<SUBMISSION>
<ACCESSION-NUMBER>0001019687-02-001391
<TYPE>SB-2/A
<PUBLIC-DOCUMENT-COUNT>10
<FILING-DATE>20020726
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BIOZHEM COSMECEUTICALS INC
<CIK>0000774740
<ASSIGNED-SIC>5990
<IRS-NUMBER>760118305
<STATE-OF-INCORPORATION>TX
<FISCAL-YEAR-END>0930
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SB-2/A
<ACT>33
<FILE-NUMBER>333-73964
<FILM-NUMBER>02712304
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>11884 TAMMY WAY
<STREET2>#
<CITY>GRASS VALLEY
<STATE>CA
<ZIP>95949
<PHONE>5302711911
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>11884 TAMMY WAY
<STREET2>#
<CITY>GRASS VALLEY
<STATE>CA
<ZIP>95949
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>ENTOURAGE INTERNATIONAL INC
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>SB-2/A
<SEQUENCE>1
<FILENAME>biozhem_sb2a1.txt
<TEXT>
<PAGE>

As filed with the Securities and Exchange Commission on ____________, 2002

                                                     Registration No. 333-73964
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                           Amendment No. 1 to Form SB-2
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933

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

                         BIOZHEM COSMECEUTICALS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

             Texas                                          79-0118305
 (State or Other Jurisdiction of                          (I.R.S. Employer
 Incorporation or Organization)                          Identification No.)

                                 11884 Tammy Way
                             Grass Valley, CA 95949
                                 (530) 271-1911
  (Address, Including Zip Code, and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)

                                Mr. James Chapin
                          BIOZHEM COSMECEUTICALS, INC.
                                 11884 Tammy Way
                             Grass Valley, CA 95949
                                 (530) 271-1911

(Name, Address, and Telephone Number, Including Area Code, of Agent for Service)

                                   Copies to:
                                David Kaye, Esq.
                         Danzig Kaye Cooper & Fiore, LLP
                          30-A Vreeland Road, Suite 230
                             Florham Park, NJ 07932
                                 (973-443-0600)

         APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.

         If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

         If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]

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

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



<PAGE>

         If delivery of the prospectus is expected to be made pursuant to Rule
434 please check the following box. [ ]
<TABLE>
<CAPTION>

                                                             Proposed        Proposed
                                                             Maximum         Maximum
                                                             Offering        Aggregate        Amount of
                                         Amount to be        Price per       Offering         Registration
Title of Securities to be Registered     Registered          Share (1)       Price (1)        Fee
---------------------------------------- ------------------- --------------- ---------------- ----------------
<S>                                       <C>                 <C>            <C>               <C>
Common stock                            25,683,986          $0.24          $6,164,157       $1,627.34
</TABLE>

   (1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 by reference to the last sale reported on the OTC Bulletin
Board on July 25, 2002.

         The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the commission, acting pursuant to said section 8(a),
may determine.



<PAGE>

         The information in this prospectus is not complete and may be changed.
The selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
document is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not
permitted.

Subject to Completion July, 2002.

PRELIMINARY PROSPECTUS

                          Biozhem Cosmeceuticals, Inc.
                        25,683,986 Shares of Common Stock

         This prospectus relates to the public offering, which is not being
underwritten, of 18,236,767 shares of the Company's common stock currently
outstanding and 7,447,219 shares which may be acquired upon the exercise of
warrants and stock options.

         The selling shareholders may offer these shares from time to time in
transactions on the OTC Bulletin Board or in privately negotiated transactions.
The Company will not receive any of the proceeds of the sale of shares by the
Selling Shareholders. The Company may receive up to $1,793,055 from the exercise
of such warrants and options. Such proceeds, if any, would be used for general
working capital.

         Biozhem common stock is quoted on the OTC Bulletin Board under the
symbol "BZHM." On July 25, 2002, the closing sale price of the Common Stock on
the OTC Bulletin Board was $0.24.

         INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS. SEE "RISK
         FACTORS" BEGINNING ON PAGE 5.

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
         COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
         UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO
         THE CONTRARY IS A CRIMINAL OFFENSE.

                  The date of this prospectus is July 25, 2002.

                                       3



<PAGE>

TABLE OF CONTENTS

                                                                           Page
                                                                           ----

PROSPECTUS SUMMARY.............................................................5

RISK FACTORS ................................................................5-7
     Our Financial Statements Have A Going Concern Opinion
     We Have Reported Continuing Net Losses
     We May Not Have The Ability To Meet Our Capital Needs
     We Rely On Sales Of Certain Products
     Our Infomercial May Not Be Successful
     We Have Established Competition
     We Have To Meet Government Regulations
     If We Lose Our Key Personnel Or Cannot Recruit Additional Personnel, Our
       Business May Suffer
     We Face Product Liability Risks
     Increases In Advertising Rates May Reduce Our Profitability
     OTC Market For Common Stock
     Possible Volatility Of Stock Price
     Because Our Common Stock Is A "Penny Stock", Trading In It Is Subject
       To The Penny Stock Rules Which Could Affect Your Ability To Resell The
       Stock In The Market
     Our Stock Does Not Have Cumulative Voting Or Pre-Emptive Rights

USE OF PROCEEDS ...............................................................8

MARKET FOR COMMON STOCK........................................................8

MANAGEMENT'S DISCUSSION AND ANALYSIS........................................9-16

ABOUT BIOZHEM..............................................................16-19

EXECUTIVE COMPENSATION.....................................................19-23

FORWARD-LOOKING STATEMENTS....................................................23

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................23

DESCRIPTION OF CAPITAL STOCK...............................................23-24

SELLING SHAREHOLDERS.......................................................24-27

PLAN OF DISTRIBUTION..........................................................27

EXPERTS.......................................................................28

LEGAL MATTERS.................................................................28

FINANCIAL STATEMENTS.......................................................29-59
                                       4



<PAGE>

                               Prospectus Summary

         The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information you should
consider before investing in the securities. Before making an investment
decision, you should read the entire prospectus carefully, including the "Risk
Factors" section, the financial statements and the notes to the financial
statements. Some of the statements made in this prospectus discuss future events
and developments, including our future business strategy and our ability to
generate revenue, income and cash flow. These forward-looking statements involve
risks and uncertainties, which could cause actual results to differ materially
from those contemplated in these forward-looking statements.

Our Company

         We are a Texas corporation, which commenced operations in 1984. Our
executive office is at 11884 Tammy Way, Grass Valley, CA 95949.
Our phone number is (530) 271-1911. Biozhem is a specialty retailer of
premium quality skin care products for men and women. The Company has marketed
its proprietary line of advanced skin care products under its brand names
Biozhem and the RevitaCel System through Company-owned skin care centers.
However, due to continuing losses, we now sell these proprietary products
primarily through nationally aired infomercials.

Use of Proceeds

         We will not receive any of the proceeds from the sale of the shares of
Common Stock by the Selling Shareholders. We will receive proceeds from the
price paid to exercise the warrants and options covered by this prospectus, if
and when such exercises occur. Such proceeds, if any, will be used for general
working capital.

                                  RISK FACTORS
                                  ------------

         You should carefully consider the risks described below before
purchasing Biozhem Common Stock. Additional risks and uncertainties not
presently known to Biozhem or that Biozhem currently deems immaterial may also
impair Biozhem's business operations.

         If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of Biozhem common stock could decline, and you may
lose all or part of your investment.

         OUR FINANCIAL STATEMENTS HAVE A GOING CONCERN OPINION. Our financial
statements for the years ended September 30, 2001 and 2000 have been prepared on
a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Our independent
auditors have issued a going concern modification in their report to our
financial statements for such years citing recurring losses and negative cash
flows from operations for each of the last two fiscal years. Accordingly, those
conditions raise substantial doubt about our ability to continue as a going
concern. This going concern qualification may also cause prospective investors
and suppliers of the Company to have a negative perception of the Company which
could cause prospective investors to not want to invest in our Company or
suppliers to not want to do business with us.

          WE HAVE REPORTED CONTINUING NET LOSSES. We reported net losses of
approximately $3,424,000 and $1,010,000 and net cash used in operating
activities of approximately $1,992,000 and $419,000 in fiscal 2001 and 2000,
respectively. There can be no assurance that we will be able to generate
sufficient revenue to achieve profitability on a sustained basis.

                                       5



<PAGE>

          WE MAY NOT HAVE THE ABILITY TO MEET OUR CAPITAL NEEDS. We need
additional capital to fund our operations and we are seeking to obtain
additional capital through equity and/or debt financing. If additional funds are
raised by issuing equity securities and/or debt convertible into equity, further
dilution to existing stockholders will result, and future investors may be
granted rights superior to those of existing stockholders. There can be no
assurance, however, that additional financing will be available when needed, or
if available, will be available on acceptable terms.

          WE RELY ON SALES OF CERTAIN PRODUCTS. Our financial success depends
almost entirely on marketing our skin care products. Although we plan to
diversify our product line and our methods of distribution in the future, there
is no assurance we will be able to do so. Any significant diminished consumer
interest in our products would adversely affect our business. We may not be able
to develop successful new products or implement successful enhancements to
existing products. Any products that we do develop or enhance may not generate
sufficient sales to justify the cost of developing and marketing these products.

          OUR INFOMERCIAL MAY NOT BE SUCCESSFUL. Our continued existence is
dependent upon our ability to achieve our 2002 operating plan, which
contemplates significantly improved operating results and cash flows. The 2002
operating plan is based on the successful launch of the RevitaCel System
infomercial. There can be no assurances that the infomercial will generate
sufficient revenues and margins to pay advertising costs, product expenses,
royalty and promotion fees and to provide funds for working capital and profit.

        WE HAVE ESTABLISHED COMPETITION. Biozhem competes with a large number of
companies and product lines in the markets in which its products are sold. Firms
compete in the direct response market by securing products which will interest
infomercial customers, producing an eye-catching infomercial and then securing
competitive rate airtime. Many competitive companies are well established and
have research, financial and manufacturing capabilities and other resources
substantially greater than those of Biozhem. Retail skin care competition
consists of major cosmetic companies such as Estee Lauder, Clinique and Lancome
and national retailers such as Body Shop. We will compete with several companies
in the infomercial market that have much more experience and more proven
successes than we do. These companies are larger and have significantly greater
financial resources than Biozhem. We will compete directly with Gunthy Renker
and their beauty product infomercials.

       WE HAVE TO MEET GOVERNMENT REGULATIONS. We and our products are subject
to regulation by the Food and Drug Administration and the Federal Trade
Commission in the United States, as well as various other Federal, state, local
and international regulatory authorities. Such regulations relate principally to
the ingredients, labeling, packaging and marketing of our products. We believe
that we are in compliance with such regulations. Our formulations are
manufactured and packaged by non-affiliated companies that manufacture products
in compliance with such regulations. However, the extent of potentially adverse
governmental regulations, which might arise from future legislation or
administrative action, cannot be predicted.

          IF WE LOSE OUR KEY PERSONNEL OR CANNOT RECRUIT ADDITIONAL PERSONNEL,
OUR BUSINESS MAY SUFFER. We depend on the continued services and performance of
our executive officers and other key personnel. None of such individuals are
employed pursuant to employment agreements. In addition, we do not have "key
person" life insurance policies. If we do not succeed in attracting new
employees or retaining and motivating current and future employees or executive
officers, our business could suffer.

          WE FACE PRODUCT LIABILITY RISKS. We are subject to potential product
liability claims if our products injure or allegedly injure our customers or
other users. We believe that our insurance coverage adequately covers potential
product liability claims. However, we may have inaccurately assessed our product
liability risk. In addition, we may be unable to purchase sufficient insurance
coverage at an affordable price, or our insurers may fail to satisfy their
obligations. If our insurance coverage is inadequate to cover future
product liability claims, our business could face substantial financial
obligations which we may not be able to pay.

                                       6



<PAGE>

          INCREASES IN ADVERTISING RATES MAY REDUCE OUR PROFITABILITY. We depend
primarily on television infomercials to market our products. Consequently, the
price we must pay for our preferred media time significantly affects our
financial performance. If the cost of our preferred media time increases, it may
increase our selling and marketing expenses and decrease any profitability.

          OTC MARKET FOR COMMON STOCK. Our Common Stock currently trades on the
OTC Bulletin Board. Therefore, no assurances can be given that a liquid trading
market will exist at the time any investor desires to dispose of any shares of
the Company's Common Stock.

          POSSIBLE VOLATILITY OF STOCK PRICE. The price of our Common Stock has
fluctuated substantially and the market price of the shares of Common Stock is
likely to continue to be highly volatile. Factors such as approximately
17,000,000 shares of our issued and outstanding stock being subject to Rule 144,
terms of any equity and/or debt financing, fluctuations in our operating results
and market conditions could have a significant impact on the future price of our
Common Stock and could have a depressive effect on the then market price of the
Common Stock. In addition, the market for the Common Stock may be influenced by
many other factors, including the depth and liquidity of the market for the
Company's Common Stock, investor perceptions of the Company, and general
economic and similar conditions.

