SELFCARE INC, DEF 14A, 1999-04-16

SELFCARE INC
DEF 14A, 1999-04-16
LABORATORY ANALYTICAL INSTRUMENTS

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SCHEDULE 14 A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

Schedule 14A Information

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

SELFCARE, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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SELFCARE, INC.
200 PROSPECT STREET
WALTHAM, MASSACHUSETTS 02453

April 16, 1999

Dear Fellow Shareholders:

You are cordially invited to attend the Annual Meeting of Shareholders on
Thursday, May 20, 1999, at 12:30 p.m. at the Harvard Club of Boston, 38th Floor,
One Federal Street, Boston, MA 02110.

At this year's Annual Meeting you will be asked to (i) elect the nominee
directors recommended by the Selfcare, Inc. Board of Directors; (ii) authorize
and approve the amendment of the Restated Certificate of Incorporation to amend
the terms of the Series B Convertible Preferred Stock, par value $.001 per
share, in connection with the settlement of certain obligations owed by the
Company to the holders of Series B Convertible Preferred Stock; (iii) ratify,
confirm and approve the issuance of the Series B Convertible Preferred Stock in
connection with the settlement of certain obligations owed by the Company to the
holders of the Series B Convertible Preferred Stock; (iv) ratify, confirm and
approve the issuance of the Senior Subordinated Convertible Notes including the
Senior Subordinated Convertible Notes as amended January 11, 1999 in connection
with the settlement of certain obligations owed by the Company to the holders of
the Senior Subordinated Convertible Notes; (v) ratify, confirm and approve the
issuance of the Series C Convertible Preferred Stock, Series D Convertible
Preferred Stock and Series E Convertible Preferred Stock, each par value $.001
per share, and ratify the participation by certain officers and directors in the
private placement of the Series C Convertible Preferred Stock and the Series E
Convertible Preferred Stock; (vi) authorize and approve the increase in shares
of common stock, par value $.001 per share, available for issuance under the
Company's 1996 Amended and Restated Stock Option and Grant Plan from 1,500,000
shares to 2,250,000 shares, and (vii) ratify the selection of the independent
auditors for the 1999 fiscal year.

THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF EACH OF THE ABOVE PROPOSALS
IS IN THE BEST INTEREST OF THE COMPANY AND ITS SHAREHOLDERS. THE BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED EACH OF THE ABOVE PROPOSALS AND RECOMMENDS
THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF EACH OF THE ABOVE PROPOSALS.

Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, please complete, sign, date and return your
proxy card in the envelope provided. If the address on the accompanying material
is incorrect, please forward in writing to our Transfer Agent, EquiServe Limited
Partnership, P.O. Box 8200, Boston, MA 02266-8200, or call (800) 426-5523.

Your vote is important. We will appreciate a prompt return of your signed
proxy card. If you have questions about voting your shares, please contact our
proxy solicitor, Corporate Investor Communications, Inc. at (877) 460-2564.

Cordially,

Ron Zwanziger
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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SELFCARE, INC.
200 PROSPECT STREET
WALTHAM, MASSACHUSETTS 02453
------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
------------------------

To the Shareholders of Selfcare, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (together
with all adjournments and postponements thereof, the "Annual Meeting") of
Selfcare, Inc. (the "Company") will be held on Thursday, May 20, 1999, at 12:30
p.m. at the Harvard Club of Boston, 38th Floor, One Federal Street, Boston MA
02110, for the following purposes:

1. To elect three individuals to serve as Class III Directors of the
Company's Board of Directors for a term of three years and until their
respective successors have been duly elected and qualified;

2. To consider and act upon a proposal to approve and adopt an amendment to
the Restated Certificate of Incorporation which will amend the terms of
the Series B Convertible Preferred Stock, par value $.001 per share (the
"Series B Preferred Stock"), in connection with the settlement of certain
obligations of the Company to the holders of the Series B Preferred
Stock;

3. To consider and act upon a proposal to authorize and approve the
issuance of the Series B Preferred Stock in connection with the
settlement of certain obligations of the Company to the holders of the
Series B Preferred Stock;

4. To consider and act upon a proposal to ratify, confirm and approve the
issuance of the Senior Subordinated Convertible Notes, issued October 27,
1997 (the "Original Notes") and the portion of Original Notes amended and
issued by the Company on January 11, 1999 (the "Amended Notes") (the
Original Notes and the Amended Notes are hereinafter referred to as the
"Notes") in connection with the settlement of certain obligations of the
Company to the holders of the Notes;

5. To consider and act upon a proposal to ratify, confirm and approve the
issuance of the Series C Convertible Preferred Stock, Series D
Convertible Preferred Stock and Series E Convertible Preferred Stock,
each par value $.001 per share (the "Series C Preferred Stock," the
"Series D Preferred Stock" and the "Series E Preferred Stock,"
respectively) and to ratify, confirm and approve the participation of
certain officers and directors of the Company in the private placement of
the Series C Preferred Stock and the Series E Preferred Stock;

6. To amend the Company's 1996 Amended and Restated Stock Option and Grant
Plan (the "1996 Plan") to increase the number of shares of common stock,
par value $.001 per share (the "Common Stock"), available for issuance
under the 1996 Plan from 1,500,000 shares to 2,250,000 shares of Common
Stock;

7. To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999; and

8. To transact such other business as may properly come before the Annual
Meeting.

The Board of Directors has fixed the close of business on March 22, 1999 as
the record date for determining the shareholders having the right to receive
notice of and to vote at the Annual Meeting. Only shareholders of record of the
Company's Common Stock and the Series B Preferred Stock at the close of business
on such date are entitled to notice of the Annual Meeting. The Common Stock and
Series B Preferred Stock shall each vote as a separate class on Proposal 2. Only
shareholders of record of Common Stock at the close of business on such date are
entitled to vote at the Annual Meeting on Proposal 1, Proposal 3, Proposal 4,
Proposal 5, Proposal 6 and Proposal 7. A list of shareholders entitled to vote
at the Annual Meeting will be available during ordinary business hours at the
offices of Goodwin, Procter &
<PAGE>
Hoar LLP, 53 State Street, Boston, Massachusetts 02109 and also at the Company's
executive offices, 200 Prospect Street, Waltham, Massachusetts 02453, at least
ten (10) days prior to the Annual Meeting, for examination by any Company
shareholder for purposes germane to the Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE
NOMINATED DIRECTORS, "FOR" APPROVAL AND ADOPTION OF THE AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY WHICH WILL AMEND THE TERMS
OF THE SERIES B PREFERRED STOCK, "FOR" AUTHORIZATION AND APPROVAL OF THE
ISSUANCE OF THE SERIES B PREFERRED STOCK, "FOR" RATIFICATION, CONFIRMATION AND
APPROVAL OF THE ISSUANCE OF THE CONVERTIBLE NOTES, "FOR" RATIFICATION,
CONFIRMATION AND APPROVAL OF THE ISSUANCE OF THE SERIES C PREFERRED STOCK,
SERIES D PREFERRED STOCK AND SERIES E PREFERRED STOCK AND THE PARTICIPATION OF
CERTAIN OFFICERS AND DIRECTORS OF THE COMPANY IN THE PRIVATE PLACEMENT OF THE
SERIES C PREFERRED STOCK AND THE SERIES E PREFERRED STOCK, "FOR" APPROVAL OF THE
INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE UNDER
THE 1996 PLAN AND "FOR" RATIFICATION OF THE SELECTION OF THE INDEPENDENT
AUDITORS.
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IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT
TO BE PRESENT AT THE MEETING, PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. THE PROXY
MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT AT THE
MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE THE
RIGHT TO VOTE YOUR SHARES PERSONALLY.
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By Order of the Board of Directors,

Kenneth D. Legg, Ph.D.,
SECRETARY

April 16, 1999
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SELFCARE, INC.
PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
THE ANNUAL MEETING

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Selfcare, Inc. (the "Company" or
"Selfcare") for use at the Annual Meeting of Shareholders to be held on May 20,
1999, at 12:30 p.m. at the Harvard Club of Boston, 38th Floor, One Federal
Street, Boston MA 02110 (including any adjournment or postponement thereof, the
"Annual Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting. This Proxy Statement and the accompanying form of proxy to
shareholders will be mailed on or about April 16, 1999.

PURPOSE OF THE ANNUAL MEETING

At the Annual Meeting, all of the holders of Common Stock (as defined below)
of the Company will be asked to consider and vote upon the following matters,
and the holders of the Series B Preferred Stock (as defined below) will be asked
to vote on those matters set forth in Proposal 2 below:

1. The election of three individuals to serve as Class III Directors of the
Company's Board of Directors for a term of three years and until their
respective successors have been duly elected and qualified (the "Election
of Directors Proposal"). The Board of Directors has nominated Jonathan J.
Fleming, Peter Townsend and John F. Levy for election as Class III
Directors.

2. The authorization and approval of the amendment of the Restated
Certificate of Incorporation to amend the terms of the Series B
Convertible Preferred Stock, par value $.001 per share (the "Series B
Preferred Stock"), contained in the Certificate of Incorporation in
connection with the settlement of certain obligations of the Company to
the holders of the Series B Preferred Stock (the "Amendment to
Certificate Proposal").

3. The authorization and approval of the issuance of the Series B Preferred
Stock in connection with the settlement of certain obligations of the
Company to the holders of the Series B Preferred Stock (the "Issuance of
Series B Preferred Stock Proposal").

4. On October 27, 1997, the Company issued certain Senior Subordinated
Convertible Notes (the "Original Notes") having an aggregate face value
of $10,000,000 and on January 11, 1999 the Company amended the portion of
the Original Notes which remained outstanding (the "Amended Notes"). The
Original Notes and the Amended Notes are sometimes hereinafter
collectively referred to as the "Notes". The Company proposes that the
Company's shareholders ratify, confirm and approve the issuance of the
Notes (the "Notes Amendment Proposal").

5. The ratification, confirmation and approval of the issuance of the
Series C Convertible Preferred Stock, Series D Convertible Preferred
Stock and Series E Convertible Preferred Stock, each par value $.001 per
share (the "Series C Preferred Stock," the "Series D Preferred Stock" and
the "Series E Preferred Stock," respectively) and the participation by
certain officers and directors of the Company in the private placement of
the Series C Preferred Stock and the Series E Preferred Stock (the
"Private Placement Proposal").

6. The authorization and approval of the amendment to the Company's 1996
Amended and Restated Stock Option and Grant Plan (the "1996 Plan")
increasing the number of shares available for issuance under the 1996
Plan from 1,500,000 shares to 2,250,000 shares of common stock of the
Company (the "Increase in Option Shares Proposal");

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7. To ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999 (the
"Ratification of Auditors Proposal"); and

8. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF
THE ELECTION OF DIRECTORS PROPOSAL, THE AMENDMENT TO CERTIFICATE PROPOSAL, THE
ISSUANCE OF SERIES B PREFERRED STOCK PROPOSAL, THE NOTES AMENDMENT PROPOSAL, THE
PRIVATE PLACEMENT PROPOSAL, THE INCREASE IN OPTION SHARES PROPOSAL AND THE
RATIFICATION OF AUDITORS PROPOSAL.

RECORD DATE; VOTING RIGHTS; PROXIES

Only holders of the Company's common stock, par value $.001 per share (the
"Common Stock"), and the holders of the Series B Preferred Stock at the close of
business on March 22, 1999 (the "Record Date"), are entitled to receive notice
of the Annual Meeting. As of the Record Date, the Company had 15,843,570 shares
of Common Stock issued and outstanding and 4,720 shares of Series B Preferred
Stock issued and outstanding. Shares held in the treasury of the Company are not
considered outstanding. Each share of Common Stock is entitled to vote on all
matters. The Series B Preferred Shares are entitled to vote on the Amendment to
Certificate Proposal, as a separate class. No other class of securities will be
entitled to vote at the Annual Meeting. There are no cumulative voting rights.

The address of the principal executive offices of the Company is 200
Prospect Street, Waltham, Massachusetts 02453, Telephone No. (781) 647-3900.

All shares that are entitled to vote and are represented at the Annual
Meeting by properly executed proxies received prior to or at the Annual Meeting
will be voted at the Annual Meeting in accordance with the instructions
indicated on the proxies. Proxies which are executed but which do not contain
any specific instructions will be voted in favor of the proposals contained
herein. If any other matters are properly presented at the Annual Meeting for
consideration, including, among other things, consideration of a motion to
adjourn such meeting to another time and/or place (including, without
limitation, for the purposes of soliciting additional proxies), the persons
named in the enclosed forms of proxy will have discretion to vote on such
matters in accordance with their best judgment. However, proxies voted against
the proposals will not be voted in favor of adjournment in order to continue to
solicit proxies. Pursuant to the Company's By-laws, no notice of an adjourned
meeting need be given other than announcement at the Annual Meeting of the hour,
date and place to which the Annual Meeting is adjourned, except where the
meeting is adjourned for 30 days or more.

Proxies in the accompanying form, duly executed and returned to the Company
and not revoked, will be voted at the Annual Meeting. Any proxy given pursuant
to such solicitation may be revoked by the shareholder at any time prior to the
voting of the proxy by a subsequently dated proxy, by written notification to
the Secretary of the Company, or by personally withdrawing the proxy at the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not
in and of itself constitute revocation of a proxy.

SOLICITATION OF PROXIES

The Company will bear the costs of solicitation of proxies and of preparing,
printing and mailing this Proxy Statement. It is estimated that said costs,
excluding the costs incurred for the services of the proxy solicitor, will be
approximately $10,000. Brokerage houses, fiduciaries, nominees and others will
be reimbursed for their out-of-pocket expenses in forwarding proxy materials to
beneficial owners of shares held in their names. In addition to the solicitation
of proxies by use of the mails, proxies may be solicited from holders of shares
by directors, officers and employees of the Company. In addition, Corporate

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Investor Communications, Inc., a proxy solicitation firm, has been engaged by
the Company to act as proxy solicitor and will receive fees estimated at
$12,000, plus reimbursement of out-of-pocket expenses.

