.50 Supply Agreement dated August 27, 1996, by and between Selfcare, Inc.,
Selfcare International GmbH and A. Menarini Industrie Parmaceutiche Riunite
S.r.L. (incorporated by reference to Exhibit 10.50 to the Company's
quarterly report on Form 10-QSB for the period ended September 30, 1996)
10.51 Manufacturing Agreement for Pregnancy and Ovulation Stick/Cassette Test
Kits, dated September 7, 1996, by and between Nova BioMedical Corp. and
Selfcare, Inc. (incorporated by reference to Exhibit 10.51 to the Company's
quarterly report on Form 10-QSB for the period ended September 30, 1996)
+10.52 Development and Distribution Agreement dated as of December 31, 1996
between ChemTrak Incorporated and Selfcare, Inc.
+10.53 Asset Purchase Agreement dated as of January 14, 1997 by and between
American Home Products Corporation, American Cyanamid Company, A.H. Robins
Company, Incorporated and Selfcare, Inc. and Selfcare Acquisition Corp.
+10.54 Agreement between EN PLC Limited Partnership and Selfcare, Inc. dated
October 17, 1996
*11.1 Statement re: computation of per share earnings
21.1 Schedule of Subsidiaries of Registrant
+23.1 Consent of Counsel (included in Exhibit 5.1 hereto)
*23.2 Consent of Arthur Andersen LLP
*23.3 Consent of Kost Levary and Forer
*23.4 Consent of Galloro & Associados
24.1 Power of Attorney (included on signature page of Registration Statement as
filed)
</TABLE>
<PAGE> 190

<TABLE>
<C> <S>
+99.1 Form of Lock-up Letter Agreement by and between the Underwriters and
certain stockholders of Selfcare, Inc.
99.2 Judgment and Opinion of U.S. Bankruptcy Court (D. Mass. W. Division), In
re: Cambridge Biotech Corporation, Chapter 11 Case No. 94-43054-JFQ,
entered September 1, 1995. (incorporated by reference to Exhibit 99.2 to
the Company's registration statement on Form SB-2, No. 333-4830-NY)
99.3 Order of Approval of Scheme of Arrangement by The High Court of Ireland
(incorporated by reference to Exhibit 99.3 to the Company's registration
statement on Form SB-2, No. 333-4830-NY)
99.4 Order of U.S. Bankruptcy Court (D. Mass. W. Division), In re: Cambridge
Biotech Corporation, Chapter 11 Case No. 94-43054-JFQ, entered November 18,
1994 (incorporated by reference to Exhibit 99.4 to the Company's
registration statement on Form SB-2, No. 333-4830-NY)
</TABLE>

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

* Filed herewith.

+ To be filed by amendment.

<PAGE> 1

EXHIBIT 11

SELFCARE, INC. AND SUBSIDIARIES

CALCULATION OF SHARES USED IN DETERMINING
NET LOSS PER SHARE OF COMMON STOCK

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ ------------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Weighted average number of shares of
common stock outstanding during the
period.............................. 1,960,938 3,173,779 3,866,842 3,820,743 4,392,512
Weighted average number of shares of
common stock issued subsequent to
May 15, 1995 computed in accordance
with treasury-stock method.......... 253,789 253,789 253,789 253,789 201,920
Weighted average number of common
stock equivalents issued subsequent
to May 15, 1995 computed in
accordance with treasury-stock
method.............................. 1,951,168 1,951,168 1,951,168 1,951,168 1,552,389
--------- --------- --------- --------- ---------
Total weighted average number of
common and common-equivalent shares
outstanding......................... 4,165,895 5,378,736 6,071,799 6,025,700 6,146,821
========= ========= ========= ========= =========
</TABLE>

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN

January 13, 1997
Boston, Massachusetts

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and the
use of our report dated November 14, 1996 on the financial statements of
Orgenics Ltd. in the registration statement Form SB-2 and related Prospectus of
Selfcare, Inc. for the registration of 2,300,000 shares of its common stock.

KOST LEVARY AND FORER
Certified Public Accountants (Israel)
a Member of Ernst & Young
International

January 16, 1997
Tel-Aviv, Israel

<PAGE> 1

EXHIBIT 23.4

Sao Paulo, January 16, 1997

KOST LEVARY AND FORER LLP, and
ARTHUR ANDERSEN LLP

Re: CPEI ORGENICS LTDA.

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

GALLORO & ASSOCIADOS
Auditores Independentes S/C
CRC-SP n degrees 05.851

VICTOR DOMINGOS GALLORO
Socio-Diretor
CT-CRC-SP n degrees 44.278
Certified Public Accountants in
Brazil

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,552,714
<SECURITIES> 0
<RECEIVABLES> 2,550,413
<ALLOWANCES> 234,700
<INVENTORY> 1,367,640
<CURRENT-ASSETS> 18,588,338
<PP&E> 5,749,031
<DEPRECIATION> 1,224,871
<TOTAL-ASSETS> 24,425,604
<CURRENT-LIABILITIES> 6,732,242
<BONDS> 16,705,344
1,724,768
0
<COMMON> 5,688
<OTHER-SE> (2,179,548)
<TOTAL-LIABILITY-AND-EQUITY> 24,425,604
<SALES> 7,856,775
<TOTAL-REVENUES> 9,098,017
<CGS> 6,477,303
<TOTAL-COSTS> 14,587,273
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,348,681
<INCOME-PRETAX> (26,126,913)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,126,913)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,126,913)
<EPS-PRIMARY> (4.25)
<EPS-DILUTED> (4.25)

</TABLE>