          BECAUSE OUR COMMON STOCK IS A "PENNY STOCK", TRADING IN IT IS SUBJECT
TO THE PENNY STOCK RULES WHICH COULD AFFECT YOUR ABILITY TO RESELL THE STOCK IN
THE MARKET. The Securities Enforcement and Penny Stock Reform Act of 1990
imposes restrictions when making trades in any stock, such as our Common Stock,
which is defined as a "penny stock". The SEC's regulations generally define a
penny stock as an equity security that has a price of less than $5.00 per share,
other than securities which are traded on markets such as the New York Stock
Exchange, the American Stock Exchange or the NASDAQ Stock Market. As a result of
being a penny stock, the market liquidity for our Common Stock may be adversely
affected since the regulations on penny stocks could limit the ability of
broker-dealers to sell our Common Stock and thus your ability to sell our Common
Stock in the secondary market. The regulations restricting trades in penny stock
include: a requirement that stockbrokers deliver to their customers, prior to
any transaction involving a penny stock, a disclosure schedule explaining the
penny stock market and the risks associated with the penny stock market; and a
requirement that broker-dealers who recommend penny stocks to persons other than
their established customers and a limited class of a accredited investors must
make a special written suitability determination for the purchaser and receive
the purchaser's written agreement to the transaction prior to the sale of the
securities.

          OUR STOCK DOES NOT HAVE CUMULATIVE VOTING OR PRE-EMPTIVE RIGHTS. There
are no pre-emptive rights in connection with the Company's Common Stock.
Therefore, in the event we issue shares of stock in connection with any
financing activities or other transactions, current shareholders of the Company
will be diluted in their percentage ownership of the Company. Cumulative voting
in the election of directors is not allowed. Accordingly, the holders of a
majority of the shares of Common Stock will be able to elect all of the
Company's Board of Directors and control the Company's policies.

                                       7



<PAGE>

                       WHERE YOU CAN FIND MORE INFORMATION

         We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document filed at the SEC's public reference room in Washington, D.C.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Reports, proxy statements and other information regarding
issuers that file electronically with the SEC, including our filings, are also
available to the public from the SEC website at "http://www.sec.gov".

         We have filed with the SEC a registration statement on Form SB-2 under
the Securities Act of 1933. This prospectus is a part of the registration
statement and constitutes a prospectus of our Company for the Common Stock to be
sold by the Selling Shareholders.

         You should rely only on the information provided in this prospectus or
any supplement. We have not authorized anyone else to provide you with different
information. You should not assume that the information in this prospectus or
any supplement is accurate as of any date other than the date on the front of
such documents.

                                 USE OF PROCEEDS
                                 ---------------

         The Company will not receive any of the proceeds from the sale of the
shares of Common Stock by the Selling Shareholders.

         We will receive proceeds of up $1,793,055 from the price paid to
exercise the warrants and options covered by this prospectus, if and when such
exercises occur. Such proceeds, if any, will be used for general working
capital.

                            MARKET FOR COMMON EQUITY
                            ------------------------

         Historically, the Company's common stock was traded in the
over-the-counter market of NASDAQ under the symbol "ENTG". Entourage
International, Inc. was our name from our inception in 1984 until 1997 when we
changed our name to Biozhem Cosmeceuticals, Inc. On January 23, 1991, the
Company was notified that its stock was delisted from the NASDAQ system because
of the limited number of firms making a market for the Entourage stock under the
NASDAQ system. There is a market in the Company's common stock now under the
symbol "BZHM" on the OTC Bulletin Board. The following table sets forth the high
and low bid prices of Biozhem common stock for the periods shown.

                  Quarter Ended                      Bid Prices
                  -------------                      ----------
                                                    Low      High
                  December 31, 1999                $0.20    $0.30
                  March 31, 2000                   $0.15    $0.25
                  June 30, 2000                    $0.15    $0.35
                  September 30, 2000               $0.25    $0.60
                  December 31, 2000                $0.31    $0.62
                  March 31, 2001                   $0.31    $0.50
                  June 30, 2001                    $0.35    $0.98
                  September 30, 2001               $0.51    $1.00
                  December 31, 2001                $0.28    $0.73
                  March 31, 2002                   $0.28    $0.40
                  June 30, 2002                    $0.25    $0.42

         The above quotations reflect inter-dealer prices, without retail
mark-up, markdowns or commission, and may not necessarily reflect actual
transactions.

         As of September 30, 2001, there were approximately 620 record holders
of the Company's common stock.

          We have never paid any dividends on our common stock and we have no
present plans to do so. The Company's Board of Directors intends to retain
earnings, if any, to finance the growth and development of the business of
Biozhem. Any payment of cash dividends in the future will be at the discretion
of the Board of Directors and will depend upon the financial condition, capital
requirements and earnings, if any, of Biozhem, as well as other factors, which
the Board of Directors may deem relevant.

                                       8



<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                      ------------------------------------

Background
----------

           On January 15, 1999, we acquired the assets of the Louisville,
Kentucky retail store from a franchisee for consideration of $80,750, consisting
of a promissory note in the amount of $65,000 and 35,000 shares of common stock
valued at $15,750. The note bears interest at 8% per annum with principal and
interest payments of $2,037 due from February 15, 1999 through January 15, 2002.
The acquisition was accounted for as a purchase. Accordingly, the purchase
consideration was allocated to the acquired assets on the basis of estimated
fair market value and the operations of the retail store acquired are included
in the statement of operations beginning January 16, 1999. Goodwill, a covenant
not to compete and customer list of $60,750, $10,000 and $10,000, respectively,
were recorded in connection with the transaction. The Louisville store was
closed in January 2000 and the customer database was transferred to the other
Company stores.

         On September 22,2000, we signed a License and Supply Agreement with
Advanced Tissue Sciences, Inc., a Delaware Corporation ("ATS"), which gave
Biozhem the exclusive right to market skin care products containing ATS'
Nutrient Solution NouriCel in the Direct Response market for a period of ten
years providing that certain sales goals are reached. Under this agreement, ATS
will provide its nutrient solution, NouriCel(TM), to us for use in our RevitaCel
product line. We will also pay to ATS aroyalty and periodic milestone payments
that are dependent on achieving certain annual and cumulative sales levels. We
contracted with DermTech International, a San Diego based independent lab, to
conduct detailed human efficacy and results testing.

         Biozhem engaged Script-to-Screen, a full-service production company
specializing in direct response television, to assist in the production of a
30-minute infomercial. The actress Lindsay Wagner was signed as the celebrity
host of the infomercial, which was tested beginning in late November 2001 and
aired nationally beginning in January, 2002. In addition to the infomercial, we
plan to sell the product through a number of direct response channels, including
cable shopping networks, Biozhem-branded or co-branded web sites, direct mail
and telemarketing.

Management Agreements
---------------------

         We entered into a management agreement in 1999. This Agreement (the
"Agreement") was effective as of July 14, 1999 (the "Effective Date") by and
among One World Network Integrated Technologies, Inc., a Nevada corporation (or
any affiliate thereof) (collectively "OWN"), and the Company. OWN was engaged by
the Company to exclusively provide and perform for and on behalf of the Company
all management services reasonably necessary for the proper and efficient
operation of the Company for a five-year period. OWN was in charge of marketing
and distribution activities on behalf of the Company. OWN was responsible for
all sales activities including determining which products to market, selling
prices, target customers, selecting distribution methods and procedures and
advertising activities. OWN was entitled to a reimbursement of expenses for its
services and a management fee of 40% of pre-tax net income, if any, for each
year during the five-year term.

         On the closing date and continuing thereafter, we issued to OWN
warrants which contained cashless exercise provisions and protection against
stock split/reverses and had a term of five years from their respective dates of
issuance. The Warrants were to be issued as follows:

(i)      1,000,000 Class A Warrants to purchase one share of Company's common
         stock at an exercise price of $.70 or the average of the closing price
         as quoted on the principal exchange for which the Company's shares
         trade for the five (5) day period immediately preceding the date of the
         execution of the agreement;

(ii)     For each $400,000 in cumulative Pre-Tax Net Income that was generated
         by the Company during the term, OWN was to receive 500,000 Class B
         Warrants to purchase one share of the Company's common stock at an
         exercise price of $1.00 per share, up to a maximum of 22,000,000 Class
         B Warrants;

                                       9



<PAGE>

(iii)    1,000,000 Class C Warrants to purchase one share of the Company's
         common stock at an exercise price of $1.00 upon the completion during
         the term of a strategic alliance, endorsement deal or product
         acquisition, the result of which, in combination with other activities
         of the Company, increase the market capitalization of the Company by at
         least $10,000,000, such determination to be based upon a six (6) month
         average before and after said transaction of the daily closing prices
         as quoted on the principal exchange for which the Company's shares
         trade;

(iv)     1,000,000 Class D Warrants to purchase one share of the Company's
         common stock at an exercise price of $1.00 upon the attainment during
         the term of the first two consecutive quarters of Pre-Tax Net Income of
         more than $60,000 per quarter; and

(v)      1,000,000 Class E Warrants to purchase one share of the Company's
         common stock at an exercise price of $1.50 per share if the Company,
         during any consecutive six (6) month period (or less) attains gross
         revenues of at least $8,000,000, provided that no Class E Warrants
         shall be issued if the Company does not have after tax net income from
         operations during such period; and provided further, a maximum of
         3,000,000 Class E Warrants shall be issued under this subparagraph.

         As of September 30, 1999, we issued 1,000,000 Class A Warrants to
purchase shares of our common stock at $0.56 per share. No additional warrants
were earned by OWN under the Agreement.

        Upon closing of the transaction, OWN made available to us a loan of up
to $50,000 to cover operational cash flow needs. The loan had an interest rate
of 10% for a one-year period. If the note was not repaid at maturity it could be
repaid with common stock of the Company valued at $.37 per share, with piggyback
registration rights. In addition, OWN agreed to assist our advisors, and us and
on a best efforts basis and on terms mutually agreed upon, in arranging for
$200,000 in new equity. The balance on the note was $42,177 at September 30,
1999.

        Concurrently with the closing of the transaction on July 14, 1999, Mr.
Hernand and Mr. Reyff, Sr. resigned from the Board of Directors of the Company.
The vacancies created thereby were to be filled, as soon as practicable, by two
new outside directors acceptable to OWN and the remaining directors. At any
subsequent time, OWN would have had the right to designate two (2) additional
nominees, and the Company would be obligated to cause the directors to increase
the size of the Board to seven members and appoint the two persons designated by
OWN to fill the vacancies so created, and such directors would serve until the
next meeting of shareholders of the Company at which directors are elected. Upon
termination of the Agreement, all directors elected by or through OWN, if any,
would resign effective immediately.

         In October 1999, we amended the Agreement. As part of the amendment,
OWN agreed to increase its loan available to the Company to $100,000 and to
purchase 127,844 shares common stock for $66,500. The parties opted thereafter
to offset the monies owed by OWN with monies owed by the Company. In
consideration for these transactions, the Company agreed to lower the exercise
price of 888,666 of the Class A Warrants from $0.56 to $0.15 per share.

        On May 1, 2000, due to a lack of management attention to the business by
OWN we terminated the Agreement with OWN. In connection with the termination,
OWN agreed to exercise 958,521 shares of Class A Warrants for $175,000 in cash
and $51,569 in expense reimbursements and cancel the remaining 41,479 warrants.
OWN also agreed to acquire co-ownership of the Company's pre-termination
customer list for a guaranteed royalty of $40,000 which was recorded as income.

           On September 22, 2000, we entered into a management agreement with
Beauty Resource, Inc., a Nevada corporation ("BR"). BR was engaged by the
Company to provide and perform for the Company all management services
reasonably necessary for the proper and efficient operation of the Company for a
five-year period. BR personnel were assigned to manage the day-to-day activities
of the Company.

                                       10



<PAGE>

          BR supervised the bookkeeping and accounting services for and on
behalf of the Company. BR was responsible for all marketing, distribution
activities on behalf of the Company including, but not limited to, determining
which products to market, sales prices, target markets and customers, selecting
distribution methods and procedures and advertising activities. Additionally, BR
was responsible for all other administrative functions of the Company including,
without limitation, hiring and personnel matters, compensation arrangements with
employees of the Company, selecting outside advisors and consultants to the
Company, choosing vendors and suppliers, selecting and negotiating banking
relationships and all other normal and customary activities associated with
operating a business.

          BR was entitled to a reimbursement, which was a payment of $15,000 per
month. In addition, commencing April 1, 2001 and continuing on the first day of
each quarter thereafter during the remaining term of the agreement, the Company
agreed to pay BR a fee in the amount of 0.5% of the sales (net of returns and
allowances) of the Company for the preceding quarter.

          Upon signing of the agreement, the Company awarded the new CEO options
to purchase 100,000 shares of the Company common stock at an exercise price of
$0.25 per share, to be exercised on or before September 30, 2003.