QUORUM

The holders of a majority of the votes represented by the issued and
outstanding shares of Common Stock, present in person or represented by proxy,
shall constitute a quorum at the Annual Meeting for Proposal 1, Proposal 3,
Proposal 4, Proposal 5, Proposal 6 and Proposal 7. The holders of a majority of
the votes represented by the issued and outstanding shares of Common Stock and
Series B Preferred Stock, each calculated as separate classes, present in person
or represented by proxy, shall constitute a quorum at the Annual Meeting for
Proposal 2. Shares represented by executed proxies received by the Company will
be counted for purposes of establishing a quorum, regardless of how or whether
such shares are voted on any specific proposal.

The inspector of elections appointed for the meeting will tabulate votes
cast in person or by proxy at the meeting. The inspector of elections will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but as unvoted for purposes of determining
the approval of any matter submitted to the shareholders for a vote. Broker
non-votes (i.e., proxies on which a broker or nominee indicates that it does not
have discretionary authority as to certain shares to vote on a particular
matter) will also be considered as present for the purposes of determining the
presence of a quorum, but unvoted with respect to that matter.

REQUIRED VOTE

Proposal 1. In connection with the Election of Directors Proposal, the three
nominees receiving the greatest number of votes cast by the holders of the
Company's shares of Common Stock entitled to vote at the Annual Meeting will be
elected as Class III Directors of the Company.

Proposal 2. The affirmative vote of a majority of the issued and outstanding
Common Stock and Series B Preferred Stock, voting as separate classes, is
required to approve the Amendment to Certificate Proposal.

Proposals 3 through 7. The affirmative vote of a majority of the Common
Stock votes cast at the Annual Meeting is required to approve each of the
Issuance of Series B Preferred Stock Proposal, the Notes Amendment Proposal, the
Private Placement Proposal, the Increase in Option Shares Proposal and the
Ratification of Auditors Proposal.

Certain officers and directors holding approximately 14.6% of the
outstanding Common Stock on the Record Date have contractually agreed with the
Series B Investors to vote in the affirmative for the Amendment to Certificate
Proposal and the Issuance of Series B Preferred Stock Proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE APPROVAL OF THE SEVEN PROPOSALS.

FORWARD-LOOKING STATEMENTS

Statements made in this Proxy Statement or in the documents incorporated by
reference into this document include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended. We caution you that, while
forward-looking statements reflect the Company's good faith beliefs, they are
not guarantees and involve known and unknown risks and uncertainties, and actual
results may differ materially from those forward-looking statements. Certain
factors that may cause the actual result to differ from those set forth in the
forward-looking statements are described in the periodic reports of the Company
filed with the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, including the Company's latest annual report, quarterly
reports filed since the latest annual report and current reports on Form 8-K.

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PROPOSAL 1
ELECTION OF DIRECTORS PROPOSAL

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 of Directors is comprised
of three Class I Directors (Messrs. Oringer, Umphrey and Zwanziger), two Class
II Directors (Ms. Goldberg and Dr. Roberts) and three Class III Directors
(Messrs. Fleming, Townsend and Levy). At each annual meeting of shareholders, a
class of directors is elected for a three-year term to succeed the directors of
the same class whose terms are then expiring. The current terms of the Class III
Directors, Class II Directors and Class I Directors will expire upon the
election and qualification of successor directors at the annual meetings of
shareholders held following the end of the calendar years 1998, 1999 and 2000,
respectively.

The proxies granted by shareholders will be voted individually at the Annual
Meeting for the election of the Class III Directors nominated by the Board of
Directors, Jonathan J. Fleming, Peter Townsend and John F. Levy. In the event
that any of Messrs. Fleming, Townsend or Levy shall be unable to serve, it is
intended that the proxy will be voted for such other nominees, if any, as are
designated by the Board of Directors. Messrs. Fleming, Townsend and Levy have
each indicated to the Board of Directors of the Company that they will be
available as a candidate.

DIRECTORS

<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- - ----------------------------------- --- ----------------------------------- -----------------
<S> <C> <C> <C>
Ron Zwanziger...................... Chairman and Chief Executive
45 Officer 1992
Jonathan J. Fleming(2)............. 41 Director 1995
Carol R. Goldberg(1)............... 68 Director 1992
John F. Levy....................... 52 Director 1996
Robert Oringer..................... 39 Director 1998
Edward B. Roberts, Ph.D.(2)........ 63 Director 1992
Peter Townsend..................... 64 Director 1996
Willard Lee Umphrey(1)............. 57 Director 1992
</TABLE>

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(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

RON ZWANZIGER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER. Mr. Zwanziger has
served as the Company's Chairman and Chief Executive Officer since its inception
in 1992. From 1981 to 1991, he was chairman and chief executive officer of
MediSense, a medical device company.

JONATHAN J. FLEMING, DIRECTOR. Mr. Fleming has served on the Board of
Directors of the Company since April 1995. Since January 1996 he has been a
General Partner of Oxford Bioscience Partners, a venture capital firm based in
Westport, Connecticut. From 1988 to 1996 he was 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.

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, a consumer products company.

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<PAGE>
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.

ROBERT ORINGER, DIRECTOR. Mr. Oringer joined the Company's Board of
Directors on February 18, 1998 upon the consummation of the Company's
acquisition of Can-Am Care Corporation ("Can-Am"). He has served as President of
Can-Am since he first joined that company in 1989. Can-Am is engaged in the
distribution of diabetes care products, primarily to the U.S. retail market.

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. He 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 plc, 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 1992. He is a co-founder, and since 1985
has served as chairman of, the Quantitative Group of Funds, an investment
management company. On June 3, 1998, Mr. Umphrey was also named President of the
Quantitative Group of Funds. 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 plc. In addition, Mr.
Zwanziger shares control of EN PLC's general partner with another individual who
is not affiliated with the Company.

BOARD OF DIRECTOR COMMITTEES AND MEETINGS

The Board of Directors has a Compensation Committee and an Audit Committee.
The Compensation Committee, consisting of Ms. Goldberg and Mr. Umphrey, 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, consisting of Mr. Fleming and
Dr. Roberts, reviews the results and scope of the financial audit and other
services provided by the Company's independent public accountants. The
Compensation Committee held one meeting and the Audit Committee held two
meetings during the last fiscal year. The Board of Directors does not have a
nominating committee or a committee serving a similar function.

The Board of Directors held fourteen meetings during the last fiscal year.

5
<PAGE>
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 1996 Plan, an option to purchase 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 (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 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.

PROPOSAL 2
APPROVAL OF AMENDMENT TO CERTIFICATE PROPOSAL

The Company has proposed the approval and adoption of an Amendment to its
Restated Certificate of Incorporation (the "Amendment to Certificate Proposal"),
which will amend the terms of the Company's Series B Convertible Preferred
Stock, par value $.001 per share (the "Series B Preferred Shares"), as described
below. The Amendment to Certificate Proposal is proposed for approval and
adoption by the holders of the Company's Common Stock and the holders of the
Company's Series B Preferred Shares, each voting as a separate class, in
connection with the restructuring of the terms of the Series B Preferred Shares.

BACKGROUND

ORIGINAL ISSUANCE OF SERIES B PREFERRED SHARES

On August 26, 1997, the Company sold in a private placement an aggregate of
8,000 Series B Preferred Shares and warrants to purchase an aggregate of up to
114,628 shares of Common Stock of the Company to Capital Ventures International,
C.C. Investments LLC and Marshall Capital Management, Inc. (formerly known as
Proprietary Convertible Investment Group, Inc.) (collectively, the "Series B
Investors") at an aggregate purchase price of $8,000,000. Each Series B
Preferred Share accrued a premium of 6% per annum (the "Premium"). Following the
issuance, the Series B Preferred Shares were convertible into shares of Common
Stock. The conversion price to determine the number of shares issuable upon
conversion of the Series B Preferred Shares was the lower of (1) the fixed
conversion price of $13.9581 and (2) the average of the lowest closing bid price
of the Common Stock of any five trading days during the thirty trading days
immediately preceding the date on which the proposed conversion was made
multiplied by 95% (the "Original Series B Conversion Price"). On August 26,
2000, any Series B Preferred Share which remains outstanding will automatically
convert into shares of Common Stock.

The transaction was effected in accordance with Delaware law and pursuant to
the authority conferred upon the Company's Board of Directors in the Company's
Restated Certificate of Incorporation to designate the terms of, and to issue,
Series B Preferred Shares. The Board of Directors approved the original
transaction in order to satisfy the Company's then current working capital needs
and to repay indebtedness.

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AMENDMENT OF TERMS OF SERIES B PREFERRED SHARES

As a result of the decline in the market price of the Company's Common Stock
during 1998 from $11.875 to as low as $1.25, the number of shares of Common
Stock into which the Series B Preferred Shares were convertible significantly
increased. When the number of shares of Common Stock into which the Series B
Preferred Shares were convertible exceeded the shares of Common Stock listed on
the American Stock Exchange for conversion of the Series B Preferred Shares (the
"Cap Amount"), each Series B Investor became entitled to request that the
Company redeem a portion of the Series B Preferred Shares held by it for cash,
and one of the Series B Investors sent such a redemption notice in December
1998. To avoid making the sizeable cash payment which would result from the
exercise by the Series B Investors of their right to have the Company redeem a
portion of their Series B Preferred Shares for cash, the Company commenced
discussions with the Series B Investors to amend certain of the terms of the
Series B Preferred Shares. The Company and the Series B Investors began
negotiations in December 1998 with respect to amendments to the terms of the
Series B Preferred Shares.

On January 22, 1999, the Company entered into an Agreement to Amend the
Terms of the Series B Preferred Shares (the "Agreement to Amend Terms"). In
exchange for certain amendments to the terms of the Series B Preferred Shares,
each of the Series B Investors agreed not to request that the Company redeem any
Series B Preferred Shares and agreed not to convert any Series B Preferred
Shares into Common Stock to the extent that such conversion would exceed such
Series B Investor's allocable portion of the Cap Amount. The Series B Investors'
agreement that they will not request that the Company redeem any Series B
Preferred Shares and that they will not convert any Series B Preferred Shares in
excess of the Cap Amount terminates if approval of the Amendment to Certificate
Proposal and Issuance of Series B Preferred Stock Proposal by the Company's
shareholders is not obtained by May 20, 1999.

Under the Agreement to Amend Terms, the terms of the Series B Preferred
Shares will be amended to increase the face amount of each Series B Preferred
Share (plus any accrued but unpaid Premium thereon) by 15% if shareholder
approval is obtained. The conversion price will be the greater of $2.00 or the
Original Series B Conversion Price until the date on which shareholder approval
of the Amendment of Certificate Proposal is obtained ("Series B Approval Date").
When and if shareholder approval is obtained, the conversion price will be fixed
at $2.00 until July 20, 1999. After July 20, 1999, and assuming shareholder
approval is obtained, the conversion price will be the lower of $2.00 or the
Original Series B Variable Conversion Price. In the event the closing price of a
share of the Company's Common Stock exceeds $3.25 for any ten consecutive
trading days after the Series B Approval Date, the Company will have the option
to fix the conversion price at $2.00 upon thirty days' advance notice to the
holders of the Series B Preferred Shares. After July 20, 1999, if the closing
price of a share of Common Stock is less than $2.00 for at least ten consecutive
trading days, the Company will have the right to redeem the Series B Preferred
Shares at the face amount, plus accrued Premium and conversion default payments
(if any). In connection with the potential conversion of Series B Preferred
Shares, the Company is required to list an additional 2,600,000 shares of Common
Stock on the American Stock Exchange.

EFFECT ON EXISTING HOLDERS OF COMMON STOCK

Approval of the Amendment of Certificate Proposal will likely have a
dilutive effect on the shareholders of the Company. Such approval will permit
the Company to list an additional 2,600,000 shares of Common Stock issuable upon
conversion of the Series B Preferred Shares on the American Stock Exchange and
will permit the Company to satisfy its contractual listing obligations relating
to the Series B Preferred Shares, while also getting the benefit, through the
Agreement to Amend Terms, of a fixed conversion price for a period of time. The
listing of such additional shares, however, will permit the holders of the
Series B Preferred Shares to convert more of these shares and therefore in the
future will result in a significant increase in the number of shares of Common
Stock outstanding.

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BOARD OF DIRECTORS RECOMMENDATION; REASONS FOR THE AUTHORIZATION OF AMENDMENT TO
CERTIFICATE PROPOSAL

The Board of Directors of the Company believes that the approval of the
Amendment to Certificate Proposal is in the best interest of the Company and its
shareholders. Among the factors considered by the Board of Directors in
approving the Amendment to Certificate Proposal and recommending it to the
Company's shareholders was the Board's view that (i) the amendment is necessary
to prevent the Series B Investors from requesting that the Company redeem their
Series B Shares for cash at a premium at a time when the Company does not have
sufficient cash to make the required payments and to continue to fund the
Company's operating activities and (ii) the revised terms under which conversion
would occur may have a less dilutive effect on the Company's shareholders than
if there were no Amendment to the Restated Certificate of Incorporation. In
addition, the Board of Directors considered the effect of an obligation to
redeem Series B Preferred Shares in light of the fact that the Company had, as
of the end of December 1998, a limited amount of cash and other working capital
available to it to conduct its operating activities.

THE BOARD OF DIRECTORS, AFTER REVIEWING THE FINANCIAL POSITION AND RESULTS
OF OPERATIONS OF THE COMPANY, DETERMINED THAT AN OBLIGATION TO REDEEM A
SIGNIFICANT NUMBER OF SERIES B PREFERRED SHARES WOULD LIKELY HAVE A DAMAGING
EFFECT ON THE COMPANY AND ITS PROSPECTS AND LIKELY RESULT IN ITS INABILITY TO
MEET ITS OBLIGATIONS. ACCORDINGLY, THE BOARD OF DIRECTORS DETERMINED THAT THE
AMENDMENT TO THE TERMS OF THE SERIES B PREFERRED SHARES WHICH MITIGATES THE
POTENTIAL EXPOSURE TO CASH REDEMPTION OBLIGATIONS, WHILE ALSO FIXING, FOR A
PERIOD OF TIME, THE CONVERSION PRICE OF THE SERIES B PREFERRED SHARES AT A
MINIMUM OF $2.00 PER SHARE, IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS.