          In addition, as defined in the agreement, BR was entitled to
performance options of up to 2,000,000 shares through March 31, 2006 at $0.25
per share based on achieving certain sales targets and 3,000,000 shares through
March 31, 2006 at $0.25 per share based on achieving certain pre-tax net income
levels. BR could earn cash bonuses of up to 5% of pre-tax net income based on
achieving certain ratios of pre-tax net income to sales. BR earned no such
options or cash awards.

         On May 24, 2001, the Board of Directors determined that BR was not
adequately managing the business and decided that it was necessary to assume all
functions and duties of BR under the Agreement. On August 13, 2001, the Company
and BR agreed to cancel the agreement and the Company agreed to pay BR the sum
of $100,000 and to issue BR 337,500 shares of our common stock.

       On April 10, 2002, we entered into a Management Service Agreement
("Agreement") with Thane International Inc. ("Thane"), which grants Thane the
exclusive rights to manage directly, or through the use of agents or
sub-contractors, all aspects of the worldwide marketing, sale and distribution
of the Company's RevitaCel System, in exchange for a management fee equal to
seven percent (7%) of the gross sales revenue. Thane will finance certain of the
Company's marketing, sales and distribution costs through advance payments as
described in the Agreement. All revenues, costs, inventories, accounts
receivables and profits generated from Thane's management services will remain
the sole property of Biozhem. The initial term of the agreement is one year and
shall automatically renew except under certain conditions. Biozhem has the right
to terminate the agreement if certain minimum payments are not made. Thane has
the right to terminate the agreement under certain circumstances, including the
ability to terminate if certain reasonable financial returns are not achieved.

Liquidity
---------

         The Company has recently experienced severe liquidity shortages.
Principal contributing factors to the deterioration of the Company's liquidity
and capital position have been the following: (1) an aggressive restructuring,
marketing campaign and dramatic increase in operational expenses to support the
growth in revenues. The sales growth rate was 391.6% for the six-month period
and 770.3% for the three-month period ended March 31, 2002, respectively, versus
the same periods ended March 31, 2001. (2) Front-end costs of successfully
launching its national television infomercial featuring a breakthrough
anti-aging skin care line promoted by the award winning actress, Lindsay Wagner.
Cash at March 31, 2002, was $74,792 compared to $556,179 as of September 30,
2001. Current liabilities exceeded current assets by $1,509,624 at March 31,
2002.

         At March 31, 2002, the Company's ending inventory balance increased by
$366,525 over the balance as of September 30, 2001, due primarily to increased
consumer demands of a successful national television infomercial launch
featuring the Company's RevitaCel(TM) skin care line.

         Accounts payable and accrued liabilities increased from $344,566 as of
September 30, 2001 to $879,261 as of March 31, 2002. Accrued royalties payable
were $526,104 and accrued sales return expense was $154,880 for the first six
months ended March 31, 2002. Short-term notes payable increased $503,701. The
primary reason for the increases in the liability categories was to support the
launch of the national infomercial and increase in inventory to accommodate the
growth in sales demand for the Company's product line.

         Cash used in operating activities was $1,991,602 for the year ended
September 30, 2001 and $418,613 for the year ended September 30, 2000. As a
result of these negative cash flows and the Company's recurring losses, the
Company's independent certified public accountants have stated in their report
included in this Form 10-KSB, that these conditions raise substantial doubt
about the Company's ability to continue as a going concern.

                                       11



<PAGE>

         In October 1999, the Company amended its contract with OWN and issued
127,844 shares of stock for the conversion of $66,500 in debt. OWN agreed to
increase its loan available to the Company to $100,000. In consideration for
these transactions, the Company agreed to lower the exercise price of 888,666 of
the Class A Warrants from $.56 to $.15. On May 1, 2000, the Company terminated
its contract with OWN. In connection with the cancellation, OWN agreed to
exercise 958,521 Class A Warrants for $175,000 and $51,569 in expense
reimbursement and cancel the remaining 41,479 warrants. OWN also agreed to
acquire co-ownership of the Company's pre-termination customer list for $40,000.

         On May 4, 2000, the Company sold 400,000 shares of common stock to a
third party for cash of $50,000. In conjunction with this sale, warrants to
purchase 400,000 shares of the Company's common stock were granted to this third
party as an incentive to purchase the stock. Therefore, the granting of the
warrants had no net impact on operations or equity.

         In September 2000, the Company committed 36,000 shares in payment of
consulting fees of $9,000 and 45,000 shares for payment of directors' fees of
$11,250.

         In fiscal 2000, the Company granted 1,608,000 options to consultants,
valued at $368,000. The fair value of each non-Plan option granted was estimated
using the Black-Scholes option-pricing model.

         Pursuant to private placement memorandums, the Company issued
11,510,370 shares (including 189,370 shares issued to finders) and committed to
issue an additional 400,000 shares for proceeds to the Company of $2,699,350
(net of issuance costs of $297,271) during the year ended September 30, 2001.

         During the years ended September 30, 2001 and 2000, the Company issued
95,911 and 103,135 shares of stock, respectively, for transactions that were
recorded in the Company's fiscal 2000 and 1999 financial statements. The value
of such shares was previously recorded as shares subscribed; therefore, the
issuances had no net impact on operations or equity.

         The Company issued 534,500 shares of common stock for services valued
at $243,928 during the year ended September 30, 2001. Shares were valued at the
estimated market value at date of issuance (based on the closing price of the
Company's common stock).

         During the year ended September 30, 2001, the Company defaulted on
$150,000 of stockholder notes and accrued interest payable. According to the
note agreement, the holder of the note had the right upon default to convert all
unpaid principal and accrued interest into common stock of the Company at a
conversion price of $0.125 per share. Further, upon conversion, the note holder
would also be granted warrants to purchase additional shares (equal to the
number shares converted) at an exercise price of $0.25 per share for a period of
three years. The Company has recorded the value of the beneficial conversion
feature and the related warrants in fiscal 2001 when the conversion feature was
no longer contingent on a future event. The combined value of the beneficial
conversion feature and the related warrants was $150,000 which was recorded to
additional paid-in capital and interest expense. As a result, the Company issued
1,200,000 shares of common stock at $0.125 per share and warrants to acquire an
additional 1,200,000 shares of common stock at $0.25 per share. This default did
not effect the repayment terms of any other notes payable.

                                       12



<PAGE>

         In addition, during the year ended September 30, 2001, the Company
issued 51,912 shares of common stock to convert another note payable totaling
$12,978 at $0.25 per share. There was no beneficial conversion associated with
this note payable.

         During 2001, under the 1998 Stock Option Plan, the Company granted
options to purchase 125,000 shares at an exercise price of $0.42 to an employee.
The options vest over a period of three years and expire in ten years.

         During the year ended September 30, 2001, the Company granted non-Plan
options to purchase 1,000,000 shares at an exercise price of $0.25 to its
directors, which was recorded as compensation expense of $260,000 as the option
price was less than market fair value on the date of grant.

         In fiscal 2000, the Company granted 1,608,000 non-Plan options at an
exercise price of $0.25 per share to consultants, valued at $368,000. In fiscal
2001, the Company granted 1,850,000 non-Plan options at an exercise price of
$0.25 per share to consultants, valued at $809,000. The fair value of each
option or warrant granted is estimated on the date of grant using the
Black-Scholes option-pricing model.

         In January 2001, the Company issued 25,000 warrants with an exercise
price of $0.25 per share to an unrelated third party for interest on a note
payable. The estimated fair value of these warrants totaled $6,250 and has been
expensed during the year.

         During the year ended September 30, 2001, the Company granted 245,000
warrants with an exercise price of $0.25 per share for services rendered, valued
at $99,300.

         During the three-month period ended December 31, 2001, the Company
issued 400,000 shares of common stock to third parties for transactions that
were recorded in the Company's September 30, 2001 financial statements. The
value of such shares was recorded previously as shares subscribed; therefore,
the issuance had no net impact on operations or equity.

         Pursuant to a private placement memorandum dated September 3, 2001, the
Company issued 200,000 shares of "restricted" common stock valued at $0.25 per
share to an outside investor for total proceeds to the Company of $45,000 (net
of issuance costs of $5,000) during the three-month period ended December
31, 2001.

         Pursuant to a private placement memorandum dated January 2, 2002, the
Company issued 1,436,000 shares of "restricted" common stock valued at $0.25 per
share to outside investors for total proceeds to the Company of $359,000 during
the seven-month period ended April 30, 2002. In conjunction with this sale,
warrants to purchase 1,336,000 shares of the Company's common stock were granted
to these investors as an incentive to purchase the stock. Therefore, the
granting of the warrants had no net impact on operations or equity.

         In April 2002, the Company issued 600,000 non-Plan options at $.25 per
share to an employee.

         During the six-month period ended March 31, 2002, the Company entered
into notes payable with a shareholder for $500,000, maturing through April 2,
2002. Interest is calculated at 5 percent due upon the maturity date of the
notes. If any payment is not paid when due, the remaining unpaid principal
balance and any accrued interest shall become due immediately and can be
converted to common stock at a conversion price of $0.125 per share at the
option of the lender. In May 2002, $75,000 of the notes was converted into
600,000 shares of Biozhem stock and the remaining $425,000 in notes was extended
to November 30, 2002.

         During the three month period ended June 30, 2002, the Company received
a total of $600,000 as an execution advance against future net revenue
compensation under its Management Agreement with Thane International.

        The Company must still rely primarily on operating cash flow and cash
management to sustain its operations. If management cannot achieve its 2002
operating plan because of sales shortfalls or other unfavorable events, the
Company may find it necessary to reduce expenses or undertake other actions as
may be appropriate.

                                       13



<PAGE>

         The Company's continued existence is dependent upon its ability to
obtain additional financing and to achieve its 2002 operating plan which
contemplates revenue and cash flow in excess of 300% of fiscal 2001 levels
through the successful launch of its infomercial beginning in January, 2002.
There can be no assurances that the Company will be successful in these regards.
The Company believes that it has sufficient cash to fund operations through
September 30, 2002.

                                                      Year Ended September 30
                                                  ------------------------------
                                                      2001             2000
                                                  -------------    -------------
Balance Sheet:
 Assets                                           $  1,174,434     $    391,672
 Liabilities                                           354,727          579,080
 Stockholders' Equity                             $    819,707     $   (187,408)

Net Sales                                         $    636,586     $    726,736
Other Income                                            13,497           44,221
                                                  -------------    -------------
 Total Revenue                                         650,083          770,957
 Total Expenses                                      4,073,773        1,781,313
                                                  -------------    -------------
Net Loss Attributable to Stockholders             $ (3,423,690)    $ (1,010,356)

Net Loss Per Common Share                         $      (0.22)    $      (0.12)

Weighted average number of common shares            15,779,337        8,711,648
  outstanding

Operations - 2001 Compared to 2000
----------------------------------

         Biozhem incurred a net loss of $3,423,690 in 2001 compared to a net
loss of $1,010,356 in 2000.

         Due primarily to decreasing customer base for the Biozhem skin care
line, net sales in 2001 decreased $90,150 or 12% compared to sales in 2000. One
Company-owned store was closed in March 2000. Average monthly sales per
Company-owned store in operation during the entire fiscal year dropped to
$10,977 in 2001 compared to $11,236 in 2000.

         Gross profit in 2001 decreased by $43,806 or 8% as compared to the
corresponding amount for 2000. Gross profit as a percentage of net sales
increased to 76% in 2001 from 73% in 2000 due to a small decrease in product
costs.

         Selling, general and administrative expenses increased by $1,918,204,
or 130%, in 2001 as compared to 2000. These increased costs were primarily
associated with the addition of the RevitaCel line, increased management
expenses required by the infomercial planning and production, and the $972,000
increase in fiscal 2001 over 2000 for the options and shares provided to
consultants and employees. Advertising expense increased by $117,330 to $145,187
in 2001 due to costs incurred introducing the new RevitaCel line.

                                       14



<PAGE>

         Depreciation decreased in 2001 by $3,211 as compared to 2000 and
amortization decreased by $6,832 primarily due to the increasing age of the
stores.

         Interest expense increased by $151,331 in 2001 as compared to 2000 due
primarily to the non-cash expense of $150,000 which was recorded on the
beneficial conversion of notes payable.

         At September 30, 2001, the Company had federal and state net operating
loss carryforwards of approximately $8,100,000 and $4,080,000, respectively. If
not used to offset future taxable income, these loss carryforwards will expire
between 2002 and 2021. Pursuant to the Tax Reform Act of 1986, use of the
Company's net operating loss carryforwards may be substantially limited if a
cumulative change in ownership of more than 50% occurs within a prescribed
testing period. Equity transactions in the past may have resulted in such a
change and would likely result in a limitation of the amount of net operating
loss that may be used annually. Further, the limitation may render a substantial
portion of the Company's net operating loss carryforwards unusable. Based on
numerous factors but not limited to the Company's historical losses, management
believes that it cannot demonstrate that it is more likely than not that it will
fully realize all of the benefits of deferred tax assets existing at September
30, 2001. Accordingly, a valuation allowance has been provided for the full
amount of the Company's deferred tax assets.

         As of September 30, 2001, due to continuing losses, the board of
directors of the Company entered into a plan to restructure its operations by
phasing out retail stores and servicing its clientele through direct sales. As a
result, the Company recognized a restructuring charge of $279,312, consisting of
the write-down of goodwill on acquired retail stores to be closed ($216,922) and
the present value of non-cancelable future retail store lease payments
($62,390).

                                                    March 31,        Sept. 30,
                                                      2002             2001
                                                      ----             ----
                                                  (unaudited)
Balance Sheet:
 Assets                                           $    618,170     $ 1, 174,434
 Liabilities                                         2,074,107          354,727
 Stockholders' (Deficit) Equity                   $ (1,455,937)    $    819,707

                                                                  March 31, 2001
                                                    (6 months)      (6 months)
                                                  -------------    -------------
Net Sales                                         $  1,807,523     $    367,698
Other Income                                                --            9,714
                                                  -------------    -------------
  Total Revenue                                      1,807,523          377,412
  Total Expenses                                     4,325,667        1,152,999
                                                  -------------    -------------
Net Loss Attributable to Stockholders             $ (2,518,144)    $   (775,587)

Net Loss Per Common Share                         $      (0.11)    $      (0.06)

Weighted average number of common shares            23,253,818       12,576,497
 outstanding

                                       15



<PAGE>

Operations - March 2002 Compared to March 2001
----------------------------------------------

         Net sales for the six-month period ended March 31, 2002 were $1,807,523
compared with net sales of $367,698 for the period ended March 31, 2001, an
increase of 391.6%. The increase in net sales was due primarily to the success
of the national infomercial launch featuring the Company's RevitaCel(TM) skin
care system.

         Gross margin increased $622,325 for the six-month period ended March
31, 2002. Gross margin as a percent of sales decreased to 49.4% compared to
73.6% for the six-month period ended March 31, 2001 due primarily to front-end
promotional infomercial pricing, incentives and accrued royalty costs.

         Selling, general and administrative expenses decreased $37,028 for the
six-month period ended March 31, 2002 compared with the six months ended March
31, 2001 due primarily to the elimination of overhead and selling expenses
associated with the now closed retail stores and kiosks.

         The Company increased its advertising expenditures during the six
months ended March 31, 2002 compared with the six months ended March 31, 2001
from $13,506 to $2,447,678 to support the launch of the national television
infomercial.

         As a result of the above, the net loss for the six-month period ended
March 31, 2002 was $2,518,144 ($.11 per share) compared with a net loss of
$775,587 ($.06 per share) for the six-month period ended March 31, 2001. The
Company's sales would have been higher for the quarter ended March 31, 2002;
however, due to a vendor related manufacturing problem, some shipments were
delayed until the following quarter.

         The Company's infomercial sales model requires front-end media
purchases and product pricing incentives, resulting in less profitability on the
initial customer sale. Thereafter, the sales are derived from continuity
reorders and a large, growing customer base for "up-sells" of existing and new
product releases under the Biozhem brand, that do not require ongoing
infomercial media costs.

                          ABOUT BIOZHEM COSMECEUTICALS
                          ----------------------------

SUMMARY

         We are a Texas corporation, which commenced operations in 1984. We are
a direct marketer of premium quality bioengineered and botanically based skin
care products for women and men. We market our proprietary line of advanced skin
care products under the brand names Biozhem(TM) and the RevitaCel System(TM)
through a national direct response television (infomercial) campaign, our
Customer Care Center telemarketing operation, and a website. Our products are
manufactured to our specifications by several companies.

         Biozhem employs 7 full-time and 1 part-time and 2 personnel. Two
of these individuals are officers of the Company.

         As of September 30, 2001, because of continuing losses we entered into
a plan to restructure our operation through the phasing out of our retail
presence by closing the Company's owned stores and servicing our clientele
through the Biozhem Customer Care Center and our developing Biozhem e-commerce
website. We sell our RevitaCel System products primarily through a national
infomercial. The Company anticipates expanding into international markets in mid
2002 through established direct response marketing channels.

         On September 22, 2000, we entered into a Supply & License Agreement
with Advanced Tissue Sciences, Inc., a Delaware corporation ("ATS"),
(NASDAQ:ATIS), which grants us the exclusive rights to become the sole,
worldwide direct response marketing partner for an ATS nutrient solution,
NouriCel(TM). We will use NouriCel in our RevitaCel product line. The exclusive
rights are for ten years, providing that certain sales goals beginning at
$15,000,000 per year and increasing to $100,000,000 per year in the sixth year
are reached. We will pay to ATS a minimum royalty of 10% of gross sales up to
$50,000,000 per year and increasing to 13% of gross sales over $100,000,000
per year. We will also pay periodic milestone payments

                                       16



<PAGE>

beginning at $1,000,000 for the first $10,000,000 in gross sales and continuing
until cumulative gross sales levels reach the $1,000,000,000 level. On January
1, 2002, due to changes in development timelines, the Company and ATS amended
the Agreement to change the first contract year to the period from January 1,
2002 until December 31, 2002, to delay the payment of the first milestone
payment of $1,000,000 to November 30, 2002 and to increase the annual minimum
exclusivity threshold royalty payment in contract year one from $1,500,000 to
$2,000,000. Additional milestone payments and increased royalty minimum payments
in future years are outlined in the Agreement. During the six-month period ended
March 31, 2002, we recorded $500,000 in royalty expense pursuant to the
Agreement.

         We will sell the RevitaCel System, which incorporates ATS' Nutrient
Solution, NouriCel, through a number of direct response channels, including
infomercials, cable shopping networks, Biozhem-branded or co-branded websites,
direct mail and telemarketing. We engaged Script to Screen, a full-service
production company specializing in direct response television to assist in the
production of a 30-minute infomercial. The actress Lindsay Wagner was signed as
the celebrity host of the infomercial. The infomercial was completed in
November, 2001 and was aired on a test basis in November and December. The
infomercial was aired nationally beginning in January, 2002. The sales growth
rate was 770% for the three-month period ended March 31, 2002, versus the same
period ended March 31, 2001.

         During the fiscal year ended September 30, 2000, we operated seven
Company-owned retail stores under the name Biozhem Skin Care Center, two of
which were closed by September 30, 2000. In 2000 essentially all sales were made
through Company-owned retail stores. During the fiscal year ended September 30,
2001, we made all sales through the five stores open at that time. Due to
continuing losses in the stores and the opportunity to air a national
infomercial, the board of directors of the Company, on September 30,2001,
entered into a plan to restructure its operations by phasing out retail stores
and servicing its clientele through direct sales. Since September 30, 2001, we
have closed all five stores. The locations (with opening and closing dates) of
these Company-owned and operated retail stores are:

                Dallas, Texas (March 1991)(closed November 2001)
                Phoenix, Arizona (March 1992)(closed December 2001)
                Denver, Colorado (March 1993)(closed in February 2002)
                Santa Ana, California (February 1997)(closed October 2001)
                San Diego, California (February 1997)(closed November 1999)
                Tulsa, Oklahoma (July 1997)(closed November 2001)
                Oklahoma City, Oklahoma (July 1997)(closed March 2000)

        As a result of the decision to close the stores, the Company
recognized a restructuring charge of $279,312, consisting of the write-off of
intangibles related to acquired retail stores to be closed ($216,922) and the
present value of future non-cancelable retail store lease payments ($62,390).

         On September 22, 2000, we entered into a Management Agreement
("Agreement") with Beauty Resource, Inc. ("BR"). We engaged BR to provide and
perform all management services reasonably necessary for the proper operation of
the Business during the five-year term of the Agreement. We agreed to pay or
grant to BR, as compensation for the services it provided to the Company
pursuant to the Agreement, a Management Fee and other consideration based upon
attaining certain profit and revenue levels. On May 24, 2001, the Board of
Directors determined that BR was not adequately managing the business and
decided that it was necessary to assume all functions and duties of BR under the
Agreement. On August 13, 2001, Biozhem and BR agreed to cancel the Agreement and
we agreed to pay BR the sum of $100,000 and to issue BR 337,500 shares of
Biozhem common stock

         On April 10, 2002, we entered into a Management Service Agreement
("Agreement") with Thane International Inc. ("Thane"), which grants Thane the
exclusive rights to manage directly, or through the use of agents or
sub-contractors, all aspects of the worldwide marketing, sale and distribution
of the Company's RevitaCel System, in exchange for a management fee equal to
seven percent (7%) of the gross revenue of sales. Thane will finance certain of
the Company's marketing, sales and distribution costs through advance payments
as described in the Agreement. All revenues, costs, inventories, accounts
receivables and profits generated from Thane's management services will remain
the sole property of Biozhem. The initial term of the agreement is one year and
shall automatically renew except under certain conditions. Biozhem has the right
to terminate the agreement if certain minimum payments are not made. Thane has
the right to terminate the agreement under certain circumstances, including the
ability to terminate if certain reasonable financial returns are not achieved.

                                       17



<PAGE>

COMPETITION

         Biozhem competes with a large number of companies and product lines in
the markets in which its products are sold. Firms compete in the direct response
market by securing products which will interest infomercial customers, producing
an eye-catching infomercial and then securing competitive rate airtime. Many
competitive companies are well established and have research, financial and
manufacturing capabilities and other resources substantially greater than those
of Biozhem. Retail skin care competition consists of major cosmetic companies
such as Estee Lauder, Clinique and Lancome and national retailers such as Body
Shop. We will compete with several companies in the infomercial market that have
much more experience and more proven successes than we do. These companies are
larger and have significantly greater financial resources than Biozhem. We will
compete directly with Gunthy Renker and their beauty product infomercials.

  GOVERNMENT REGULATIONS

         We and our products are subject to regulation by the Food and Drug
Administration and the Federal Trade Commission in the United States, as well as
various other Federal, state, local and international regulatory authorities.
Such regulations relate principally to the ingredients, labeling, packaging and
marketing of our products. We believe that we are in compliance with such
regulations. Our formulations are manufactured and packaged by non-affiliated
companies that manufacture products in compliance with such regulations.
However, the extent of potentially adverse governmental regulations, which might
arise from future legislation or administrative action, cannot be predicted.

                                   Management
                                   ----------

         The Directors and Executive Officers of the Company are listed below,
together with brief accounts of their business experience and certain other
information.
<TABLE>

Board of Directors
------------------
<CAPTION>

      Name                     Age    Present Office or Position       Year First Elected Director
      ----                     ---    --------------------------       ---------------------------
<S>                             <C>   <C>                                       <C>
James S. Chapin                 44    Chairman of the Board and CEO             2001
Stan R. Wylie                   59    Director and  Secretary                   1995
Lawrence A. Rheins, Ph.D.       46    Director                                  2001
David M. Lewis                  48    Director                                  2001
Dean J. Hastas                  42    Director                                  2001

Officers
--------

Marti Wolf                      60    President
</TABLE>

Chairman of the Board  - James S. Chapin
----------------------------------------

         Mr. Chapin was co-founder of SierraSilicon, a corporate financial
consulting firm headquartered in Northern California. He has been a principal in
that business since June, 1998. The mission of SierraSilicon is to assist early
and second stage companies with a wide-range of business services that include
business plan preparation, corporate strategy refinement and fund raising. He
has contacts in Silicon Valley and throughout the United States that specialize
in funding projects that require $5 million to $50 million.

         Mr. Chapin spent five years with International Business Machines in
Farmington, Connecticut in various executive positions, followed by ten years in
the investment securities industry with Smith Barney and Tucker Anthony in
Hartford, Connecticut. In 1994, he was recruited by publicly traded, Brush Creek
Mining and Development Co., Inc., Grass Valley, California, and served as its
CEO and Chairman until May 1998. During his tenure, Mr. Chapin was successful in
raising approximately $15 million of equity financing, negotiating a significant
joint-venture agreement and steering the company through a variety of hurdles
created by a previous management. Mr. Chapin graduated from Trinity College in
Hartford, Connecticut and attended MBA courses at the University of Hartford and
the University of Connecticut. He also attended the Executive MBA Program at the
Tuck School at Dartmouth. He was appointed CEO on February 1, 2002.

                                       18



<PAGE>

Director and Secretary  - Stan R. Wylie
---------------------------------------------------------------

         Mr. Wylie has been a director of Biozhem since December 1995. Since
March 1995 he has been a self employed financial consultant. Mr. Wylie was
employed from 1992 to 1995 by several related technology companies located in
Houston and Dallas areas. He holds an MBA Degree from Michigan State University,
has over thirty years of experience as a Certified Public Accountant and in
financial management positions in marketing, manufacturing, contracting and
service companies. He was Chief Financial Officer of the Company from 1986 to
1991 during which time he managed its Initial Public Offering. He assumed the
title of Chief Financial Officer again in September 2000 and served until
February 28, 2002.