DELAWARE STATE LAW VOTING REQUIREMENTS

The Company is incorporated in the State of Delaware. The Delaware General
Corporation Law requires the approval of a majority of shareholders entitled to
vote to amend the Certificate of Incorporation.

AMERICAN STOCK EXCHANGE VOTING REQUIREMENTS

The Company's Common Stock is traded on the American Stock Exchange. Rule
713 of the American Stock Exchange requires shareholder approval of the issuance
of securities convertible into common stock if such underlying common stock
would be, upon issuance, equal to or in excess of 20% of the currently
outstanding common stock before such issuance and would be issued for less than
the greater of book or market value of the common stock. As noted above, under
certain circumstances it is possible that Series B Preferred Stock could be
convertible into a number of shares of Common Stock which exceeds 20% of the
currently outstanding Common Stock of the Company.

VOTE REQUIRED

To approve the Amendment to Certificate Proposal, the affirmative vote of a
majority of the outstanding shares of Common Stock and Series B Preferred Stock,
voting as separate classes, entitled to vote at the Annual Meeting is required.
The Board of Directors believes the Amendment to Certificate Proposal is in the
best interests of the Company and its shareholders, and accordingly, recommends
that the shareholders vote "FOR" the approval and adoption of the Amendment to
Certificate Proposal.

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holder's allocated portion of the Cap Amount. If shareholder approval of the
Amendment to Certificate Proposal and Issuance of Series B Preferred Stock
Proposal is not obtained by May 20, 1999, the Company may be required to redeem
a portion of the Series B Preferred Shares for cash. The amount of cash will
depend on certain factors, including the closing bid prices of the Company's
Common Stock during certain periods before the redemption is completed. If the
redemption had occurred on April 1, 1999, the Company would have been required
to pay the holders of Series B Preferred Shares cash totaling approximately $5.5
million.

PROPOSAL 3
APPROVAL OF ISSUANCE OF SERIES B PREFERRED STOCK PROPOSAL

The Company has proposed the authorization and approval of the issuance of
Series B Preferred Shares, as described below (the "Issuance of Series B
Preferred Stock Proposal"). The Issuance of Series B Preferred Stock Proposal is
proposed for authorization and approval by the holders of the Company's Common
Stock in connection with the restructuring of the terms of the Series B
Preferred Shares.

BACKGROUND

ORIGINAL ISSUANCE OF SERIES B PREFERRED SHARES

On August 26, 1997, the Company sold in a private placement an aggregate of
8,000 Series B Preferred Shares and warrants to purchase an aggregate of up to
114,628 shares of Common Stock of the Company to the Series B Investors at an
aggregate purchase price of $8,000,000. Each Series B Preferred Share accrued a
Premium. For a further description of the original issuance of the Series B
Preferred Shares, see the Amendment of Certificate Proposal above.

AMENDMENT OF TERMS OF SERIES B PREFERRED SHARES

As a result of the decline in the market price of the Company's Common Stock
during 1998 from $11.875 to as low as $1.25, the number of shares of Common
Stock into which the Series B Preferred Shares were convertible significantly
increased. When the number of shares of Common Stock into which the Series B
Preferred Shares were convertible exceeded the Cap Amount, each Series B
Investor became entitled to request that the Company redeem a portion of the
Series B Preferred Shares held by it for cash. To avoid having to make the
sizeable cash payment which would result from the exercise by the Series B
Investors of their right to have the Company redeem a portion of their Series B
Preferred Shares for cash, the Company commenced discussions with the Series B
Investors to amend certain of the terms of the Series B Preferred Shares. The
Company and the Series B Investors began negotiations in December 1998 with
respect to amendments to the terms of the Series B Preferred Shares.

As described in fuller detail above in the Amendment of Certificate
Proposal, on January 22, 1999, the Company entered the Agreement to Amend Terms.
In exchange for certain amendments to the terms of the Series B Preferred Stock,
the Series B Investors agreed not to request that the Company redeem any Series
B Preferred Shares and agreed not to convert any Series B Preferred Shares into
Common Stock to the extent that such conversion would exceed such Series B
Investor's allocable portion of the Cap Amount. Under the Agreement to Amend
Terms, the terms of the Series B Preferred Shares will be amended to increase
the face amount of each Series B Preferred Share (plus accrued but unpaid
Premium) by 15% and to establish certain fixed conversion prices for the Series
B Preferred Shares. In connection with the potential conversion of Series B
Preferred Shares, the Company is required to list an additional 2,600,000 shares
of Common Stock on the American Stock Exchange.

If shareholder approval is not obtained, the original terms of the Series B
Preferred Shares require the Company to list on the American Stock Exchange 135%
of the total number of shares of Common Stock into which the Series B Preferred
Shares could then be converted. As a result of the decline in the market price
of the Common Stock in the time period since a number of shares of Common Stock
issuable upon

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<PAGE>
conversion of the Series B Preferred Shares were initially listed on the
American Stock Exchange, and the corresponding increase in the number of shares
of Common Stock into which the Series B Preferred Shares are convertible, the
Company may not have a sufficient number of shares of Common Stock listed on the
American Stock Exchange, as required by its agreements with the Series B
Investors, including the Series B Preferred Shares Certificate of Designations,
Rights and Preferences. As a result, the Company could be required to list on
the American Stock Exchange a yet undetermined number of additional shares of
Common Stock into which the Series B Preferred Shares would be convertible.
Under Rule 713 of the American Stock Exchange, a company must obtain shareholder
approval to issue any security convertible into common stock if such underlying
common stock (i) would be, upon issuance, equal to or in excess of 20% of the
outstanding common stock at the time of issuance and (ii) would be issued for
the lesser of book or market value for the common stock. A failure to obtain
shareholder approval of the Amendment to Certificate Proposal or the Issuance of
Series B Stock Preferred Stock Proposal will result in a default under the
original terms of the Series B Preferred Shares and may result in the Series B
Investors having the right to request that the Company redeem a portion of the
Series B Preferred Shares then outstanding for cash at a significant premium.
There can be no assurances that the Company would have sufficient cash to make
any such required redemption payments.

As described above in the Amendment to Certificate Proposal, the Series B
Investors agreed not to request that the Company redeem any portion of the
Series B Preferred Shares prior to the listing of additional shares of Common
Stock (or the failure to obtain approval for such listing), in exchange for the
Company's agreement to propose an Amendment to the Company's Restated
Certificate of Incorporation, as well as a listing of 2,600,000 additional
shares of Common Stock on the American Stock Exchange issuable upon conversion
of the Series B Preferred Shares.

EFFECT ON EXISTING HOLDERS OF COMMON STOCK

Approval of the Issuance of Series B Preferred Stock Proposal will likely
have a dilutive effect on the shareholders of the Company. Such approval will
permit the Company to list an additional 2,600,000 shares of Common Stock
issuable upon conversion of the Series B Preferred Shares on the American Stock
Exchange and will permit the Company to satisfy its contractual listing
obligations relating to the Series B Preferred Shares, while also getting the
benefit, through the Agreement to Amend Terms, of a fixed conversion price for a
period of time. The listing of such additional shares, however, will permit the
holders of the Series B Preferred Shares to convert more of these shares and
therefore in the future result in a significant increase in the number of shares
of Common Stock outstanding.

BOARD OF DIRECTORS RECOMMENDATION; REASONS FOR THE AUTHORIZATION AND APPROVAL OF
THE ISSUANCE OF SERIES B PREFERRED STOCK PROPOSAL

The Board of Directors of the Company believes that the authorization and
approval of the Issuance of Series B Preferred Stock Proposal is in the best
interest of the Company and its shareholders. Among the factors considered by
the Board of Directors in approving the Issuance of Series B Preferred Stock
Proposal and recommending it to the Company's shareholders was the Board's view
that the increase in Common Stock issuable upon conversion of the Series B
Preferred Shares is necessary (i) to satisfy its contractual obligations under
the original Series B Preferred Shares terms and the amended Series B Preferred
Shares terms as contemplated in the Amendment to Certificate Proposal, and (ii)
to satisfy the requirements of the American Stock Exchange under Rule 713
thereof. In addition, the Board of Directors considered the effect of an
obligation to redeem Series B Preferred Shares in light of the fact that the
Company had, as of the end of December 1998, a limited amount of cash and other
working capital available to it to conduct its operating activities.

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THE BOARD OF DIRECTORS, AFTER REVIEWING THE FINANCIAL POSITION AND RESULTS
OF OPERATIONS OF THE COMPANY, DETERMINED THAT AN OBLIGATION TO REDEEM A
SIGNIFICANT NUMBER OF SERIES B PREFERRED SHARES WOULD LIKELY HAVE AN ADVERSE
EFFECT ON THE COMPANY AND ITS PROSPECTS. ACCORDINGLY, THE BOARD OF DIRECTORS
DETERMINED THAT AN AMENDMENT TO THE TERMS OF THE SERIES B PREFERRED SHARES WHICH
MITIGATES THE POTENTIAL EXPOSURE TO CASH REDEMPTION OBLIGATIONS, WHILE ALSO
FIXING, FOR A PERIOD OF TIME, THE POTENTIAL DILUTIVE EFFECT OF THE SERIES B
PREFERRED SHARES, IS IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS.
THE PROPOSED AMENDMENT OF THE SERIES B PREFERRED SHARES, COUPLED WITH THE
DECLINE IN THE PRICE OF THE COMPANY'S COMMON STOCK, REQUIRES THE COMPANY TO
OBTAIN SHAREHOLDER APPROVAL OF THE AMENDMENT OF CERTIFICATE PROPOSAL AND THE
ISSUANCE OF SERIES B PREFERRED STOCK PROPOSAL, EACH OF WHICH THE BOARD OF
DIRECTORS HAS DETERMINED IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS.

AMERICAN STOCK EXCHANGE VOTING REQUIREMENTS

The Company's Common Stock is traded on the American Stock Exchange. Rule
713 of the American Stock Exchange requires shareholder approval of the issuance
of securities convertible into common stock if such underlying common stock
would be, upon issuance, equal to or in excess of 20% of the currently
outstanding common stock before such issuance and would be issued for less than
the greater of book or market value of the common stock. As noted above, under
certain circumstances it is possible that Series B Preferred Shares could be
convertible into a number of shares of Common Stock which exceeds 20% of the
currently outstanding Common Stock. Shareholder approval is not otherwise
required as a matter of Delaware law or other applicable laws or rules.

VOTE REQUIRED

To approve the Issuance of Series B Preferred Stock Proposal, the
affirmative vote of a majority of the Common Stock votes cast at the Annual
Meeting is required. The Board of Directors believes the Issuance of Series B
Preferred Stock Proposal is in the best interests of the Company and its
shareholders, and accordingly, recommends that the shareholders vote "FOR" the
approval and adoption of the Issuance of Series B Preferred Stock Proposal.

In the event either the Amendment to Certificate Proposal or the Issuance of
Series B Preferred Stock Proposal is not approved, the holders of the Series B
Preferred Shares may require the Company to redeem for cash a portion of each
holder's Series B Preferred Shares. The Company may be required by the holders
of the Series B Preferred Shares to redeem as many Series B Preferred Shares for
cash as is necessary so that, after giving effect to such redemption, the number
of shares of Common Stock issuable to each such holder upon conversion of the
holder's remaining Series B Preferred Shares is less than each holder's
lalocated portion of the Cap Amount. If shareholder approval of the Amendment to
Certificate Proposal and Issuance of Series B Stock Proposal is not obtained by
May 20, 1999, the Company may be required to redeem a portion of the Series B
Preferred Shares for cash. The amount of cash will depend on certain factors,
including the closing bid prices of the Company's Common Stock during certain
periods before the redemption is completed. If the redemption had occurred on
April 1, 1999, the Company would have been required to pay the holders of Series
B Preferred Shares cash totaling approximately $5.5 million.

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PROPOSAL 4
APPROVAL OF NOTES AMENDMENT PROPOSAL

On October 27, 1997, the Company issued certain Senior Subordinated
Convertible Notes (the "Original Notes") having an aggregate face value of
$10,000,000, and on January 11, 1999, the Company amended the portion of the
Original Notes which remained outstanding (the "Amended Notes") (the Original
Notes and the Amended Notes are hereinafter referred to as the "Notes"). The
Company is proposing that the shareholders ratify, confirm and approve the
issuance of the Notes as described below (the "Notes Amendment Proposal").

BACKGROUND

ORIGINAL ISSUANCE OF NOTES

On October 27, 1997, the Company sold in a private placement the Notes and
warrants to purchase up to 106,700 shares of Common Stock to Elliott Associates,
L.P. and Westgate International, L.P. for gross proceeds of $10,000,000. The
principal of the Notes was payable in full on October 28, 2002. The unpaid
principal on each Note currently accrues interest at the rate of 8% per year
payable in cash or, at the option of the Company, subject to certain conditions,
shares of Common Stock. The holder of each Note may convert all or a portion of
the principal amount outstanding under such Note into Common Stock prior to
October 27, 2002 with such principal amount converted into that number of shares
of Common Stock calculated by dividing the principal amount of the Note to be
converted, plus any accrued and unpaid interest, by a conversion price equal to
the lesser of (i) $12.65625 (the "Ceiling Price"), and (ii) the lowest price at
which the Company's Common Stock has traded in the five days preceding the date
on which the conversion notice is sent by the holder of the Note to the Company.
The Company may block any conversion by a holder of a Note in the event the per
share conversion price is less than 60% of the Ceiling Price by offering to
redeem for cash the value of the shares that would have been issued had a
conversion of the Notes occurred in the normal course plus accrued but unpaid
interest.

The issuance of the Notes was effected in accordance with Delaware law and
pursuant to the authority conferred upon the Company's Board of Directors by the
Company's Restated Certificate of Incorporation and By-laws to incur debt on
behalf of the Company. The Board of Directors approved the original transaction
in order to continue the Company's research and development and marketing
efforts and to satisfy the Company's then current working capital needs.

AMENDMENT OF TERMS OF THE NOTES

As a result of the significant decline in the market price of the Company's
Common Stock during 1998 from $11.875 to as low as $1.25, the number of shares
of Common Stock into which the Notes were convertible increased dramatically.
When the number of shares of Common Stock into which the Notes were convertible
exceeded the number of shares listed on the American Stock Exchange for
conversion of the Notes, the holders of the Notes became entitled to request
that the Company redeem up to the full principal amount of the Notes in cash. As
of January 11, 1999, the principal amount of the Notes was approximately
$3,778,000. To mitigate the sizeable cash payments which would result from the
exercise by the Note holders of their rights under the Notes to accelerate
principal amounts due thereunder, the Company commenced discussions with the
Note holders to amend the terms of the Notes. On January 11, 1999, the Company
entered into an agreement to amend the terms of the Notes ("Note Amendment
Agreement") with the holders of the Notes, subject to ratification of certain
terms of the Note Amendment Agreement by the Company's shareholders in order to
comply with certain rules and regulation of the American Stock Exchange.
Pursuant to the terms of the Note Amendment Agreement, the Company redeemed
approximately $781,000 of the principal amount of the Notes and $78,000 of
accrued premium in cash and converted approximately $904,000 of the principal
amount due under the Notes plus accrued but unpaid interest into 500,000 shares
of Common Stock at a conversion price of $1.8125 per share.

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Under the Notes, as amended by the Note Amendment Agreement, any principal
amount not redeemed for cash or converted into shares of the Company's Common
Stock on or prior to January 11, 1999 as part of the settlement with the Note
holders was increased by 15% and, in consideration thereof, as well as for other
consideration, the warrants held by the Note holders were canceled. The Amended
Notes, which are due and payable in full on July 12, 1999, accrue interest at a
rate of 8% per share. As of the close of business on January 11, 1999 the
principal amount and accrued interest of the Amended Notes was $2,415,000.

Amounts due under the Amended Notes may be converted into shares of Common
Stock subject to certain restrictions. The holders of the Amended Notes cannot
effect a conversion of the Amended Notes into shares of Common Stock until the
Company has obtained the approval of its shareholders, to the extent required,
of the terms of the Amended Notes and the issuance of shares of Common Stock
issuable upon conversion of the Amended Notes. The number of shares of Common
Stock issuable upon conversion of the Amended Notes is determined by dividing
the portion of the principal amount of the Amended Notes being converted by the
then conversion price. If the Company's shareholders ratify the Notes Amendment
Proposal, the holders of the Amended Notes will then be entitled to convert all
or a portion of the amounts due under the Amended Notes into shares of Common
Stock at a fixed conversion price of $2.00 per share. In the event of certain
events of default under the Amended Notes, the holders may convert all or a
portion of the amounts due under the Amended Notes into shares of Common Stock
at a conversion price equal to the lesser of $2.00 (the "Notes Ceiling Price")
and the lowest price at which the Company's Common Stock traded during the five
trading days preceding such conversion date. Notwithstanding the foregoing
provision, the holders of the Amended Notes may fix the conversion price at
which the Amended Notes may be converted into shares of Common Stock on any date
at the conversion price in effect on that date.

If the per share conversion price is less than 60% of the Notes Ceiling
Price, the Company may block any conversion by offering to redeem the Amended
Notes for cash in an amount equal to the fair market value of the Common Stock
for which the Amended Notes, plus accrued but unpaid interest, could then be
converted. Commencing two weeks after shareholder approval is obtained, the
Company may redeem an Amended Note at 100% of its face value plus accrued but
unpaid interest. In the event shareholder approval is not obtained by certain
dates which vary depending upon the review, if any, of the Company's proxy
solicitation materials by the Securities and Exchange Commission, the holders of
the Amended Notes will be entitled to accelerate all amounts due under the
Amended Notes and require the Company to pay the Amended Notes in full.

In exchange for the Note holders' forbearance of acceleration of amounts due
under the Notes or conversion of amounts due thereunder into shares of Common
Stock at the then applicable conversion prices (which were as low as $1.25 per
share) prior to the listing of additional shares of Common Stock issuable upon
conversion of the Notes, the Company has agreed to amend the terms of the
outstanding Notes and list additional shares of Common Stock issuable upon
conversion of the Notes on the American Stock Exchange, subject to shareholder
approval. On January 19, 1999, the Company listed 2,500,000 Note Conversion
Shares on the American Stock Exchange.

EFFECT UPON EXISTING HOLDERS OF COMMON STOCK

Approval of the Notes Amendment Proposal will have a potentially dilutive
effect on the shareholders of the Company. Such approval will permit the Company
to satisfy its contractual listing obligations under both the existing Notes and
the terms of the Note Amendment Agreement. The listing of such additional
shares, however, will permit the holders of the Notes to convert more of the
Notes for Common Stock and therefore in the future will result in a significant
increase in the number of shares of Common Stock outstanding.

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BOARD OF DIRECTOR RECOMMENDATIONS; REASONS FOR THE AUTHORIZATION OF ADDITIONAL
SHARES OF COMMON STOCK

Based primarily on its consideration of the factors referred to below, the
Board of Directors of the Company believes that the amendment of the terms
governing the Notes and the authorization of additional shares of Common Stock
to be listed on the American Stock Exchange is in the best interest of the
Company and its shareholders.

Among the factors considered by the Board of Directors in approving and
recommending to the shareholders the Notes Amendment Proposal was the Board's
view that (i) the current Note terms and terms of the Amended Notes both require
the Company to list additional shares of Common Stock on the American Stock
Exchange and (ii) that a partial redemption of the Notes in six months in the
form of Common Stock rather than payment immediately of cash which is otherwise
necessary for working capital as a result of the Notes being accelerated is in
the Company's best interest. In addition, the Board of Directors considered the
effect of an acceleration of the amounts due under the Notes in light of the
fact that the Company had, as of the end of December 1998, a limited amount of
cash and other working capital available to it to conduct its operating
activities.

THE BOARD OF DIRECTORS, AFTER REVIEWING THE FINANCIAL POSITION AND RESULTS
OF OPERATIONS OF THE COMPANY DETERMINED THAT AN OBLIGATION TO REPAY, FOLLOWING
ACCELERATION OF THE AMOUNTS DUE UNDER THE NOTES, WOULD LIKELY HAVE AN ADVERSE
EFFECT ON THE COMPANY AND ITS PROSPECTS. ACCORDINGLY, THE BOARD OF DIRECTORS
DETERMINED THAT AN AMENDMENT TO THE TERMS OF THE NOTES WHICH MITIGATED THE
POTENTIAL EXPOSURE TO CASH PAYMENT OBLIGATIONS FOLLOWING AN ACCELERATION OF THE
AMOUNTS DUE UNDER THE NOTES, WHILE ALSO FIXING, FOR A PERIOD OF TIME, THE
POTENTIAL DILUTIVE EFFECT OF THE NOTES, WAS IN THE BEST INTERESTS OF THE COMPANY
AND ITS SHAREHOLDERS.

AMERICAN STOCK EXCHANGE VOTING REQUIREMENTS

The Company's Common Stock is traded on the American Stock Exchange. Rule
713 of the American Stock Exchange requires shareholder approval of the issuance
of securities convertible into common stock if such underlying common stock
would be, upon issuance, equal to or in excess of 20% of the currently
outstanding common stock before such issuance and would be issued at a price
less than the greater of book or market value of the common stock. On January 8,
1999, the Company obtained a waiver from the American Stock Exchange of the
requirement that the Company receive shareholder approval prior to listing the
additional Note Conversion Shares. On January 19, 1999 the Company listed an
additional 2,500,000 shares of Common Stock issuable upon conversion of the
Notes on the American Stock Exchange. The American Stock Exchange waiver was
conditioned on the Company providing certain notice to shareholders.

The Notes Amendment Agreement requires the Company to seek shareholder
approval of the Notes Amendment Proposal, and accordingly the Company is doing
so. Shareholder approval is not otherwise required as a matter of Delaware law
or other applicable laws or rules.

VOTE REQUIRED

To approve the Notes Amendment Proposal, the affirmative vote of the holders
of a majority of Common Stock votes cast at the Annual Meeting is required. The
Board of Directors believes that the Notes Amendment Proposal is in the best
interests of the Company and its shareholders, and accordingly, recommends that
the shareholders vote "FOR" the Notes Amendment Proposal.

In the event the Notes Amendment Proposal is not approved by a vote of the
shareholders, the holder of each Amended Note will have the option, exercisable
any time prior to repayment of the Amended Note, to have all or part of the Note
redeemed by the Company (i) for cash equal to the principal amount plus Premium
or (ii) for Common Stock equal to the number of shares of Common Stock into
which the

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principal amount of the Amended Note to be redeemed would then be convertible,
multiplied by the mean average of the five weighted average trading prices of
the Common Stock over each of the five trading days beginning on the second day
after delivery of the notice of exercise. If the holder elects the alternative
referred to in clause (ii) above and the average closing bid price for the five
consecutive trading days after April 30, 1999 but prior to redemption of the
Notes preceding such conversion date remains above $2.00, then the Company will
issue Common Stock to redeem such holder's Notes. In the event shareholder
approval of the Notes Amendment Proposal is not obtained and the average closing
bid price for five consecutive trading days after April 30, 1999 but prior to
redemption of the Notes preceding such conversion date is below $2.00, the
Company will have to redeem a portion of the indebtedness represented by the
Notes with Common Stock, and the Company will be obligated to redeem the
remainder for cash.

PROPOSAL 5
APPROVAL OF THE PRIVATE PLACEMENT PROPOSAL

On January 8, 1999, the Company sold an aggregate of 56,845 shares of Series
C Convertible Preferred Stock (the "Series C Preferred Shares") at a price per
share of $100, 3,030 shares of Series D Convertible Preferred Stock (the "Series
D Preferred Shares") at a price per share of $100, and 14,170 shares of Series E
Convertible Preferred Stock (the "Series E Preferred Shares") at a price per
share of $100, for an aggregate purchase price of $7,404,500 to certain
investors (the "Investors") in a private placement (the "Private Placement")
(the Series C Preferred Shares, Series D Preferred Shares and Series E Preferred
Shares are referred to herein, collectively as the "Series Preferred Shares").
The Investors include certain officers and directors of the Company identified
below. The Company is proposing that the shareholders ratify, confirm and
approve the issuance of the Series Preferred Shares as described below (the
"Private Placement Proposal") by the holders of the Company's Common Stock.

TERMS OF THE ISSUANCES

The Company is proposing that the shareholders ratify, confirm, and approve
the Private Placement Proposal, as described below (the "Private Placement
Proposal"). Each Series Preferred Share accrues a dividend at the rate of 7% per
annum (the "Preferred Premium"). The Preferred Premium is cumulative and accrues
without interest from the first day of the quarterly period in which such
dividend may be payable. No interest shall be declared and paid on the Preferred
Shares unless the dividends on the Series B Preferred Shares have been declared
and paid. The Preferred Shares are convertible into shares of Common Stock.

The transactions were effected in accordance with Delaware law and pursuant
to the authority conferred upon the Company's Board of Directors in the
Company's Certificate of Incorporation to designate the terms of and to issue
shares of Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock. The Board of Directors approved the transactions because the
Company required funds to redeem a portion of the amounts due under the Notes,
as described above, and to continue to execute the Company's business strategy
and meet its current working capital needs.

The Investors, including certain officers and directors of the Company
identified below, acquired the Series Preferred Shares which had a conversion
price (the price used to determine how many shares of Common Stock would be
issuable upon the conversion of a Series Preferred Share) that was less than the
closing price of a share of Common Stock on the American Stock Exchange on the
date of issuance of the applicable Series Preferred Shares. The actual number of
shares of Common Stock issuable upon conversion of one Series Preferred Share is
equal to the aggregate stated value per share (i.e., $100), plus any accrued but
unpaid Preferred Premium (unless the Company elects to pay such premium in cash)
through the date of such conversion, divided by a conversion price initially
equal to $1.8125 for the Series C Preferred Stock, $2.00 for the Series D
Preferred Stock and $3.028 for the Series E Preferred Stock, each as adjusted in
accordance with the applicable Certificate of Designation. The conversion prices

15
<PAGE>
for the different series were determined by applying a discount of 15% to the
closing price of the Common Stock on the American Stock Exchange on the date
before the Investor was scheduled to purchase the applicable shares, except that
the conversion price for the Series D Preferred Shares was specifically
negotiated with the sole purchaser thereof, a Series B Investor. The 15%
discount was approved by the members of the special committee of the Board of
Directors referred to below and reflects, among other things, that the Series
Preferred Shares and the Common Stock issuable on conversion of the Series
Preferred Shares are illiquid and are not freely tradeable for at least a year
from the date of issuance. Any Series Preferred Share not previously converted
will automatically convert into Common Stock on the third anniversary of the
date of issuance of such Series Preferred Share.

Pursuant to the regulations of the American Stock Exchange, in the absence
of shareholder approval, the aggregate number of shares of Common Stock issuable
upon conversion of the Series Preferred Shares may not exceed 19.99% of the
outstanding shares of Common Stock on January 8, 1999 (i.e., 15,176,998 shares).
Under the terms of the respective Series Preferred Shares, each purchaser of a
Series Preferred Share cannot convert such securities until the earlier of April
30, 1999 or shareholder ratification of the issuance of such Series Preferred
Shares.

In the event any holder of the Series Preferred Shares gives the Company a
conversion notice on or after April 30, 1999, but prior to the ratification by
the Shareholders of the issuance of the Series Preferred Shares, the Company is
required to deliver to all holders of the Series Preferred Shares notice of the
right to convert up to a pro-rata portion of the 3,033,881 shares of Common
Stock the Company intends to list for conversion of the Series Preferred Shares
(the "Listed Shares"). The holders of the Series Preferred Shares wishing to
convert any Series Preferred Shares must respond to the Company's notice of the
right to convert within thirty days of the Company providing such notice. If the
total number of shares of Common Stock issuable upon conversion of the Series
Preferred Shares for which conversion is requested (the "Requested Shares")
exceeds the number of Listed Shares, then the Company will convert, on a pro-
rata basis, only that portion of the Series Preferred Shares as is convertible
into the number of Listed Shares. In this event, the Company will redeem for
cash the remaining Series Preferred Shares not converted into Common Stock.