Director - Lawrence A. Rheins, Ph.D.
------------------------------------

         Dr. Rheins is founder and Executive Vice President of DermTech
International, a comprehensive skin-testing laboratory that focuses on testing
dermatology, cosmetic and personal care products. He has been Executive Vice
President since 1999 and served as President and CEO from 1996 to 1999. He has
over two decades of experience in clinical toxicology, immunology, dermatology
and in vitro toxicology alternatives. Among his previous appointments, Dr.
Rheins served as Executive director of In Vitro technology at Advanced Tissue
Sciences and as Manager of Proctor & Gamble's Professional and Regulatory
Services Skin Care Division. He was also Director of Clinical Safety and
Toxicology at Hill Top Research, Inc. He received his Ph.D., M.S. and B.S. from
the University of Cincinnati.

Director - David M. Lewis
-------------------------

         Mr. Lewis was the co-founder served as CEO of Jupiter Power
International Inc. from 1996 to 2000. Jupiter, a publicly traded company that
specialized in the production of electricity, concluded a number of joint
ventures to install and operate power projects in Asia, the largest of which
stemmed from the formation of a 50% owned subsidiary in Cambodia with
Caterpillar Power Ventures Inc. Jupiter Power International recently merged with
Maxim Power Corp., a Canadian Venture Exchange corporation.

Director - Dean J. Hastas
-------------------------

         Mr. Hastas has been employed since 1992 at Adelphia Communications (one
of the world's largest cable companies), where he is currently a Senior Systems
Analyst. In addition, he is the CFO of Investrak LLC(TM) where he designed and
developed a software application that tracks stocks, bonds and mutual funds.
Investrak is used by brokerage houses, accountants and day traders, and has
received several industry awards.

President - Marti Wolf
----------------------

         Ms. Wolf was elected President of the Company on July 14, 1999. Prior
to joining Biozhem, Ms. Wolf was president of MW Consulting Group, a marketing
strategies and development firm, from 1997 to 1999. She also served as Executive
Vice President for Los Angeles-based Kent & Spiegel Direct, a national marketing
firm specializing in direct response television, from 1990 to 1997. As head of
one of their largest divisions, she was responsible for seven $100+ million
infomercial rollouts.

                             Executive Compensation
                             ----------------------

         It is not anticipated that the Company will pay any cash remuneration
to its directors. The Company may offer stock and or options to attract and
retain directors. As of September 30, 2001, aggregate annual cash remuneration
paid by the Company to the persons who are officers of the Company and all such
officers and directors of the Company as a group is as follows:

                                       19



<PAGE>
<TABLE>

                                      Summary Compensation Table
<CAPTION>

                                   Annual                      Long-Term
                                   Compensation               Compensation

                                                                            Restricted    Shares
Name and Principal                 Fiscal                       Other         Stock     Underlying
Position                            Year     Salary   Bonus  Compensation**   Awards      Options
--------------------------------- --------- -------- ------- -------------- ---------- --------------
<S>                                <C>           <C>   <C>      <C>           <C>         <C>
James S. Chapin (1)                2001          $ 0   $  0     $     0       $    0      500,000
Chairman of the Board

John C. Riemann  (2)               2001          $ 0   $  0     $ 2,750       $    0      125,000
Chief Executive Officer

Marti Wolf                         2001     $100,000   $  0     $     0       $    0      125,000
President

Stan Wylie                         2001          $ 0   $  0     $ 2,750       $    0      125,000
Chief Financial Officer

John C. Riemann                    2000          $ 0   $  0     $ 3,750       $    0      250,000
Chairman of the Board and
Chief Executive Officer

Marti Wolf                         2000     $100,000   $  0     $     0       $    0            0
President

Stan Wylie                         2000          $ 0   $  0     $ 3,750       $    0      200,000
Chief Financial Officer

John C. Riemann                    1999     $ 79,167   $  0     $ 2,375       $    0            0
Chairman of the Board and
Chief Executive Officer
</TABLE>

(1)      Received an additional 1,000,000 options for consulting services prior
         to becoming Chairman of the Board on August 28, 2001.

(2)      Resigned as CEO and Chairman of the Board on August 28, 2001.

** On August 28, 2001, 11,000 shares of the Company's common stock valued at
$.25 per share were committed to be issued in lieu of cash payment for
director's fees. On September 30, 2000, 15,000 shares of the Company's common
stock valued at $.25 per share were committed to be issued in lieu of cash
payment for director's fees. On September 30, 1999, 6,419 shares of the
Company's common stock valued at $.37 per share were issued in lieu of cash
payment for director's fees.

Stock Options Granted in Fiscal 1999, 2000 and 2001

          The following tables set forth certain information with respect to
stock options granted to the persons named in the Summary Compensation Table
during the fiscal years ended September 1999, 2000 and 2001.
<TABLE>
<CAPTION>

                                    Options Granted

                                   Individual Grants

                                  Number of      Percent of Total
                                  Securities     Options Granted
                                  Underlying     To               Exercise or
                        Fiscal    Options        Employees in     Base Price    Expiration
Name                    Year      Granted        Fiscal Year      ($/Sh)          Date
----                    ----      -------        -----------      ------          ----
<S>                     <C>      <C>               <C>             <C>            <C>
John C. Riemann         1999           0               0           $   0
Stan Wylie              1999           0               0           $   0

John C. Riemann         2000     250,000           41.1%           $0.25         12/31/03
Stan Wylie              2000     200,000           32.9%           $0.25         12/31/03
Marti Wolf              2000           0               0           $   0

John C. Riemann         2001     125,000           14.3%           $0.25          6/30/04
Stan Wylie              2001     125,000           14.3%           $0.25          6/30/04
Marti Wolf              2001     125,000           14.3%           $0.42           1/1109
James S. Chapin         2001     500,000           50.1%           $0.25          9/17/06
</TABLE>

                                       20



<PAGE>

Stock Options Exercised in Fiscal 2001; Fiscal Year-End Values

         The following table sets forth certain information as to each exercise
of stock options during the year ended September 30, 2001, by the persons named
in the Summary Compensation Table and the fiscal year-end value of unexercised
options:
<TABLE>

                       Aggregated Options Exercises in Fiscal 2001 and Year-End Option Value
<CAPTION>

                          Number of Securities                            Value of Unexercised
                          Underlying Unexercised                          In-the-Money Options

              Shares                   Options at                         at
              Acquired                 September                          September 30,
                                       30,2001                            2001
              On          Value
Name          Exercise    Realized     Exercisable     Unexercisable      Exercisable       Unexercisable
----          --------    --------     -----------     -------------      -----------       -------------
<S>               <C>          <C>             <C>           <C>                   <C>          <C>
John C. Riemann  -0-          -0-             600,000         -0-                 $216,750         -0-
Stan Wylie       -0-          -0-             425,000         -0-                 $166,000         -0-
Marti Wolf       -0-          -0-              50,000        75,000                $13,500      $20,250
James S. Chapin  -0-          -0-           1,500,000         -0-                 $660,000         -0-
</TABLE>

                            Compensation of Directors
                            -------------------------

         Beginning October 1, 1998, all directors were paid $3,000 per year.
Each year this amount was paid in stock in lieu of cash based on the closing
price of the stock on the date the stock was issued. On September 1, 2001, the
Board of Directors changed this policy and the new outside directors, appointed
on August 28, 2001, each received a one-time award of 200,000 options to
purchase common stock at $0.25 per share, expiring September 17, 2006.

                                       21



<PAGE>

                             PRINCIPAL STOCKHOLDERS
                             ----------------------

         The following tables sets forth, as of September 30, 2001, the name,
number of shares of common stock, options, warrants and rights owned of record
by each person or entity who owns more than five percent (5%) of the outstanding
shares of any class of securities or is a director or officer of the Company,
and the number of shares owned by all officers and directors as a group,
together with percentage holdings of such shares.

               Name and               Number of Shares
Title of      Address of                  Owned                   Percent of
 Class         Owner                   Beneficially                 Class
 -----         -----                   ------------                 -----

       (1) Each of the persons who are officers and directors:

Common     James S. Chapin          1,500,000 shares (a)              5.8%
           13000 Echo Glen Rd
           Grass Valley, CA 95945

Common     Stan R. Wylie              583,925 shares (b)              2.3%
           15306 Quiet Creek
           Houston, TX 77095

Common     Lawrence A. Rheins, PhD    200,000 shares (c)              0.8%
           165 Calle Del Rancho
           Escondido, CA 92025

Common     David M. Lewis             840,000 shares (d)              3.3%
           6719 Larch Ct. S.W.
           Calgary, Alberta
           Canada T3E6E9

Common     Dean J. Hastas             234,600 shares (e)              0.9%
           421 2nd Ave.
           Olean, NY 14760

Common     Marti Wolf                 125,000 shares (f)              0.5%
           25651 Atlantic Ocean Dr.
           Lake Forest, CA 92630

       (2) All officers and directors as a group:

Common                              3,483,525 shares                 13.6%

       (3) Each shareholder who owns more than 5% of any class of the Company's
stock including those shares subject to outstanding options:

Common     John C. Riemann          1,452,732 shares (g)              5.7%
           19641 Descartes
           Foothill Ranch, CA 92610

Common     Clifford N. Fowler       2,592,856 shares (h)             10.1%
           3113 Professional Dr #5
           Auburn, CA 95603

Common     Ilse Rickert             2,500,000 shares                  9.7%
           Dorfstrasse 42
           Willingrande 24626, Germany

(a) Includes 1,500,000 options which are exercisable as of the date of this
prospectus
(b) Includes 425,000 options which are exercisable as of the date of this
prospectus
(c) Includes 200,000 options which are exercisable as of the date of this
prospectus
(d) Includes 200,000 options and 100,000warrants which are exercisable as of the
date of this prospectus
(e) Includes 200,000 options which are exercisable as of the date of this
prospectus
(f) Includes 125,000 options which are exercisable as of the date of this
prospectus
(g) Includes 600,000 options which are exercisable as of the date of this
prospectus
(h) Includes 1,321,428 warrants which are exercisable as of the date of this
prospectus

                                       22



<PAGE>

       (4) Options, warrants and rights: As of September 30, 2001, there were
7,882,697 shares of Common Stock granted as options and/or warrants to key
officers and employees, consultants and other service providers of the Company.

                           FORWARD-LOOKING STATEMENTS
                           --------------------------

          We have made forward-looking statements in this prospectus.
Forward-looking statements are subject to risks and uncertainties and include
information concerning possible or assumed future results of our operations.
When we use words such as "believe," "expects," "anticipated" or similar
expressions, we are making forward-looking statements. You should note that an
investment in our securities involves certain risks and uncertainties that
affect our future financial results. Our actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, excluding those set forth in "Risk Factors" and elsewhere in
this prospectus.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                 ----------------------------------------------

         During the fiscal year ended September 30, 2001, the following were the
only transactions or series of transactions with Biozhem in which the amount
involved exceeded $60,000, and in which any of directors Chapin, Lewis, Hastas,
Wylie, Rheins, Riemann and Goldsberry or members of their immediate families,
had a direct or indirect material interest (and any proposed transactions of a
similar type). James Chapin received $89,480 in cash as consulting compensation
for his assistance in funding activities in fiscal 2001 prior to his appointment
to the board of directors. During fiscal 2000, the Company borrowed funds from a
shareholder. On June 30, 2001, stockholder notes totaling $150,000 were
converted to equity with the issuance of 1,200,000 shares of the Company's
common stock. As of September 30, 2001, all notes from stockholders were paid
off. Interest expense (including $150,000 of non-cash interest recorded in
fiscal 2001 upon the conversion of the notes) on these notes totaled
approximately $151,890 and $18,600 for fiscal 2001 and 2000, respectively.


         During the fiscal year ended September 30, 2000, there were no
transactions or series of transactions with Biozhem in which the amount involved
exceeded $60,000, and in which any officers or directors Riemann, Wylie and
Goldsberry or members of their immediate families, had a direct or indirect
material interest (and any proposed transactions of a similar type). During
fiscal 2000, the Company borrowed funds from a shareholder. On June 30, 2001,
stockholder notes totaling $150,000 were converted to equity with the issuance
of 1,200,000 shares of the Company's common stock. As of September 30, 2001, all
notes from stockholders were paid off. Interest expense (including $150,000 of
non-cash interest recorded in fiscal 2001 upon the conversion of the notes) on
these notes totaled approximately $151,890 and $18,600 for fiscal 2001 and 2000,
respectively.

         During the fiscal year ended September 30, 1999, the following were the
only transactions or series of transactions with Biozhem in which the amount
involved exceeded $60,000, and in which any of directors Riemann, Hernand,
Wylie, Reyff, and Goldsberry or members of their immediate families, had a
direct or indirect material interest (and any proposed transactions of a similar
type). Mr. Riemann On July 14, 1999, JCR Enterprises, Inc., a company for which
Mr. Riemann is president, agreed to cancel $112,844 in debt owed to it by the
Company. In consideration, the Company issued 304,930 shares of the Company's
common stock to JCR Enterprises, Inc. at a share price of $.37.