If instead the total number of shares of Common Stock issuable upon
conversion of the Requested Shares does not exceed the number of Listed Shares,
then the Company will automatically convert the Requested Shares and redeem all
remaining outstanding shares ("Remaining Shares") of the Series Preferred Stock.
In such an event, the Company has the option of redeeming a percentage of the
Remaining Shares in shares of Common Stock instead of cash so long as the
aggregate number of shares of Common Stock issuable upon conversion of the
Series Preferred Shares and redemption of the Remaining Shares does not exceed
the number of Listed Shares.

USE OF PROCEEDS FROM THE PRIVATE PLACEMENT

The gross proceeds to the Company from the offering of approximately
$7,404,500 have been and will be used principally to pay for the expenses of the
offering (including a fee payable to an entity with which a director of the
Company is an affiliate: See "Certain Relationships and Related
Transactions--Transactions with U.S. Boston Capital and Pear Tree Royalty"),
fund the working capital needs of the Company and redeem approximately $859,000
of the outstanding amounts due under the Notes to Elliot Associates, L.P. and
Westgate International, L.P. as discussed in the Notes Amendment Proposal. No
director or officer of the Company is affiliated with either Elliot Associates,
L.P. or Westgate International, L.P.

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<PAGE>
EFFECT UPON EXISTING HOLDERS OF COMMON STOCK

Approval of the Private Placement Proposal will have a dilutive effect on
the shareholders of the Company.

Authorization of shares of Common Stock issuable upon conversion of the
Series Preferred Shares will permit the Company to list an appropriate number of
shares on the American Stock Exchange to satisfy the Company's obligation in the
event of the conversion of all the Series Preferred Shares.

INTERESTS OF CERTAIN PERSONS

The Series C Preferred Shares and the Series E Preferred Shares were
purchased in part by officers and directors of the Company. The officers and
directors who participated in the placement of Series C Preferred Shares and
Series E Preferred Shares beneficially held an aggregate 24.8% of the Company's
Common Stock prior to the issuance. The officers and directors who participated
in the Private Placement purchased 10,732 of Series C Preferred Shares and 4,241
Series E Preferred Shares.

SERIES PREFERRED SHARES PURCHASED BY OFFICERS AND DIRECTORS

<TABLE>
<CAPTION>
OFFICERS AND DIRECTORS SERIES C SHARES ACQUIRED SERIES E SHARES ACQUIRED
- - ------------------------------------------ --------------------------- -------------------------
<S> <C> <C>
Ron Zwanziger............................. 850 971
Willard Umphrey........................... 2,289 0
Kenneth Legg.............................. 250 0
Robert Oringer............................ 1,500 0
Jonathan Fleming.......................... 0 1,020
John Levy................................. 5,104 0
Carol Goldberg............................ 289 1,000
Otto Wahl................................. 0 750
John Yonkin............................... 250 0
Christopher Huntoon....................... 200 0
Emanuel Hart.............................. 0 500
</TABLE>

BOARD OF DIRECTORS RECOMMENDATIONS; REASONS FOR AUTHORIZATION OF THE PRIVATE
PLACEMENT

The Board of Directors of the Company, as advised by the special committee
described below, believes that the ratification of the sale of Series Preferred
Shares to the Investors, including certain officers and directors, is in the
best interest of the Company and its shareholders.

In considering the proposed Private Placement, the Board of Directors
determined that some members of the Board of Directors would likely participate
in the Private Placement because they, along with other potential investors
known to the Company, could be provided the opportunity to invest in a private
placement and, based upon their knowledge of the Company, reach an agreement
with the Company in a relatively short period of time so as to provide the
Company with the needed capital infusion on an expedited basis. Because of this
potential conflict of interest, the Board of Directors appointed a special
committee which consisted of two members of the Board of Directors who would not
participate in any private placement transaction, to consider and act upon the
Private Placement and approve the final terms of the Private Placement. The
special committee consisted of Edward B. Roberts, Ph.D. and Peter Townsend. The
special committee was advised by Covington & Associates, a financial advisor
located in Boston, Massachusetts, the principals of which have over forty years
of combined investment banking experience. Although Covington & Associates has
been paid by the Company for providing advice in connection with Selfcare
acquisitions and financings in recent years, it received no fee in connection
with the assistance it rendered to the special committee relating to the Private
Placement.

17
<PAGE>
Among the factors considered by the special committee of the Board of
Directors in approving the private placement of the Series Preferred Shares was
the special committee's (and the entire Board of Directors') view that (i) the
Company's working capital needs and the agreement to repay $859,000 of the Notes
plus Preferred Premium required an immediate influx of cash, and (ii) the
issuance and sale of the Series Preferred Shares represented the most efficient
and expeditious means of satisfying the Company's immediate need for working
capital and funds to repay a portion of the Notes. The Company's management
provided the Board of Directors and its special committee with financial and
operational information about the Company that indicated that the Company had
less than $1 million of available cash at the end of December 1998 and that the
Company was then expending a significant amount of cash each week in its
operating activities. This analysis of the Company's cash position and net cash
outflow led the Board of Directors to conclude that the Company needed to raise
capital on an expedited basis and that the issuance of the Series Preferred
Stock would be an efficient way to raise these funds.

AMERICAN STOCK EXCHANGE VOTING REQUIREMENTS

Accordingly, the Company is seeking shareholder approval of the Private
Placement Proposal. Shareholder approval is not otherwise required as a matter
of Delaware law or other applicable laws or rules.

VOTE REQUIRED

To approve the Private Placement Proposal, the affirmative vote of a
majority of Common Stock votes cast at the Annual Meeting is required. The Board
of Directors believes that the Private Placement Proposal is in the best
interest of the Company and its shareholders, and accordingly, recommends that
the shareholders vote "FOR" the Private Placement Proposal.

In the event the Private Placement Proposal is not approved, the holders of
Series Preferred Shares will be permitted, assuming that the American Stock
Exchange approves the listing of the Listed Shares, to convert the Series
Preferred Shares into up to 3,033,881 shares of Common Stock, representing
19.99% of the Common Stock outstanding on the date the Series Preferred Shares
were issued. The Company could be required to redeem the remaining Series
Preferred Shares for cash based on the average of the closing bid prices for the
five trading days immediately preceding the thirtieth day after a redemption
notice is received by the Company (as of April 1, 1999, such amount would have
been approximately $3.3 million).

18
<PAGE>
PROPOSAL 6
INCREASE IN OPTION SHARES PROPOSAL

The Company's Board of Directors recommends that the 1996 Plan be amended to
increase the number of shares of Common Stock that are available to be issued
pursuant to the exercise of options granted under the 1996 Plan from 1,500,000
shares to 2,250,000 shares. Of the 1,500,000 shares of Common Stock currently
authorized for grant under the 1996 Plan, options to purchase 1,470,660 shares
have been granted and 29,340 shares remain available for grant under the 1996
Plan. The Company is proposing that the shareholders ratify, confirm and approve
the increase in shares available under the 1996 Plan as described below (the
"Increase in Option Shares Proposal") by the holders of the Company's Common
Stock.

The Board of Directors recommends this action in order to continue to
provide a source of stock to attract and compensate talented personnel. The
Company's recent acquisitions and management's continued commitment to growth
require that the amount of Common Stock available for grant be increased. The
Board of Directors believes that stock options promote growth and provide a
meaningful incentive to employees of successful companies.

The effect of an increase of 750,000 shares of Common Stock available for
grant under the 1996 Plan will result in additional potential dilution of the
Company's outstanding Common Stock. As of March 15, 1999, 15,756,480 shares of
Common Stock were outstanding and if all outstanding options and warrants were
exercised, and if all of the outstanding Series B Preferred Shares and Senior
Subordinated Convertible Notes were converted into Common Stock, the number of
outstanding shares would increase to 29,076,737.

Based solely on the closing price of Common Stock as reported on the AMEX on
March 15, 1999 of $3.50 per share, the maximum aggregate market value of the
additional 750,000 shares of Common Stock reserved for issuance under the 1996
Plan would be $2,625,000.

Section 162(m) of the Code and the regulations thereunder generally would
disallow a Federal income tax deduction to the Company for compensation in
excess of $1 million paid in any year to the Chief Executive Officer or any
other executive officer whose compensation is required to be reported in the
summary compensation table ("Covered Employees"). However, this limitation on
compensation expense does not apply to payments of "performance-based
compensation." In order to provide that stock options and stock appreciation
rights granted under the 1996 Plan qualify as "performance-based compensation"
under Section 162(m) of the Code, the 1996 Plan provides that stock options and
stock appreciation rights with respect to no more than 500,000 shares of Common
Stock (subject to adjustment for stock splits and similar events) may be granted
to any one individual during any one-calendar year period.

AMENDED AND RESTATED 1996 STOCK OPTION AND GRANT PLAN

PLAN ADMINISTRATION; ELIGIBILITY. The Company has authorized the issuance
of up to 1,500,000 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 are 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

19
<PAGE>
management, growth or profitability of the Company and its subsidiaries, as
selected from time to time by the Administrator. Independent Directors are also
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 significant
shareholders.

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 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

20
<PAGE>
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 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, if any, 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 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.

21
<PAGE>
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
shareholders 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.

GRANTS OF OPTIONS UNDER PROPOSAL 6. No grants have been made with respect
to the additional 750,000 shares of Common Stock proposed under this Proposal 6
to be reserved for issuance under the 1996 Plan. The number of shares of Common
Stock that may be granted to executive officers and non-executive officers is
indeterminable at this time, as such grants are subject to the discretion of the
Administrator.

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 requirements, the employee generally will realize
ordinary income in the year of disposition, and 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

22
<PAGE>
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. 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.

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 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 of the Company's proxy statement
receives compensation (other than performance-based compensation) in excess of
$1.0 million a year.

VOTE REQUIRED

To approve the Increase in Option Shares Proposal, the affirmative vote of a
majority of Common Stock votes cast at the Annual Meeting is required. The Board
of Directors believes that the Increase in Option Shares Proposal is in the best
interest of the Company and its shareholders, and accordingly, recommends that
the shareholders vote "FOR" the Increase in Option Shares Proposal.

PROPOSAL 7
RATIFICATION OF AUDITORS

The Company's financial statements for the year ended December 31, 1998 were
audited by Arthur Andersen LLP, which has audited the Company's books and
records since 1994. The Board of Directors recommends to the shareholders that
they ratify the selection of Arthur Anderson LLP to examine and report upon the
financial statements of the Company for the fiscal year ending December 31,
1999. Arthur Anderson LLP has no direct or indirect interest in the Company or
any affiliate of the Company. A representative of Arthur Andersen LLP will be
present at the Annual Meeting, will be given the opportunity to make a statement
if he or she so desires and will be available to respond to appropriate
questions.

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<PAGE>
PRINCIPAL SHAREHOLDERS

BENEFICIAL OWNERSHIP OF MANAGEMENT

The following table sets forth certain Common Stock information regarding
the beneficial ownership of the Common Stock as of February 1, 1999 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
executive officers of the Company and (iv) all directors and executive officers
as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP OF CLASS (2)
- - ---------------------------------------------------- -------------------- ---------------
<S> <C> <C>

<CAPTION>
Directors and Executive Officers
- - ----------------------------------------------------
<S> <C> <C>

Ron Zwanziger....................................... 2,146,730(3) 12.8%
Willard Lee Umphrey................................. 793,116(4) 5.0%
David Scott, Ph.D................................... 425,016(5) 2.6%
Kenneth D. Legg, Ph.D............................... 393,384(6) 2.5%
Robert Oringer...................................... 282,294(7) 1.8%
Jonathan J. Fleming................................. 235,416(8) 1.5%
John F. Levy........................................ 206,966(9) 1.3%
Carol R. Goldberg................................... 146,183(10) *
Edward B. Roberts, Ph.D............................. 108,479(11) *
Otto Wahl........................................... 105,245(12) *
Peter Townsend...................................... 28,750(13) *
John Yonkin......................................... 6,889(14) *
Christopher L. Huntoon.............................. 0(15) *
Emanuel Hart........................................ 0(16) *

Total of Directors and Executive Officers (14
persons). 4,878,468 27.3%
</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 02453.

(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 from February 1, 1999, the date of the above table, but
excludes shares of Common Stock underlying options or warrants held by any
other person.

(3) Includes options and warrants that are currently exercisable, or exercisable
within 60 days of February 1, 1999, to purchase up to 1,076,167 shares of
Common Stock. Excludes 551,228 shares issuable upon the conversion of 9,991
shares of Series C Convertible Preferred Stock at a price of $1.8125 per
share and 98,415 shares issuable upon the conversion of 2,980 shares of
Series E Convertible Preferred Stock at a price of $3.028 per share after
April 30, 1999.

(4) Includes options and warrants that are currently exercisable, or exercisable
within 60 days of February 1, 1999, to purchase up to 120,340 shares of
Common Stock. Mr. Umphrey's wife owns 137,280 shares of Common Stock. In
addition, as of February 1, 1999, Mr. Umphrey was the co-trustee of a
retirement account for Leon Okurowski which held shares, warrants, and
convertible notes, in the aggregate amount of 150,637 shares of Common
Stock. Mr. Umphrey disclaims beneficial ownership of the shares of Common
Stock owned by his wife and Mr. Okurowski. On March 31, 1998 the Company
purchased the partnership interests of USB '93 in which Mr. Umphrey and his
wife had certain interests. See the discussion of the transaction with USB
'93 Technology Associates Limited Partnership" under the heading entitled
"Certain Transactions" below. Excludes 126,290 shares

24
<PAGE>
issuable upon conversion of 2,289 shares of Series C Convertible Preferred
Stock at a price of $1.8125 per share after April 30, 1999.

(5) Includes options to purchase up to 329,053 shares of Common Stock that are
currently exercisable or exercisable within 60 days of February 1, 1999.

(6) Includes options to purchase up to 198,384 shares of Common Stock that are
currently exercisable or exercisable within 60 days of February 1, 1999.
Excludes 13,793 shares issuable upon the conversion of 250 shares of Series
C Convertible Preferred Stock at a price of $1.8125 per share after April
30, 1999.

(7) Excludes 82,759 shares issuable upon the conversion of 1,500 shares of
Series C Convertible Preferred Stock at a price of $1.8125 per share after
April 30, 1999.