                          DESCRIPTION OF CAPITAL STOCK
                          ----------------------------

         We are authorized to issue 10,000,000 shares of $1.00 par value
Preferred Stock. There are no shares of Preferred Stock outstanding. The Company
is authorized to issue 100,000,000 shares of $.001 par value Common Stock. As of
May 31, 2002, there were 25,603,741 shares of Common Stock issued and
outstanding. There were approximately 620 shareholders of record of the Common
Stock.

COMMON STOCK. Holders of Common Stock are entitled to one vote per share on all
matters subject to shareholder vote. The Common Stock has no preemptive,
conversion, redemption, sinking fund or other subscription rights. All of the
presently outstanding shares of Common Stock are, and the shares of Common Stock
offered by the Company hereby when issued will be, fully paid and
non-assessable. Holders of Common Stock are entitled to receive dividends
ratably, as the Board of Directors may declare from time to time out of funds
legally available therefore. In the event of a liquidation, dissolution or
winding-up of the Company, holders of Common Stock are entitled to share ratably
in the assets of the Company, if any, remaining after the payment of all debts
and liabilities of the Company.

                                       23



<PAGE>

DIVIDEND RIGHTS. Holders of shares of Common Stock will be entitled to receive
dividends ratably, when, as and if declared by the Board of Directors out of
funds at the time legally available therefore. Declared dividends will be
payable to holders of record as they appear on the stock books of the Company on
such record dates as are fixed by the Board of Directors. The Company has never
paid cash dividends on the Common Stock. The Company does not anticipate paying
cash dividends on the Common Stock in the foreseeable future since currently it
intends to retain any earnings for use in its business. The payment of cash
dividends in the future will depend on such factors as earnings levels, capital
requirements, the Company's financial condition and other factors deemed
relevant by the Board of Directors.

VOTING RIGHTS. The holders of the Common Stock are entitled to one vote per
share on all matters on which the holders of Common Stock are entitled to vote.

                            SELLING SECURITY HOLDERS
                            ------------------------

        We are registering all of the outstanding shares beneficially owned by
the selling security holders listed in the table below except as footnoted.
Therefore, the columns reflecting the number and % ownership after selling the
related shares are excluded, as the amounts would be 0.
<TABLE>
<CAPTION>

                                                        Beneficial Ownership Prior to Offering
                                                        --------------------------------------
                                                             Shares
                                                      Beneficial Ownership                       Shares to
         Name                                           Prior to Offering     Percentage         be Offered
         ----                                           -----------------     ----------         ----------
<S>                                                        <C>                  <C>              <C>
Robert Michael Albert                                        100,000               *               100,000
319273 Alberta LTD                                           200,000               *               200,000
Barbaranne Andersen (8)                                       10,000               *                10,000
Richard & Betty M. Azevedo                                   200,000               *               200,000
Tim Banghart                                                 240,000               *               240,000
David G. Bates                                                48,000               *                48,000
Beauty Resource, Inc. (5)                                    337,500             1.35%             337,500
Randall S. Benson                                             50,000               *                50,000
David Berglass (7)                                           125,000               *               125,000
Timothy A. Brant & Kay Brant, JTTEN (9)                      566,667             2.27%             566,667
Timothy A. Brant                                              50,000               *                50,000
Bridgewater Capital Corporation (10)                          25,000               *                25,000
Brian P. Burns                                               450,000             1.80%             450,000
Alan J. Bush                                                 100,000               *               100,000
Ted Bussey & Norma Bussey, JTTEN (11)                        503,334             2.01%             503,334
Mark W. Bussey                                               180,000               *               180,000
James Chapin (32)                                          1,500,000             5.90%             640,000
Gene Cox                                                      50,000               *                50,000
Robert M. Danese & Jody M. Danese                            100,000               *               100,000
Kenneth G. Doctor                                            200,000               *               200,000
Clifford N. Fowler (12)                                    2,592,856            10.10%           1,090,000
Mina Furo                                                     30,000               *                30,000
William T. Gibson & Kathleen P. Gibson, JTTEN                100,000               *               100,000
Glacier Partners                                             120,000               *               120,000
Alan Goldsberry (3)                                           99,536               *                99,536
Susan M. Gordon                                               20,000               *                20,000
Stephen M. Haile                                              40,000               *                40,000
Dean Hastas (35)                                             234,600               *                85,000
Damian Hawkins (13)                                           25,000               *                25,000

                                       24



<PAGE>

Health Wise Management, Inc. (14)                             17,000               *                17,000
Charles Henriques Irrevocable Trust DTD (15)                  83,334               *                83,334
Doris Hobson                                                 100,000               *               100,000
Nadine M. Holt                                               150,000               *               150,000
Ivan Ichters                                                 120,000               *               120,000
Ivan Ichters & Mary Ichters, JTTEN                           100,000               *               100,000
Jessee Lee Real Estate, Inc. (16)                             27,778               *                27,778
Jennifer Johnson                                              20,000               *                20,000
R. Curtis Jordan                                             200,000               *               200,000
Kenneth K. Kinsey Living Trust UA DTD 6/9/87                 500,000             2.00%             500,000
Gerald S. Knapp Revocable Trust DTD 1/24/96(17)              285,712             1.14%             285,712
Knox Living Trust DTD 3/14/82 (18)                            75,000               *                75,000
Lori Koebler                                                  40,000               *                40,000
Michael D. Laufer, M.D. (19)                                  40,000               *                40,000
Gregory Todd Lear                                            200,000               *               200,000
Alan Leboeuf (20)                                             80,000               *                80,000
John F. Lemak                                                200,000               *               200,000
David M. Lewis (34)                                          840,000             3.36%             355,000
George Logan (21)                                             25,000               *                25,000
Manhattan Financial Group (22)                               950,000             3.80%             950,000
Willaim R. Ste Marie (23)                                    123,334               *               123,334
Jennifer Marrerios                                            40,000               *                40,000
Shannon Miller                                                 2,500               *                 2,500
David Morgan (24)                                            325,000             1.30%             325,000
Ruth S B Morrill                                              40,000               *                40,000
One World Integrated Technologies, Inc. (4)                  937,457             3.75%             937,457
Michael Opara & Elena Opara, JTTEN                            80,000               *                80,000
Willaim E. Ormond                                             40,000               *                40,000
John M. Pesce                                                100,000               *               100,000
David E. T. Pinkman (56)                                     440,000             1.76%             440,000
The Pinnacle Fund LP                                       1,000,000             4.00%           1,000,000
Samantha Jane Posthumus (25)                                  30,000               *                30,000
Mahbub Rahman & Donna L. Rahman, JTTEN (57)                  600,000              2.4%             600,000
Mark A. Rapport (26)                                          41,667               *                41,667
Jay David Reese (IRA), Charles Schwab Cust.(27)              114,288               *               114,288
Lawrence A. Rheins (36)                                      200,000               *                85,000
Ilse Rickert                                               2,500,000                ?%           2,500,000
Roger B. Ricketts (28)                                       525,000             2.10%             525,000
Steve Ricketts (29)                                        1,500,000             6.00%           1,500,000
John C. Riemann & Roselyn Riemann, JTTEN (1)                 400,581             1.60%             400,581
John C. Riemann (1)                                          827,151             3.31%             827,151
Rosaria M. Roberts                                            50,000               *                50,000
Dennis M. Theres M. Rohan                                    160,000               *               160,000
Michael Sabo (30)                                            142,856               *               142.856
James Sanford                                                 50,000               *                50,000
Mark Satterfield & Anne Satterfield, JT                      100,000               *               100,000
Glenn A. Seawell                                             400,000             1.60%             400,000
John A. Shaban                                                20,000               *                20,000
Scott T. & Kathryn Schultz                                    80,000               *                80,000
Sierra Silicon                                                68,000               *                68,000
Jay D. Smith                                                 100,000               *               100,000
Southwell Partners LP                                        400,000             1.60%             400,000
Lennart A. Steiner                                           335,712             1.34%             335,712
Barden E. Stevenot                                           166,667               *               166,667
Robert T. Suter                                              100,000               *               100,000
Douglas Swenson                                              200,000               *               200,000

                                       25



<PAGE>

Gayle Walker (33)                                            100,000               *               100,000
Marlene Wesson                                                51,912               *                51,912
Westamerica Bank Cust Clifford N Fowler (IRA)                 80,000               *                80,000
Western Wallcovering Inc. Pension & Profit                   200,000               *               200,000
Westpark Fund                                                400,000             1.60%             400,000
Stan R. Wylie (2)                                            583,925             2.34%             245,000
Charles K. Yotter (6)                                         88,000               *                88,000
Eugene C. Zlatunich & John Zlantunich, JTTEN                  68,000               *                68,000
Andy Rickert (37)                                            600,000             2.40%             600,000
Gary J. Elliot (38)                                          160,000               *               160,000
Subodh & Anjalay Banejree (39)                               100,000               *               100,000
Dean P. Sheer (40)                                            40,000               *                40,000
Hillery F. & Laurel B. McClimans (41)                        400,000             1.60%             400,000
Stuart A. & Patrica P. McClimans (42)                         80,000               *                80,000
Raymond M. Sykes SEP IRA (43)                                 40,000               *                40,000
Laurel B. McClimans (44)                                     200,000               *               200,000
Todd Potts (45)                                               60,000               *                60,000
Victor E. & Sue Larson (46)                                   40,000               *                40,000
Robin R. Ward (47)                                           280,000             1.12%             280,000
Jennifer B. Larson (48)                                       60,000               *                60,000
Hillary L. Larson (49)                                        60,000               *                60,000
James K. & Sara E. Larson (50)                               204,000               *               204,000
Jack A. & Linda J. Lube (51)                                  40,000               *                40,000
Maria Lewis (52)                                             280,000             1.12%             280,000
Frank W. & Maria Antonucci (53)                               80,000               *                80,000
Eugene D. & Patrica P. Sass (54)                             168,000               *               168,000
Ruth E. & Waymon E. Schoelles (55)                            80,000               *                80,000
Total                                                     29,135,367                            25,683,986
-----------
*Less than 1%
</TABLE>

(1) JOHN C. RIEMANN has been a director of Biozhem since June of 1991, and was
Executive Vice President of Biozhem from October 1991 to May 1994. In December
1995, he was elected Chairman, CEO and President of the Company. Concurrent with
the signing of the Management Agreement with One World Technologies, Inc. "OWN"
on July 14, 1999, Mr. Riemann stepped down as president of the Company, but
remained as CEO and Chairman. Concurrent with the signing of the Management
Agreement with Beauty Resource on September 22, 2000, Mr. Riemann resigned as
CEO. On August 28, 2001, Mr. Riemann resigned from the Board. Includes 325,000
options, which are exercisable as of the date of this prospectus. Has an
additional 225,000 qualified options that are not being registered in this
prospectus.
(2) STAN R. WYLIE has been a director of Biozhem since December 1995. On
September 28, 2000, he was named Chief Financial Officer and served until
February 28, 2002. Includes 145,000 options which are exercisable as of the date
of this prospectus. Has an additional 58,925 shares and an additional 180,000
options that are not being registered in this prospectus. Has an additional
100,000 qualified options that are not being registered in this prospectus.
(3) ALAN GOLDSBERRY was a director of Biozhem from December 1995, until August
28, 2001, at which time he resigned from the Board.
(4) ONE WORLD TECHNOLOGIES, INC. entered into a management contract with the
Company on July 14, 1999. The Company terminated that agreement on May 1, 2000.
(5) BEAUTY RESOURCE INC. entered into a management agreement with the Company in
September 2000. The Company terminated that agreement in August 2001.
(6) CHARLES YOTTER was with Biozhem from December 1995 until September 2001 and
held various positions during that time, the most recent being operating
officer. Includes 58,000 options which are exercisable as of the date of this
prospectus.
(7) Includes 125,000 warrants which are exercisable as of the date of this
prospectus
(8) Includes 10,000 warrants which are exercisable as of the date of this
prospectus
(9) Includes 105,556 warrants which are exercisable as of the date of this
prospectus
(10) Includes 25,000 warrants which are exercisable as of the date of this
prospectus
(11) Includes 27,778 warrants which are exercisable as of the date of this
prospectus