(8) Includes options to purchase up to 48,091 shares of Common Stock that are
currently exercisable or exercisable within 60 days of February 1, 1999.
Also includes an aggregate of 135,421 shares of Common Stock owned by Medica
Israel and Medica U.S., two investment limited partnerships and 48,904 share
of Common Stock owned by Selfcare Holdings Ltd, an affiliate of Medica. 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 184,325 shares of Common Stock owned by Medica Israel, Medica U.S. and
Selfcare Holdings, Ltd. Excludes 33,686 shares issuable upon the conversion
of 1,020 shares of Series E Convertible Preferred Stock at a price of 3.028
per share on the earlier of shareholder approval or April 30, 1999. The
table also excludes 49,505 shares of Common Stock issuable to Medica Israel
and Medica U.S. upon the conversion of 1,499 shares of Series E Convertible
Preferred Stock at price of $3.028 per share after April 30, 1999.

(9) Includes options and warrants to purchase up to 28,635 shares of Common
Stock that are currently exercisable or exercisable within 60 days of
February 1, 1999. Excludes 281,600 shares issuable upon the conversion of
5,104 shares of Series C Convertible Preferred Stock at a price of $1.8125
per share after April 30, 1999.

(10) Includes options and warrants to purchase up to 80,611 shares of Common
Stock that are currently exercisable or exercisable within 60 days of
February 1, 1999. Excludes 15,945 shares issuable upon conversion of 289
shares of Series C Convertible Preferred Stock at a price of $1.8125 per
share and 33,025 shares issuable upon the conversion of 1,000 shares of
Series E Convertible Preferred Stock at a price of $3.028 per share after
April 30, 1999.

(11) Includes options and warrants to purchase up to 74,250 shares of Common
Stock that are currently exercisable or exercisable within 60 days of
February 1, 1999. 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.

(12) Represents options to purchase up to 97,804 shares of Common Stock which
are currently exercisable or exercisable within 60 days of February 1, 1999.
Excludes 24,769 shares issuable upon the conversion of 750 shares of Series
E Convertible Preferred Stock at a price of $3.028 per share after April 30,
1999.

(13) Represents options to purchase up to 28,750 shares of Common Stock which
are currently exercisable or exercisable within 60 days of February 1, 1999.

(14) Includes options to purchase up to 3,019 shares of Common Stock which are
currently exercisable or exercisable within 60 days of February 1, 1999.
Excludes 13,793 shares issuable upon the conversion of 250 shares of Series
C Convertible Preferred Stock at a price of $1.8125 per share after April
30, 1999.

(15) Excluded from this table is the 27,586 shares issuable upon the conversion
500 shares of Series C Convertible Preferred Stock at a price of $1.8125 per
share after April 30, 1999.

(16) Excludes 16,513 shares issuable upon the conversion of 500 shares of Series
E Preferred Stock at a price of $3.028 per share after April 30, 1999.

25
<PAGE>
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

The executive officers and significant employees of the Company and their
ages are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ------------------------------------------ --- ------------------------------------------
<S> <C> <C>

<CAPTION>
Executive Officers
- - ------------------------------------------
<S> <C> <C>

Ron Zwanziger............................. 45 Chairman, President and Chief Executive
Officer
Christopher L. Huntoon.................... 50 Chief Financial Officer
Emanuel Hart.............................. 48 President, Orgenics Limited
Kenneth D. Legg, Ph.D..................... 56 Secretary and Vice President, U.S.
Operations
Robert Oringer............................ 39 President, Can-Am Care Corporation
John Yonkin............................... 39 Vice President, U.S. Sales
David Scott, Ph.D......................... 42 Managing Director, Inverness Medical
Limited
Otto Wahl................................. 50 Managing Director, Selfcare International
GmbH
<CAPTION>
Significant Employees
- - ------------------------------------------
<S> <C> <C>

Gilbert Daggett........................... 50 U.S. National Sales Manager
Detlef Jantos............................. 40 General Manager of Selfcare GmbH for
Germany, Austria and Switzerland
Jerry McAleer, Ph.D....................... 44 Director, Development, Inverness Medical
Limited
Piet Moerman, M.D......................... 35 Director, Product Development
John O'Meara.............................. 44 General Manager, Cambridge Diagnostics
Ireland Ltd.
Diane M. Sullivan......................... 44 Director, Marketing Communications
</TABLE>

EXECUTIVE OFFICERS

RON ZWANZIGER, CHAIRMAN AND CHIEF EXECUTIVE OFFICER. Mr. Zwanziger has
served as 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.

CHRISTOPHER L. HUNTOON, CHIEF FINANCIAL OFFICER. Mr. Huntoon, a C.P.A.,
joined the Company in September 1998 as Chief Financial Officer. From May 1997
to August 1998 he worked as a financial consultant. From October 1989 to April
1997 he was Chief Financial Officer of Hollingsworth & Vose Co. Inc., a
manufacturer of specialty filtration papers primarily for the automotive and
computer chip manufacturing industries.

EMANUEL HART, PRESIDENT, ORGENICS LIMITED. Mr. Hart joined Orgenics in May
1998 as President and Chief Executive Officer. Previously he worked for
I.S.O.S., an international security business, from September 1996 to May, 1998.
Prior to his employment at I.S.O.S., he was a Brigadier General in the Israel
Defense Forces from 1968 to 1996.

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 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.

26
<PAGE>
ROBERT ORINGER, PRESIDENT, CAN-AM CARE CORPORATION. Mr. Oringer joined the
Company on February 18, 1998 upon the consummation of the Company's acquisition
of Can-Am Care Corporation ("Can-Am"). He is the President of Can-Am and has
held that position since he first joined the company in 1989. Can-Am is engaged
in the distribution of diabetes care products primarily to the U.S. retail
market.

JOHN YONKIN, VICE PRESIDENT, U.S. SALES. Mr. Yonkin joined Selfcare in
October 1997 as Manger of Product Development. In October 1998, he was appointed
Vice President of U.S. Sales. From January 1995 to September 1998, Mr. Yonkin
was Director of National Accounts for Genzyme Genetics, a subsidiary of Genzyme,
Inc., a leader in Genetic testing services for hospitals, physicians and managed
healthcare companies. Previously Mr. Yonkin worked for MediSense, a medical
device company, in a number of marketing and sales capacities.

DAVID SCOTT, PH.D., MANAGING DIRECTOR, INVERNESS MEDICAL LIMITED. Dr. Scott
has served as Managing Director of Inverness Medical Limited since June 1995.
Dr. Scott served as Managing Director from October 1993, to April 1995, of Great
Alarm Limited, a consulting company. Previously, Dr. Scott held several
positions from October 1984, to September 1993, 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 April 1995. Prior to
joining Selfcare, Mr. Wahl was the managing director for MediSense in Germany,
Austria and Switzerland and area manager for Eastern Europe from January 1990 to
March 1995.

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
Medical Limited 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, DIRECTOR OF MARKETING. 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, from
April 1992 to January 1997 for Tambrands Ireland, a feminine hygiene products
company.

DIANE M. SULLIVAN, DIRECTOR, MARKETING COMMUNICATIONS. 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.

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.

27
<PAGE>
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 1998 (the Chief
Executive Officer and such four other executive officers are hereinafter
referred to as the "Senior Executives"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
--------------------- --------------------------------
<S> <C> <C> <C> <C> <C>
SECURITIES
UNDERLYING ALL OTHER
YEAR SALARY BONUS OPTIONS COMPENSATION(1)
--------- ---------- --------- ----------- -------------------
Ron Zwanziger......................................... 1998 $ 193,536(2) -- 6,491(3) --
Chief Executive Officer and 1997 202,213 -- -- --
Chairman of the Board of 1996 176,277 50,000 400,000 --
Directors

Otto Wahl............................................. 1998 170,947(4) -- 5,479(3) --
Managing Director of 1997 186,624(4) -- -- --
Selfcare International GmbH 1996 207,600 -- 30,000 --

Kenneth D. Legg, Ph.D................................. 1998 135,360(2) -- 74,438(5) --
Vice President and Secretary 1997 137,066 -- -- --
1996 111,055 20,000 45,000 --

David Scott, Ph.D..................................... 1998 133,826 -- 124,183(6) --
Managing Director of 1997 96,445 -- -- --
Inverness Medical Limited 1996 78,110 -- -- --

Robert Oringer........................................ 1998 130,000(7) -- -- --
President of Can-Am Care Corp. 1997 -- -- -- --
1996 -- -- -- --
</TABLE>

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

(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
1998.

(2) The decrease in salary for Kenneth Legg and Ron Zwanziger in 1998 was the
result of a 20% temporary involuntary salary reduction in the first two
quarters of 1998. The underlying salary was actually the same in 1997 and
1998.

(3) Options granted in exchange for a reduction in salary in 1998. Such options
were granted on January 5, 1998, became exercisable on July 5, 1998 and will
expire on January 5, 2008. The option exercise price for such options is
$9.9375.

(4) The decrease in Otto Wahl's salary is the result of currency translation
from German Deutsche Marks to U.S. dollars, as well as a 20% temporary
involuntary salary reduction in the first two quarters of 1998. The
underlying salary was actually the same in 1996, 1997 and 1998.

(5) 4,438 of the 74,438 options listed were granted in exchange for a reduction
in salary in 1998. Such options were granted on January 5, 1998, became
exercisable on July 5, 1998 and will expire on January 5, 2008. The option
exercise price for such options is $9.9375.

28
<PAGE>
(6) 4,183 of the 124,183 options were granted in exchange for a reduction in
salary in 1998. Such options were granted on January 5, 1998, became
exercisable on July 5, 1998 and will expire on January 5, 2008. The option
exercise price for such options is $9.9375.

(7) Robert Oringer was not employed by the Company until it acquired Can-Am
Corp. In February 1998.

OPTION GRANTS

The following table sets forth certain information concerning grants of
stock options made during fiscal 1998 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>

Kenneth D. Legg, Ph.D................ 70,000(2) 3.8% $ 3.500 10/13/08

David Scott, Ph.D.................... 50,000(3) 2.7% $ 8.875 02/12/08
70,000(2) 3.8% $ 3.500 10/13/08
</TABLE>

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

(1) 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
would be accelerated upon the occurrence of a change in control as set forth
in the 1996 Plan.

(2) These options are exercisable in four equal annual installments commencing
on October 13, 1998.

(3) Due to the Incentive Stock Option limitations under Section 162 of the
Internal Revenue Code of 1986, as amended, 11,981 shares were granted as
Non-Qualified rather than Incentive Stock Options.

* Except as stated in note 2 above, all options listed in the table above are
intended to qualify as incentive stock options under the Internal Revenue
Code of 1986, as amended.

29
<PAGE>
YEAR-END OPTION VALUES

The following table sets forth certain information concerning each exercise
of a stock option during fiscal 1998 by each of the Senior Executives and the
number and value of unexercised options held by each of the Senior Executives on
December 31, 1998:

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

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES IN-THE-MONEY
UNDERLYING OPTIONS AT
OPTIONS AT FISCAL
NUMBER FISCAL YEAR-END 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 $ 0/$0
Otto Wahl........................ -- -- 95,204/37,775 $ 11,960/$0
Kenneth D. Legg, Ph.D............ -- -- 198,384/107,500 $ 17,940/$0
David Scott, Ph.D................ -- -- 309,183/179,000 $ 68,780/$0
Robert Oringer................... -- -- -- --
</TABLE>

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

(1) Based on the fair market value of the Common Stock as of December 31, 1998
($2.00 per share), the closing price of the Common Stock as reported on the
American Stock Exchange (the "AMEX") on such date, less the option exercise
price, multiplied by the number of shares underlying the options.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Willard L. Umphrey, who is a member of the Compensation Committee, is the
President of U.S. Boston Capital Corporation and is a significant shareholder of
the Company. Mr. Umphrey and his wife each own a one-third interest in Pear Tree
Royalty Company. During 1998, U.S. Boston Capital Corporation and Pear Tree
Royalty Company each received compensation from the Company for various
transactions that are described in this Proxy Statement under the heading
"Certain Transactions."

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

In establishing the annual salary and incentive payments for the Company's
Chief Executive Officer ("CEO") and senior management ("Executive Officers") who
report directly to the CEO, the Company's Compensation Committee generally
applies the following guidelines:

a) Annual base salary for each individual will generally be near the
average for the particular peer group from comparable companies for that
individual. Annually, the CEO will review the base salary for each Executive
Officer and recommend appropriate adjustments to the Compensation Committee.

b) Cash bonus paid for achieving agreed performance measures will bring
the individual to the top 10% of the cash compensation of the particular
peer group for each individual.

c) Stock related incentives for achieving specified performance
measures need to be significant and meaningful to that individual.

d) For the Executive Officer's there will be group goals only. This is
to help foster interaction between the complimentary but dispersed
operations of the growing organization.

30
<PAGE>
e) The incentive payments (cash or stock), if the specified performance
measures have been achieved within the management team, should not be the
same for each individual but should reflect the Executive Officer's relative
value to the Company.

f) The group goals for the Executive Officers do not necessarily have
to be the same goals as for the CEO.

g) Each year (or every two years if a two year plan is in place, but
the targets shall nevertheless be annual) prior to or shortly after the
start of the fiscal year, the CEO will present a plan to the Compensation
Committee with suggested performance targets for the Executives for the
subsequent year or two years. The plan will include a specific proposal with
respect to stock-based incentives but may omit a cash bonus recommendation.
In such event, the Compensation Committee may change the plan to provide for
awards of cash bonuses if and when specified goals are met. Following
discussion and any changes, the Compensation Committee will recommend to the
Board of Directors approval of a plan and the performance targets.

h) Each year (or every two years if a two year plan is in place) the
Compensation Committee will determine, prior to or shortly after the start
of the subsequent year, the performance targets and specific stock-based
incentives for the CEO and recommend approval of the plan to the full Board
of Directors. Any cash bonuses will be determined separately from time to
time. The determination of cash bonuses may be tied to individual
performance as well as achievement of performance targets. The Compensation
Committee will review the base salary of the CEO annually.

i) The performance targets referred to in (g) and (h) may include both
numeric targets including increases in share price and descriptive business
objectives. These targets may be varied subsequently at the recommendation
of the Compensation Committee and approval by the Board of Directors if the
Company has undergone significant positive change rendering the previous
targets meaningless, weakened or counter productive.

Relying on published data from recognized compensation specialists, the
Compensation Committee recommended, and the Company's Board of Directors
approved, compensation levels in 1998 for Ron Zwanziger, the Company's CEO, and
the Executive Officers, based on levels established in comparable companies.

Upon the recommendation of the Compensation Committee, on December 10, 1996,
the Board of Directors granted options to various key employees, including
Executive Officers, based upon various performance criteria, including budget
performance, stock price, product development and launch, acquisitions, and
raising additional capital. These options are exercisable on and after the
seventh anniversary of the date of grant at a price of $13 7/8. If, in the
judgment of the Compensation Committee, the Company had met certain criteria by
December 31, 1998, then 50% of the options would have vested as of the date of
such determination. In addition, if in the judgment of the Compensation
Committee, the Company had met certain criteria by December 31, 1999, then an
additional 50% of the options would have vested as of the date of that
determination. The Company did not achieve, in a timely manner, a sufficient
number of these criteria for any of the options to vest early. During 1998, no
stock options were granted to Mr. Zwanziger, and options for a total of 270,000
options were granted to Executive Officers based upon the recommendation of the
CEO in regard to their individual performance. An additional 23,610 total
options were granted to certain Executive Officers and the CEO in exchange for
individual salary reductions.

<TABLE>
<C> <S>
Carol Goldberg Willard L. Umphrey
</TABLE>

31
<PAGE>
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 the termination of his employment.

Under the terms of an employment agreement dated February 18, 1998, between
Selfcare Consumer Products, Inc. ("Selfcare Consumer Products"), a subsidiary of
the Company, and Robert Oringer, Mr. Oringer shall serve as President of Can-Am
and is entitled to receive an annual salary of $150,000, subject to annual
reviews, for a term of three years. Mr. Oringer is also eligible for bonuses and
cash and non-cash compensation customarily awarded by Selfcare Consumer Products
and the Company to senior executives of Selfcare Consumer Products and the
Company. Under the Agreement, Mr. Oringer may spend up to five hours per week
performing services for A.M.G. Medical Inc. ("AMG Medical"). For a description
of AMG Medical, see the section below entitled "Certain Transactions." This
agreement also prohibits Mr. Oringer from directly or indirectly competing with
or soliciting employees from Can-Am and the Company for a period of two years
from the date he ceases to work for Can-Am.

Pursuant to the service contract employment agreement, dated November 13,
1994, and a supplemental agreement dated October 30, 1995, between Otto Wahl and
Selfcare International GmbH ("Selfcare International"), a wholly-owned
subsidiary of the Company, 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. In addition, Mr. Wahl has agreed to make himself available to provide
consulting services for selling activities in the United States and elsewhere
for which he receives $4,000 per month. 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 the
Company, and a profit-linked bonus of at least DM40,000 after February 9, 1996.
Under the terms of his employment agreement, Mr. Wahl has also 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. Furthermore, Mr. Wahl agrees not to hire any consultants
or employees employed by the Company for a period of one year after the
termination of his employment with the Company. In 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 may
be terminated by either party upon twelve months written notice.

CHANGE OF CONTROL PROVISIONS. There are no compensatory plans or
arrangements with any executive officer of the Company in connection with a
change in control of the Company or a change in such officer's responsibilities.
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 of the 1996 Plan may accelerate
awards and waive conditions and restrictions on any awards to the extent it may
determine appropriate.

32
<PAGE>
PERFORMANCE GRAPH

The following chart sets forth a line graph comparing the yearly percentage
change in the cumulative total shareholder return on the Company's Common Stock
since it completed its initial public offering and was listed on AMEX on August
6, 1996. This graph assumes the investment of $100 on August 6, 1996 in the
Company's Common Stock, and compares the performance with the AMEX Composite
Index and the AMEX Healthcare Sector Index. The Company pays no dividends. The
AMEX Composite Index and the AMEX Healthcare Sector reflect a cumulative total
return based upon the reinvestment of dividends of the stocks included in those
indices. Measurement points are at August 6, 1996 for the first year and
December 31 for each of the following years.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
SLF AMEX COMPOSITE INDEX(XAX) AMEX HEALTHCARE SECTOR INDEX(XHL)
<S> <C> <C> <C>
8/6/96 $100.00 $100.00 $100.00
12/31/96 $148.53 $104.96 $99.89
12/31/97 $111.03 $125.55 $112.29
12/31/98 $23.53 $126.36 $110.50
</TABLE>

<TABLE>
<CAPTION>
SELFCARE, AMEX AMEX HEALTHCARE
DATE INC. COMPOSITE SECTOR INDEX
- - --------- ------------- ----------- -------------------
<S> <C> <C> <C>
08/06/96.. 100.00 100.00 100.00
12/31/96.. 148.53 104.96 99.89
12/31/97.. 111.03 125.55 112.29
12/31/98.. 23.53 126.36 110.50
</TABLE>

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of Company's outstanding shares of Common Stock, to file
reports of ownership and changes in ownership with the Commission and AMEX.
Officers, directors and greater than 10% shareholders are required by applicable
regulations to furnish the Company with copies of all reports filed by such
persons pursuant to Section 16(a) of the Exchange Act and the rules and
regulations promulgated thereunder. Based solely on its review of the copies of
such reports received by it, the Company believes that for the fiscal year ended
December 31, 1998, all filing requirements applicable to its officers, directors
and such 10% beneficial owners were complied with, except that two reports for
Willard Umphrey, relating to four transactions, one report for Ron Zwanziger,
relating to one transaction, and one report for Jonathan Fleming, relating to
one transaction, were inadvertently not filed on a timely basis. As of the date
of this proxy statement all such reports have since been filed.

33
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

TRANSACTIONS WITH U.S. BOSTON CAPITAL AND PEAR TREE ROYALTY

The Company retained U.S. Boston Capital Corporation ("U.S. Boston
Capital"), a broker-dealer, in two capacities during 1998. Willard Lee Umphrey,
a director of the Company, is the Chairman, President, Treasurer and a Director
of U.S. Boston Capital, as well as a holder, indirectly, of fifty percent of
U.S. Boston Capital's capital stock. U.S. Boston Capital received fees in
connection with the services it rendered to the Company as more fully described
below.

U.S. BOSTON CAPITAL AS SUBORDINATED NOTE AND WARRANT PLACEMENT AGENT. The
Company retained U.S. Boston Capital to act as placement agent in connection
with the private placement during June, July and August 1998 of subordinated
notes and warrants to purchase shares of the Company's Common Stock
(collectively, a "Unit"). The Company sold approximately $10.2 million of Units.
U.S. Boston Capital received cash commissions totaling $612,000, as well as an
expense allowance of $10,200 and the reimbursement of fees and expenses of its
outside counsel, for its services.

U.S. BOSTON CAPITAL AS EXCHANGE AGENT. The Company retained U.S. Boston
Capital to assist the Company in certain of its efforts with respect to the
private placement of the Series Preferred Shares described above under "Proposal
5--Approval of the Private Placement Proposal." U.S. Boston Capital assisted the
Company in securing the agreement of certain holders of Subordinated Revenue
Royalty Notes, which were issued in 1997, to exchange their rights to receive
cash from the Company as payment on such notes for Series Preferred Shares. The
payments on the Subordinated Revenue Royalty Notes which were exchanged for
Series Preferred Shares constituted payments which would have been due during
the first half of 1999 and amounted to $598,000 of the gross proceeds received
in connection with the placement of the Series Preferred Shares. U.S. Boston
Capital received $47,190 as compensation for its services in securing the
agreement of such holders to exchange cash payments due to them for Series
Preferred Shares.

The Company also retained U.S. Boston Capital to assist the Company in its
efforts with respect to the exchange of certain outstanding promissory notes
evidencing indebtedness of the Company for newly issued convertible promissory
notes as more fully described below under "--Transactions with CDIL
Noteholders." U.S. Boston Capital received approximately $88,500 as compensation
for its services rendered in connection with this exchange.

PEAR TREE AS AUTHORIZED REPRESENTATIVE. Pear Tree Royalty Company, Inc.
("Pear Tree") was retained to act as the authorized representative of the
holders of the subordinated notes which constituted a part of the Units
described above. Mr. Umphrey is also a director of Pear Tree, and he and his
wife, each own one-third of Pear Tree's capital stock. As compensation for its
service as an authorized representative, Pear Tree received warrants to purchase
24,196, 13,443 and 22,938 shares of Common Stock on June 26, 1998, July 17, 1998
and August 28, 1998, respectively, at exercise prices of $10.125, $9.1125 and
$6.2125 per share, respectively, which represented the average of the closing
price of the Company's Common Stock on the American Stock Exchange for the five
trading days preceding the issuance of the respective warrant.

34
<PAGE>
TRANSACTIONS INVOLVING USB '93 TECHNOLOGY ASSOCIATES LIMITED PARTNERSHIP

On December 29, 1993, the Company 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 Company director. Mr. Umphrey and
his wife each own one-third of USB, Inc. Mr. Umphrey also holds a 3.3% interest
in USB '93 as a limited partner. Under the terms of the Technology Agreements,
USB '93 acquired certain ovulation prediction technology from the Company for a
purchase price of $1.36 million payable in two installments, and the Company
agreed to develop, market and distribute products developed from the technology
and to pay license fees, equal to 1.5% of the Company's gross sales plus 22.5%
of the Company's royalty income from such products, to USB '93 until such time
as aggregate license fee payments total $6.0 million (the "Aggregate
Royalties"). As additional consideration for the license, the Company issued
warrants to purchase up to 438,750 (the "Warrants") shares of Common Stock at an
exercise price of $1.54 per share to USB '93. On March 31, 1998, the Company
purchased all of the partnership interests in USB '93 for an aggregate purchase
price of $4,925,778 (the "Purchase Price"), representing the Aggregate Royalties
less the license fee payments the Company had paid to date. The Company thereby
reacquired the ovulation prediction technology, which was the only asset of USB
'93 as of that date, and satisfied its obligation to make further license fee
payments under the Technology Agreements. The Purchase Price, in the form of
487,017 shares of Common Stock and $360,000 in cash (the "Cash"), was paid by
the Company into a trust (the "Trust") created for the benefit of the partners
of USB '93 (the "Partners"). The Trustee of the Trust is Willard Lee Umphrey, a
director of the Company. The Trust used the Cash to exercise in full a Warrant
to purchase 234,000 shares of Common Stock (the "Warrant Shares") carrying
certain registration rights, which Warrant USB '93 had transferred into the
Trust immediately prior to the sale of the partnership assets to the Company.
The Trust distributed the Warrant Shares to each of the Partners in December
1998.

TRANSACTIONS WITH EN PLC NOTEHOLDERS

On June 12, 1998, approximately $1.7 million due under certain convertible
promissory notes (the "Convertible EN PLC Notes") automatically converted
pursuant to the terms of such notes into 237,022 shares of Common Stock at a
conversion price of $7.225 per share. Carol R. Goldberg, John F. Levy and
Willard L. Umphrey, directors of the Company, and Ron Zwanziger, the Company's
Chairman and Chief Executive Officer, held an aggregate of approximately
$774,000 of Convertible EN PLC Notes which automatically converted, on identical
terms with the other holders of Convertible EN PLC Notes, into an aggregate of
112,521 shares of Common Stock.

The Convertible EN PLC Notes were issued in December 1997, bore interest at
10% per annum and automatically converted on June 12, 1998, their six month
maturity date, into shares of Common Stock in the event they had not previously
been redeemed or converted. The Convertible EN PLC Notes were issued to the
former partners of EN PLC Limited Partnership ("EN PLC") in exchange for amounts
due during January and April 1998 under certain notes issued by the Company to
EN PLC (the "Original EN PLC Notes") as consideration for shares of capital
stock of Enviromed plc, a publicly traded company based in the United Kingdom,
which were purchased by the Company from EN PLC. EN PLC's partners received
rights to the amounts due under the Original EN PLC Notes as a distribution from
EN PLC. Accordingly, the Convertible EN PLC Notes were issued to the partners of
EN PLC, including Messrs. Levy, Umphrey and Zwanziger and Ms. Goldberg, in
exchange for the January and April 1998 payments due under the Original EN PLC
Notes.

TRANSACTIONS WITH CDIL NOTEHOLDERS

On June 12, 1998, approximately $3.1 million due under certain convertible
promissory notes (the "Convertible CDIL Notes") automatically converted pursuant
to the term of such notes into 428,713

35
<PAGE>
shares of Common Stock at a conversion price of $7.225 per share. John F. Levy
and Willard L. Umphrey, directors of the Company, and David Scott and Ron
Zwanziger, the Managing Director of the Company's Inverness Medical Limited
subsidiary and the Company's Chief Executive Officer, respectively, held an
aggregate of approximately $866,000 of Convertible CDIL Notes which
automatically converted, on identical terms with the other holders of
Convertible CDIL Notes, into an aggregate of 119,896 shares of Common Stock

The Convertible CDIL Notes were issued in December 1997, bore interest at
10% per annum and automatically converted on June 12, 1998, their six month
maturity date, into shares of Common Stock in the event they had not previously
been redeemed or converted. The Convertible CDIL Notes were issued by the
Company to certain holders of notes (the "Original CDIL Notes") originally
issued by the Company in connection with its refinancing of debt incurred in
connection with the Company's acquisition of Cambridge Diagnostics International
Limited in 1994.

CAN-AM CARE CORPORATION AND A.M.G. MEDICAL INC. TRANSACTIONS

On February 18, 1998, Selfcare Consumer Products, a subsidiary of the
Company, acquired Can-Am, a leading supplier of diabetes care products, for
approximately $27.9 million, consisting of $13.6 million in cash, notes in the
aggregate principal amount of $2 million (subject to potential premiums of up to
an additional $2 million in the aggregate based upon increases in the Company's
Common Stock during the term of the notes) and approximately 1.1 million shares
of the Company's Common Stock. Can-Am sells insulin syringes, blood lancets,
glucose tablets and specialty skin creams to pharmacies across the United
States. Can-Am's revenues for the fiscal year ended May 31, 1997 were
approximately $25.9 million. In connection with, and as part of, this
acquisition, Mr. Robert Oringer, President of Can-Am, became a member of the
Company's Board of Directors and continued as President of Can-Am. Mr. Oringer
was not a member of the Company's Board of Directors, nor was he an officer or
employee of the Company prior to the acquisition of Can-Am by the Company's
subsidiary. In consideration for the sale of his 25% interest in Can-Am, Mr.
Oringer received from the Company 277,083 shares of the Company's Common Stock
and a non-negotiable note, maturing February 18, 2001, in the principal amount
of $500,000, bearing interest at a rate of 6% per annum.