                                       26



<PAGE>

(12) Includes 590,000 warrants which are exercisable as of the date of this
prospectus. Has an additional 771,428 shares and an additional 731,428 warrants
that are not being registered in this prospectus.
(13) Includes 25,000 warrants which are exercisable as of the date of this
prospectus
(14) Includes 17,000 warrants which are exercisable as of the date of this
prospectus
(15) Includes 27,778 warrants which are exercisable as of the date of this
prospectus
(16) Includes 27,778 warrants which are exercisable as of the date of this
prospectus
(17) Includes 142,856 warrants which are exercisable as of the date of this
prospectus
(18) Includes 25,000 warrants which are exercisable as of the date of this
prospectus
(19) Includes 25,000 warrants which are exercisable as of the date of this
prospectus
(20) Includes 25,000 warrants which are exercisable as of the date of this
prospectus
(21) Includes 25,000 warrants which are exercisable as of the date of this
prospectus
(22) Includes 550,000 warrants which are exercisable as of the date of this
prospectus
(23) Includes 27,728 warrants which are exercisable as of the date of this
prospectus
(24) Includes 25,000 warrants which are exercisable as of the date of this
prospectus
(25) Includes 10,000 warrants which are exercisable as of the date of this
prospectus
(26) Includes 13,889 warrants which are exercisable as of the date of this
prospectus
(27) Includes 57,144 warrants which are exercisable as of the date of this
prospectus
(28) Includes 25,000 warrants which are exercisable as of the date of this
prospectus
(29) Includes 1,500,000 options which are exercisable as of the date of this
prospectus
(30) Includes 142,856 warrants which are exercisable as of the date of this
prospectus
(31) Includes 192,856 warrants which are exercisable as of the date of this
prospectus
(32) Jim Chapin was elected to the Board of Directors on August 28, 2001. He was
appointed CEO on February 1, 2002. Includes 640,000 options which are
exercisable as of the date of this prospectus. Has an additional 860,000
warrants that are not being registered in this prospectus.
(33) Includes 100,000 options which are exercisable as of the date of this
prospectus
(34) David M. Lewis was elected to the Board of Directors on August 28, 2001.
Includes 155,000 options which are exercisable as of the date of this
prospectus. Includes 100,000 warrants which are exercisable as of the date of
this prospectus. . Has an additional 440,000 shares and an additional 45,000
options that are not being registered in this prospectus.
(35) Dean Hastas was elected to the Board of Directors on August 28, 2001.
Includes 85,000 options, which are exercisable as of the date of this
prospectus. Has an additional 115,000 options that are not being registered in
this prospectus. Owns an additional 34,600 shares, which are not being
registered in this prospectus.
(36) Lawrence A. Rheins was elected to the Board of Directors on August 28,
2001. Includes 85,000 options, which are exercisable as of the date of this
prospectus. Has an additional 115,000 options that are not being registered in
this prospectus.
(37) Includes 600,000 options which are exercisable as of the date of this
prospectus.
(38) Includes 80,000 warrants which are exercisable as of the date of this
prospectus.
(39) Includes 50,000 warrants which are exercisable as of the date of this
prospectus.
(40) Includes 20,000 warrants which are exercisable as of the date of this
prospectus.
(41) Includes 20,000 warrants which are exercisable as of the date of this
prospectus.
(42) Includes 80,000 warrants which are exercisable as of the date of this
prospectus.
(43) Includes 40,000 warrants which are exercisable as of the date of this
prospectus.
(44) Includes 200,000 warrants which are exercisable as of the date of this
prospectus.
(45) Includes 30,000 warrants which are exercisable as of the date of this
prospectus.
(46) Includes 20,000 warrants which are exercisable as of the date of this
prospectus.
(47) Includes 140,000 warrants which are exercisable as of the date of this
prospectus.
(48) Includes 30,000 warrants which are exercisable as of the date of this
prospectus.
(49) Includes 30,000 warrants which are exercisable as of the date of this
prospectus.
(50) Includes 102,000 warrants which are exercisable as of the date of this
prospectus.
(51) Includes 20,000 warrants which are exercisable as of the date of this
prospectus.
(52) Includes 140,000 warrants which are exercisable as of the date of this
prospectus.
(53) Includes 40,000 warrants which are exercisable as of the date of this
prospectus.
(54) Includes 84,000 warrants which are exercisable as of the date of this
prospectus.
(55) Includes 40,000 warrants which are exercisable as of the date of this
prospectus.
(56) Includes 100,000 warrants which are exercisable as of the date of this
prospectus.
(57) Includes 50,000 warrants which are exercisable as of the date of this
prospectus.

                                       27



<PAGE>

                             PLAN OF DISTRIBUTION

         We are registering 25,683,986 shares of Common Stock on behalf of the
Selling Shareholders.

         The Selling Shareholders may choose to sell their shares from time to
time on the OTC Bulletin Board, at market prices prevailing at the time of the
sale, at prices related to the then prevailing market prices, in negotiated
transactions or through a combination of these methods. In addition, the Selling
Shareholders may choose one or more of the following alternatives:

(i)      a block trade in which a broker or dealer will attempt to sell the
         shares as agent but may position and resell a portion of the block as
         principal in order to facilitate the transaction;

(ii)     purchases by a broker or dealer as principal and resale by such broker
         or dealer for its account pursuant to this prospectus; and

(iii)    ordinary brokerage transactions and transactions in which the broker
         solicits purchasers.

         The Selling Shareholders and any broker-dealers who act in connection
with the sale of their shares of Common Stock under this prospectus may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933 and any commissions received by them and profit on any
resale of their shares of Common Stock as principals might be deemed to be
underwriting discounts and commissions under the Securities Act.

         Except for sales volume limitations which may be applicable to Selling
Shareholders who are affiliates of the Company, the Selling Shareholders are not
restricted as to the number of shares which may be sold at any one time, and it
is possible that a significant number of shares could be sold at the same time,
which may have a depressive effect on the market price of the Common Stock. The
period for sale of the shares of the Common Stock by the Selling Shareholders
may occur over an extended period of time.

         The Company will pay most expenses related to the offer and sale of the
shares offered by the Selling Shareholders using this prospectus. The Selling
Shareholders, however, will pay any underwriting discounts and selling
commissions.

[Any shares covered by this prospectus which qualify for sale under Rule 144 of
the Securities Act may be sold under that Rule rather than under this
prospectus.]

                                LEGAL PROCEEDINGS

         There are no legal proceedings.

                                     EXPERTS

         Our audited financial statements as of September 30, 2001, and for each
of the two years in the period then ended included in this prospectus have been
audited by Corbin & Wertz, independent public accountants, as indicated in their
report with respect thereto, and are included herein by reference in reliance
upon the authority of said firm as experts in giving said reports. Reference is
made to said report, which includes an explanatory paragraph with respect to the
uncertainty regarding our ability to continue as a going concern as discussed in
Note 1 to the financial statements.

                             DESCRIPTION OF PROPERTY

         We lease for our executive office approximately 1,750 square feet of
office space in Grass Valley, California on a month to month basis.

                                  LEGAL MATTERS

         For the purpose of this offering, Danzig Kaye Cooper & Fiore, LLP is
giving its opinion on the validity of the shares of Common Stock being offered
by this prospectus.

                                       28



<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Board of Directors and Stockholders
Biozhem Cosmeceuticals, Inc.

We have audited the accompanying balance sheet of Biozhem Cosmeceuticals, Inc.
(the "Company") as of September 30, 2001, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
two-year period then ended. These financial statements are the responsibility of
the management of the Company. Our responsibility is to express an opinion on
the financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Biozhem Cosmeceuticals, Inc. as
of September 30, 2001, and the results of its operations and its cash flows for
the each of the years in the two-year period then ended in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully disclosed in Note 2 to
the financial statements, the Company has recurring losses and has negative cash
flow from operations for each of the last two fiscal years. These matters raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans as to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

                                                     CORBIN & WERTZ
Irvine, California
December 14, 2001

                                       29



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                                   BALANCE SHEET

                                                        AS OF SEPTEMBER 30, 2001

================================================================================

ASSETS

Current assets:
   Cash                                                            $    556,179
   Inventory                                                             57,572
   Prepaid expenses and other current assets                            124,565
   Capitalized television production costs                              369,967
                                                                   -------------

         Total current assets                                         1,108,283

Property and equipment, net                                              39,613

Deposits and other                                                       26,538
                                                                   -------------

                                                                   $  1,174,434
                                                                   =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued liabilities                        $    344,566
   Note payable                                                          10,161
                                                                   -------------

         Total current liabilities                                      354,727
                                                                   -------------

Commitments and contingencies

Stockholders' equity:
   Preferred stock, $1.00 par value; 10,000,000 shares
     authorized; no shares issued and outstanding                             -
   Common stock, $.001 par value; 100,000,000 shares
     authorized; 22,967,741 shares issued and outstanding
     as  of September 30, 2001                                           22,968
   Common stock subscribed, $.001 par value; 400,000
     shares committed as of September 30, 2001                              400
   Additional paid-in capital                                        10,487,781
   Accumulated deficit                                               (9,691,442)
                                                                   -------------
         Total stockholders' equity                                     819,707
                                                                   -------------

                                                                   $  1,174,434
                                                                   =============

--------------------------------------------------------------------------------
                                            SEE INDEPENDENT AUDITORS' REPORT AND
                                      ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                       30



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                        STATEMENTS OF OPERATIONS

================================================================================

                                                     YEARS ENDED SEPTEMBER 30,
                                                  ------------------------------
                                                       2001             2000
                                                  -------------    -------------

Net sales                                         $    636,586     $    726,736

Cost of sales                                          148,767          195,111
                                                  -------------    -------------

         Gross profit                                  487,819          531,625
                                                  -------------    -------------

Expenses:
   Selling, general and administrative               3,398,292        1,480,088
   Depreciation and amortization                        62,057           72,100
   Restructuring charges                               279,312                -
                                                  -------------    -------------

         Total expenses                              3,739,661        1,552,188
                                                  -------------    -------------

Loss from operations                                (3,251,842)      (1,020,563)

Interest expense                                      (185,345)         (34,014)

Other income                                            13,497           44,221
                                                  -------------    -------------

         Net loss                                 $ (3,423,690)    $ (1,010,356)
                                                  =============    =============

Net loss per common and equivalent share -
   basic and diluted                              $      (0.22)    $      (0.12)
                                                  =============    =============

Weighted average number of common
   shares outstanding                               15,779,337        8,711,648
                                                  =============    =============

--------------------------------------------------------------------------------
                                            SEE INDEPENDENT AUDITORS' REPORT AND
                                      ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                       31



<PAGE>

<TABLE>
                                                                                                        BIOZHEM COSMECEUTICALS, INC.

                                                                                                  STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                                     FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

====================================================================================================================================
<CAPTION>

                                          COMMON STOCK           COMMITTED COMMON STOCK     ADDITIONAL
                                   --------------------------  -------------------------     PAID-IN     ACCUMULATED
                                      SHARES        AMOUNT        SHARES        AMOUNT       CAPITAL       DEFICIT        TOTAL
                                   ------------  ------------  ------------  ------------  ------------  ------------  ------------
<S>                                  <C>         <C>              <C>        <C>           <C>           <C>           <C>
Balances at October 1, 1999          7,985,548   $     7,985       118,046   $       118   $ 5,340,081   $(5,257,396)  $    90,788

Shares committed for services                -             -        81,000            81        20,169             -        20,250

Shares sold for cash                   400,000           400             -             -        49,600             -        50,000

Issuance of shares upon
  conversion of debt                   127,844           128             -             -        66,372             -        66,500

Exercise of warrants for cash
  and services                         958,521           959             -             -       225,610             -       226,569

Subscribed shares issued               103,135           103      (103,135)         (103)            -             -             -

Options issued for services                  -             -             -             -       368,840             -       368,840

Net loss                                     -             -             -             -             -    (1,010,356)   (1,010,356)
                                   ------------  ------------  ------------  ------------  ------------  ------------  ------------

Balances at September 30, 2000       9,575,048         9,575        95,911            96     6,070,672    (6,267,752)     (187,409)

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                SEE INDEPENDENT AUDITORS' REPORT AND
                                                                                          ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                                                 32
</TABLE>



<PAGE>

<TABLE>
                                                                                                        BIOZHEM COSMECEUTICALS, INC.