In connection with, and as part of, the acquisition of Can-Am, Can-Am
entered into a supply agreement with AMG Medical Inc. ("AMG Medical") whereby
Can-Am agreed, with certain exceptions, to purchase 100% of its requirements for
monolet-compatible lancets from AMG Medical for so long as Can-Am is in the
business of selling monolet compatible lancets. In addition, Can-Am entered into
a management services agreement (the "Management Agreement") with AMG Medical
whereby AMG Medical will provide labor, office space, office related services
and insurance to Can-Am for a term of five years. Under the Management
Agreement, Can-Am will pay AMG Medical a fixed fee to cover the costs of office
space, property taxes, heating, maintenance and insurance costs associated
therewith, office expenses and telephone and computer equipment and access
expenses (the "Fixed Fee"); a variable fee to cover the costs of salaries,
overtime pay, bonuses and related compensation of employees providing services
to Can-Am (the "Variable Fee"), and the costs of all direct expenses incurred by
AMG Medical, including supply expenses, postage costs, printing costs, and other
miscellaneous charges and expenses (the "Direct Expenses"). During the first
year of the term of the Management Agreement, the Fixed Fee was $112,800. The
Fixed Fee will increase by 5% annually and is subject to change in the event
Can-Am requests AMG Medical to change the scope of services rendered for Can-Am.
The Variable Fee is based on the actual salaries paid by AMG Medical to the AMG
Medical employees providing services to Can-Am and the percentage of their time
that such employees devote to providing services to Can-Am. The Direct Expenses
are based on the actual costs AMG Medical incurs. Robert Oringer's spouse did
not receive compensation in connection with the Can-Am transaction, though she
owns 33% of AMG Medical through a personal holding company.

36
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to "incorporate by reference" information into this Proxy
Statement, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this Proxy Statement, except
for any information superseded by information in this Proxy Statement. This
Proxy Statement incorporates by reference the information set forth in Part I
and Part II of the Company's Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1998 (including the Financial Statements referred to
therein), which we have previously filed with the SEC. This document contains
important information about the Company and its finances.

If you are a shareholder, we have sent you the Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1998 as part of the Company's Annual
Report to Shareholders, which is being delivered to you together with this Proxy
Statement, but you also can obtain the Annual Report on Form 10-K/A through us
or the SEC. Documents incorporated by reference are available from us without
charge, excluding all exhibits unless we have specifically incorporated by
reference such exhibits in this Proxy Statement. Shareholders may obtain the
document incorporated by reference in this Proxy Statement by requesting it in
writing or by telephone from the following address: Attention Duane James,
Corporate Controller and Assistant Secretary, Selfcare, Inc., 200 Prospect
Street, Waltham, Massachusetts 02453, telephone (781) 647-3900.

We are also incorporating by reference additional documents that we may file
with the SEC between the date of this Proxy Statement and the date of the Annual
Meeting.You may read and copy any reports, statements or other information we
file at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the SEC at 800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from commercial document retrieval services and at the web site
maintained by the SEC at "http://www.sec.gov."

If you would like to request documents from us, please do so by May 12, 1999
in order to receive them before the Annual Meeting. You should rely only on the
information contained or incorporated by reference in this Proxy Statement to
vote on the Company's proposals. We have not authorized anyone to provide you
with information that is different from what is contained in this Proxy
Statement. This Proxy Statement is dated April 16, 1999. You should not assume
that the information contained in this Proxy Statement is accurate as of any
date other than such date, and the mailing of this Proxy Statement to
shareholders shall not create any implication to the contrary.

SHAREHOLDER PROPOSALS

Shareholders who wish to present proposals pursuant to Rule 14a-8
promulgated under the Exchange Act for consideration at the Company's Annual
Meeting of Shareholders to be held in 2000 must submit the proposals in proper
form to the Company at its address set forth on the first page of this Proxy
Statement not later than January 6, 2000 in order for the proposals to be
considered for inclusion in the Company's Proxy Statement and form of proxy
relating to such Annual Meeting in 2000.

Any shareholder proposals intended to be presented at the Company's Annual
Meeting of Shareholders to be held in 2000, other than a shareholder proposal
submitted pursuant to the Exchange Act Rule 14a-8, must be received in writing
by the Company no later than March 7, 2000, nor earlier than January 20, 2000,
together with all supporting documentation required by the Company's By-laws.

OTHER INFORMATION

Proxies for the Annual Meeting will be solicited by mail and through
brokerage institutions and all expenses involved, including printing and
postage, will be paid by the Company.

37
<PAGE>
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K/A FOR THE YEAR ENDED
DECEMBER 31, 1998 (THE "ANNUAL REPORT") IS BEING FURNISHED HEREWITH TO EACH
SHAREHOLDER OF RECORD AS OF THE CLOSE OF BUSINESS ON MARCH 22, 1999. ADDITIONAL
COPIES OF THE ANNUAL REPORT WILL BE PROVIDED FOR A NOMINAL CHARGE UPON WRITTEN
REQUEST TO:

SELFCARE, INC.
200 PROSPECT STREET
WALTHAM, MASSACHUSETTS 02453
ATTENTION: DOUG GUARINO

IN ADDITION, COPIES OF ANY EXHIBITS TO THE ANNUAL REPORT WILL BE PROVIDED
FOR A NOMINAL CHARGE TO SHAREHOLDERS WHO MAKE A WRITTEN REQUEST TO THE COMPANY
AT THE ABOVE ADDRESS.

The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
shareholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.

By order of the Board of Directors
Ron Zwanziger
CHAIRMAN OF THE BOARD OF DIRECTORS

April 16, 1999

38
<PAGE>
ANNEX A

CERTIFICATE OF AMENDMENT
TO
THE CERTIFICATE OF INCORPORATION
OF
SELFCARE, INC.
(Pursuant to Section 242 of the
Delaware General Corporation Law)

Selfcare, Inc., a Delaware corporation (the "Corporation"), hereby certifies
that the following amendment to the Corporation's Certificate of Incorporation
(the "Amendment") has been duly adopted in accordance with Section 242 of the
Delaware General Corporation Law.

The Certificate of Designations, Preferences and Rights of the Series B
Convertible Preferred Stock filed by the Corporation with the Secretary of State
of the State of Delaware on August 26, 1997 and incorporated into the
Corporation's Certificate of Incorporation (the "Certificate") is hereby amended
as follows:

1. In Article I of the Certificate, the words "One Thousand U.S. Dollars
($1,000)" shall be deleted and replaced with the words "[THE AMOUNT TO BE
INSERTED WILL BE EQUAL TO THE PRODUCT OF (A) $1,000 PLUS PREMIUM ON EACH
SHARE OF PREFERRED STOCK ACCRUED TO, BUT NOT INCLUDING, THE DATE OF THE
AMENDMENT TIMES (B) 1.15]".

2. Paragraph D of Article III of the Certificate shall be deleted in its
entirety and replaced with the following: "'Conversion Price' means (i)
on any date occurring from and after [THE DATE OF THE AMENDMENT] through
and including July 20, 1999, the Fixed Conversion Price; and (ii) on any
date occurring after July 20, 1999, the lower of (A) the Variable
Conversion Price and (B) the Fixed Conversion Price; PROVIDED, HOWEVER,
that in the event that at any time following [THE DATE OF THE AMENDMENT]
the Closing Bid Price for a share of Common Stock exceeds $3.25 (subject
to equitable adjustment for the events specified in Article XI, A and B)
for a period of ten (10) consecutive trading days and the Corporation
delivers to each Holder, in accordance with the provisions of this
Certificate relating to the delivery of notice, written notice of the
occurrence of such event within five (5) Business Days after the tenth
such trading day, "Conversion Price" shall mean, from and after the
effective date specified in such notice, which date shall be at least
thirty (30) days after delivery of such notice to each Holder, the Fixed
Conversion Price, it being understood that after the date of such
delivery and prior to such effective date, each Holder shall have the
right to convert shares of Series B Preferred Stock at any time and from
time to time at the lower of (A) the Variable Conversion Price and (B)
the Fixed Conversion Price."

3. Article III of the Certificate shall be amended as follows:

Paragraph E thereof shall be deleted in its entirety and replaced
with the following:

"E. "Fixed Conversion Price" means $2.00, and shall be subject to
adjustment as provided herein."

Paragraph H thereof shall be deleted in its entirety and replaced
with the following:

"H. "N" means the number of days from and including [THE DATE OF THE
AMENDMENT]."

A-1
<PAGE>
4. In Section A of Article IV of the Certificate, the formula described in
clause (i) thereof shall be deleted and replaced with the following:

_FA + P_
CP

<TABLE>
<S> <C> <C>
where FA Represents the Face Amount of such share of Series B Preferred Stock,
P Represents the aggregate Premium accrued on such share of Series B
Preferred Stock up to and including the Conversion Date, and
CP Represents the Conversion Price (as defined below) in effect on the
applicable Conversion Date.
</TABLE>

5. In the first sentence of paragraph (i) of Section B of Article IV of the
Certificate, the following words shall be inserted in the parenthetical
after the words "subject to a two (2) business day grace period":

"or, if the Corporation does not have a sufficient number of shares
of Common Stock listed on the principal exchange or market on which
the Common Stock is then traded in order to effect the conversion of
Series B Preferred Stock, a five (5) business day grace period"

6. Section C of Article IV of the Certificate shall be amended as follows:

(i) In the first sentence of Section C, the words "limitations (each of
which limitations shall be applied independently)" shall be deleted
and replaced with the word "limitation".

(ii) Paragraph (i) of Section C shall be deleted in its entirety.

(iii) The number "(ii)" at the beginning of paragraph (ii) of Section C
shall be deleted.

7. Section E of Article IV of the Certificate shall be amended so that the
words "the Fixed Conversion Price then in effect" appearing in
subparagraph (iii)(a) shall be deleted and replaced with "$13.9581
(subject to equitable adjustment for the events specified in Article XI,
A and B)".

8. Article VII of the Certificate shall be deleted in its entirety and
replaced with the following:

"VII. [Intentionally Omitted]"

9. In subparagraph (iv) of Section B, Article VIII of the Certificate, the
parenthetical shall be amended so that (i) the words "Articles V or VII"
shall be deleted and replaced with the words "Article V" and (ii) the
words "such Articles" shall be deleted and replaced with the words "such
Article".

10. Section B of Article VIII of the Certificate shall be amended as
follows:

(i) In the first sentence of paragraph VIII.B.(i), the words "for any
five (5) consecutive trading days is less than $9.00" shall be
deleted and replaced with the words "for any ten (10) consecutive
trading days occurring after July 20, 1999 is less than $2.00".

(ii) In the first sentence of paragraph VIII.B.(i), the words "following
the expiration of such five (5) day period" shall be deleted and
replaced with the words "following the expiration of such ten (10)
day period".

(iii) In the last sentence of paragraph VIII.B.(i), the words "115% of
the Face Amount thereof" shall be deleted and replaced with the words
"the Face Amount thereof".

11. In Section C of Article XIV of the Certificate, all references to "Cap
Amount" shall be deleted.

12. The following paragraph shall be added at the end of Article XIV:

A-2
<PAGE>
"NOTICES. Any notice, demand or request required or permitted to be
delivered by the Corporation to any Holder or by any Holder to the Corporation
pursuant to the terms of this Certificate of Designation shall be in writing and
shall be deemed delivered (i) when delivered personally or by verifiable
facsimile transmission (with an original to follow) on or before 5:00 p.m.,
eastern time, on a Business Day or, if such day is not a Business Day, on the
next succeeding Business Day, (ii) on the next Business Day after timely
delivery to a nationally-recognized overnight courier and (iii) upon actual
receipt after deposit in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed as follows:

IF TO THE CORPORATION:

Selfcare, Inc.
200 Prospect Street
Waltham, MA 02154
Attn: Chief Executive Officer
Fax: (781) 647-3939

WITH A COPY TO:

Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Stephen W. Carr, P.C. and Martin Carmichael, III, P.C.

and if to any Holder, to such address for such Holder as appears in the
Securities Purchase Agreement, dated as of August 26, 1997 by and among the
Corporation and each of the purchasers named therein, or as may be designated by
such Holder in writing to the Corporation."

Except as specifically amended hereby, the Certificate of Incorporation
(including without limitation the Certificate of Designation) shall remain in
full force and effect in accordance with its terms. No amendment effected hereby
shall apply to any event or circumstance occurring prior to the date on which
this Amendment is filed with the Secretary of State of the State of Delaware and
has become effective in accordance with the laws of the State of Delaware.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

A-3
<PAGE>
IN WITNESS WHEREOF, this Certificate of Amendment has been executed on
behalf of the Corporation this day of , 1999.

<TABLE>
<S> <C> <C>
SELFCARE, INC.

By:
-----------------------------------------
Name:
Title:
</TABLE>

A-4
<PAGE>
APPENDIX
SELFCARE, INC.
200 PROSPECT STREET
WALTHAM, MASSACHUSETTS 02154
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

1. ELECTION OF DIRECTORS:

Jonathan J. Fleming, Peter Townsend, John F. Levy

/ / FOR ALL NOMINEES / / WITHHOLD / / FOR ALL EXCEPT

If you do not wish your shares voted "For" a particular nominee, mark the "For
All Except" box and strike a line through the name(s) of the nominee(s). Your
shares will be voted for the remaining nominee(s).

2. Authorization and approval of the amendment to the Restated Certificate of
Incorporation to amend the terms of the Series B Convertible Preferred Stock,
par value $.001 per share, contained in the Certificate of Incorporation in
connection with the settlement of certain obligations of the Company to the
holders of the Series B Preferred Stock (the "Amendment to Certificate
Proposal").