                                                                                      STATEMENTS OF STOCKHOLDERS' EQUITY - CONTINUED

                                                                                     FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

====================================================================================================================================
<CAPTION>
                                        COMMON STOCK           COMMITTED COMMON STOCK       ADDITIONAL
                                 --------------------------  ---------------------------     PAID-IN     ACCUMULATED
                                    SHARES        AMOUNT        SHARES        AMOUNT         CAPITAL       DEFICIT         TOTAL
                                 ------------  ------------  ------------   ------------   ------------  ------------   ------------
<S>                               <C>          <C>               <C>        <C>            <C>           <C>            <C>
Shares committed for cash                  -             -       400,000            400         99,600             -        100,000

Shares sold for cash              11,510,370        11,510             -              -      2,587,840             -      2,599,350

Issuance of shares upon
   conversion of debt              1,251,912         1,252             -              -        161,726             -        162,978

Shares issued for services           534,500           535             -              -        243,393             -        243,928

Subscribed shares issued              95,911            96       (95,911)           (96)             -             -              -

Options and warrants issued
  for services                             -             -             -              -      1,324,550             -      1,324,550

Net loss                                   -             -             -              -              -    (3,423,690)    (3,423,690)
                                 ------------  ------------  ------------   ------------   ------------  ------------   ------------

Balances at September 30, 2001    22,967,741   $    22,968       400,000    $       400    $10,487,781   $(9,691,442)   $   819,707
                                 ===========   ===========   ===========    ===========    ===========   ===========    ===========

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                SEE INDEPENDENT AUDITORS' REPORT AND
                                                                                          ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                                                 33
</TABLE>



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                        STATEMENTS OF CASH FLOWS

================================================================================

                                                       YEARS ENDED SEPTEMBER 30,
                                                     ---------------------------
                                                         2001           2000
                                                     ------------   ------------

Cash flows from operating activities:
   Net loss                                          $(3,423,690)   $(1,010,356)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
       Depreciation and amortization                      62,057         72,100
       Loss on disposal of assets                         11,261              -
       Non-cash portion of restructuring charges         216,922              -
       Common stock issued or committed for services     243,928         20,250
       Exercise of warrants for services                       -         51,569
       Warrants and options issued for services        1,324,550        368,840
       Changes in operating assets and liabilities:
          Accounts receivable                                  -          1,347
          Inventory                                      (31,931)        34,221
          Prepaid expenses and other current assets     (124,104)         2,807
          Capitalized television production costs       (369,967)             -
          Other assets                                   (14,283)        11,094
          Accounts payable and accrued liabilities       113,655         29,515
                                                     ------------   ------------

   Net cash used in operating activities              (1,991,602)      (418,613)
                                                     ------------   ------------

Cash flows used in investing activities:
   Purchases of property and equipment                   (37,754)             -
                                                     ------------   ------------

Cash flows from financing activities:
   Proceeds from sale of common shares
     and exercise of warrants                          2,699,350        225,000
   Proceeds from borrowings                                    -        338,506
   Repayment of debt                                    (175,030)       (83,678)
                                                     ------------   ------------

   Net cash provided by financing activities           2,524,320        479,828
                                                     ------------   ------------

Net increase in cash                                     494,964         61,215

Cash at beginning of year                                 61,215              -
                                                     ------------   ------------

Cash at end of year                                  $   556,179    $    61,215
                                                     ============   ============

Supplemental disclosure of cash flow information:
   Cash paid during the year for interest            $    18,819    $    17,125
                                                     ============   ============

Supplemental disclosure of non-cash investing and
   financing activities:
     Conversion of debt into common stock            $   162,978    $    66,500
                                                     ============   ============

--------------------------------------------------------------------------------
                                            SEE INDEPENDENT AUDITORS' REPORT AND
                                      ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                       34



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 1 - ORGANIZATION
---------------------

Description of the Company
--------------------------

Biozhem Cosmeceuticals, Inc. ("Biozhem" or "the Company") incorporated in Texas
in 1984 as Entourage International, Inc. Biozhem is currently a direct marketer
of premium quality bioengineered and botanically-based skin care products for
women and men. The Company markets its proprietary line of advanced skin care
products under its brand names BIOZHEM(TM) and the REVITACEL SYSTEM(TM) through
a national direct response television (infomercial) campaign, its customer care
center telemarketing operation, shopping channels, a web site, and planned print
advertising, catalog and direct mail campaigns. The Company also enters into

marketing and distribution agreements with manufacturers of specific products or
product lines for resale through its marketing channels (see Note 8).

As of September 30, 2001, Biozhem entered into a plan to restructure its
operations through the phasing out of its retail presence by closing the
Company's owned stores (see Note 2) and servicing its clientele through the
customer care center and its website. In the future, the Company will sell its
products primarily through its national infomercial and other direct response
television, shopping channels, and through its call center, website, and direct
advertising campaigns, and anticipates expanding into international markets in
mid-2002 through established direct response marketing channels.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

Basis of Presentation
---------------------

The Company's financial statements for the years ended September 30, 2001 and
2000 have been presented on the basis that it will continue as a going concern,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company reported net losses of $3,423,690
and $1,010,356 and net cash used in operating activities of $1,991,602 and
$418,613 in fiscal 2001 and 2000, respectively.

The Company's continued existence is dependent upon its ability to achieve its
2002 operating plan, which contemplates significantly increased revenues,
improved operating results and increased cash flows from operations and
obtaining additional financing. There can be no assurances that the Company will
be successful in these efforts.

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

                                       35



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------

If management cannot achieve the 2002 operating plan because of sales
shortfalls, reduced profit margins or other unfavorable events, the Company may
find it necessary to further reduce expenses or undertake other actions as may
be appropriate. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty (including any impairment
losses on long-lived assets).

Revenue Recognition
-------------------

Sales are recorded when a call center customer is shipped the goods or when a
retail customer takes possession of the goods. Provisions are made for estimated
returns and allowances at the time of sale.

The Company's policies comply with Staff Accounting Bulletin 101 ("SAB 101"),
"REVENUE RECOGNITION," issued by the Securities and Exchange Commission In
December 1999. SAB 101 outlines the basic criteria that must be met to recognize
revenue and provides guidance for presentation of revenue and for disclosure
related to revenue recognition policies in financial statements filed with the
Securities and Exchange Commission. The Company's adoption of SAB 101 did not
have a material impact on its financial position and results of operations.

Fair Value of Financial Instruments
-----------------------------------

The Company has financial instruments whereby the fair market value of the
financial instruments could be different than that recorded on a historical
basis. The Company's financial instruments consist of its cash, accounts payable
and accrued liabilities and note payable. Management believes the carrying
amounts of the Company's financial instruments approximate their fair values at
September 30, 2001 due to the short-term nature of these financial investments.

Inventory
---------

Inventory consists mainly of skin care products which are stated at the lower of
cost or market using the first-in, first-out method. The Company purchases a
majority of its inventory from several vendors. These items are readily
available from other vendors. However, a change in supplier could cause delays
in product delivery and possible losses in revenue which could adversely affect
operating results. Market is determined by comparison with recent purchases or
net realizable value. Such net realizable value is based on forecasts for the
sales of the Company's products in ensuing years. Should demand for the
Company's products prove to be significantly less than anticipated, the ultimate
realizable value of the Company's inventories could be substantially less than
the amount shown on the accompanying balance sheet.

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

                                       36



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------

Capitalized Television Production Costs
---------------------------------------

In March 2001, the Company entered into an infomercial consultation agreement
with a third party to produce a television commercial designed to sell certain
skin care products by means of direct response by the customer. As of September
30, 2001, production costs for the television commercial totaled $369,967 and
was recorded as other assets. In accordance with Statement of Position 93-7,
"REPORTING ON ADVERTISING COSTS," such costs are capitalized and expensed in
total the first time the commercial is aired, which occurred in November 2001.
Therefore, such amount will be expensed in the quarter ended December 31, 2001.

Property and Equipment
----------------------

Property and equipment are stated at cost. Expenditures for additions and major
improvements are capitalized. Repairs and maintenance costs are charged to
operations as incurred. When property and equipment are retired or otherwise
disposed of, the related cost and accumulated depreciation are removed from the
accounts, and gains or losses from retirements and dispositions are credited or
charged to income.

Depreciation and amortization are provided over the estimated useful lives of
the related assets, ranging from 3 to 5 years, using the straight-line method.
Leasehold improvements are amortized over the lesser of the estimated useful
life of the asset or the term of the lease. Depreciation expense totaled $15,714
and $18,925 for the years ended September 30, 2001 and 2000, respectively.

Management of the Company assesses the recoverability of property and equipment
by determining whether the net carrying value of such assets can be recovered
over their remaining lives through projected undiscounted cash flows. The amount
of impairment, if any, is measured based on fair value (projected discounted
cash flows) and is charged to operations in the period in which such impairment
is determined by management. Management has determined that there is no
impairment of property and equipment at September 30, 2001. However, there can
be no assurance that market conditions will not change or demand for the
Company's products will continue which could result in asset impairments in the
future.

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

                                       37



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------

Intangible Assets
-----------------

Intangible assets consist of covenants not to compete, customer lists and
goodwill arising from business combinations and are amortized on a straight-line
basis. The covenants are amortized over the contractual term of 3 years. The
customer lists are amortized over the expected benefit life of 3 years.
Goodwill, representing the excess of the purchase price over the estimated fair
market value of the net assets of the acquired business, is amortized over the
period of expected benefit of 10 years. Amortization expense totaled $46,090 and
$53,175 for the years ended September 30, 2001 and 2000, respectively.

The Company assesses the recoverability of these intangible assets by
determining whether the net carrying value of such assets can be recovered over
their remaining lives through projected undiscounted future cash flows. The
amount of impairment, if any, is measured based on fair value and charged to
operations in the period in which the impairment is determined by management.

As of September 30, 2001, the Company entered into a plan of reorganization to
close all of its acquired retail stores; as a result, at September 30, 2001, the
Company wrote-off intangible assets of $216,922, representing the remaining net
book value of the retail-related intangible assets at September 30, 2001 (see
below).

Advertising
-----------

Except as discussed above relating to television production costs, advertising
costs are expensed as incurred. Advertising costs expensed totaled $145,187 and
$27,857 in fiscal 2001 and 2000, respectively.

Restructuring Charges
---------------------

As of September 30, 2001, the board of directors of the Company entered into a
plan to restructure its operations by phasing out retail stores and servicing
its clientele through direct sales (see Note 1). As a result, the Company
recognized a restructuring charge of $279,312, consisting of the write-off of
intangibles related to acquired retail stores to be closed ($216,922) and the
present value of future non-cancelable retail store lease payments ($62,390)
(see Note 8).

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

                                       38



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------

Income Taxes
------------

The Company provides for income taxes under the liability method. Accordingly,
deferred tax assets and liabilities are computed for differences between the
financial statement carrying amounts and tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future based on enacted
tax laws and rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred tax assets to amounts which are more likely than
not to be realized. The provision for taxes represents the tax payable or
refundable for the period plus or minus the change during the period in deferred
assets and liabilities.

Earnings Per Share
------------------

Basic earnings per share ("EPS") is computed as net income divided by the
weighted average of common shares for the period (see Note 10). Diluted EPS
reflects the potential dilution that could occur from the common shares issued
through stock options, warrants and other convertible securities. All
potentially dilutive shares, 3,762,557 and 2,437,289 shares as of September 30,
2001 and 2000, respectively, have been excluded from dilutive EPS, as their
effect would be anti-dilutive for fiscal 2001 and 2000.

Stock-Based Compensation
------------------------

The FASB has issued Statement of Financial Accounting Standards No. 123 ("SFAS
123"), "ACCOUNTING FOR STOCK-BASED COMPENSATION," which defines a fair value
based method of accounting for stock-based compensation. However, SFAS 123
allows an entity to continue to measure compensation cost related to stock and
stock options issued to employees using the intrinsic method of accounting
prescribed by Accounting Principles Board Opinion No. 25 ("APB 25"), "ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES." Entities electing to remain with the accounting
method of APB 25 must provide pro forma disclosures of net income and earnings
per share, as if the fair value method of accounting defined in SFAS 123 had
been applied. The Company has elected to account for its stock-based
compensation to employees under APB 25 (see Note 7).

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

                                       39



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------

In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44") "ACCOUNTING
FOR CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION, AN INTERPRETATION OF APB
OPINION 25." FIN 44 clarifies the application of APB 25 for (a) the definition
of employee for purposes of applying APB 25, (b) the criteria for determining
whether a plan qualifies as a non-compensatory plan, (c) the accounting
consequences for various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective on July 1, 2000, but
certain provisions cover specific events that occur after either December 15,
1998, or January 12, 2000. The adoption of FIN 44 did not have a material effect
on the financial statements.

Comprehensive Income
--------------------

The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "REPORTING COMPREHENSIVE INCOME." Under SFAS 130, the Company
reports and displays all components of comprehensive income in a full set of
financial statements. For fiscal 2001 and 2000, the Company had no items of
comprehensive income.

Segments
--------

The FASB has issued Statement of Financial Accounting Standards No. 131 ("SFAS
131"), "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION." As
the Company operates in one segment, the Company has not provided any additional
segment disclosures as required under SFAS 131.

Use of Estimates
----------------

In the normal course of preparing financial statements in conformity with
accounting principles generally accepted in the United States of America,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Significant estimates made
by management include the realizability of inventory and long-lived assets.
Actual results could differ from those estimates.

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

                                       40



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------------

Recent Accounting Pronouncements
--------------------------------

In June 2001, the FASB approved two new pronouncements: Statement of Financial
Accounting Standards No. 141 ("SFAS 141"), "BUSINESS COMBINATIONS," and
Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "GOODWILL AND
OTHER INTANGIBLE ASSETS." SFAS 141 applies to all business combinations with a
closing date after June 30, 2001. This statement eliminates the
pooling-of-interests method of accounting and further clarifies the criteria for
recognition of intangible assets separately from goodwill. SFAS 142 eliminates
the amortization of goodwill and indefinite-lived intangible assets and
initiates an annual review for impairment. Identifiable intangible assets with a
determinable useful life will continue to be amortized. The amortization
provisions apply to goodwill and other intangible assets acquired after June 30,
2001. The Company does not expect SFAS 141 and SFAS 142 to have a material
impact on its financial statements because its intangible assets are either
fully amortized or written-off at September 30, 2001.

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143 ("SFAS 143"), "ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS." SFAS 143
establishes standards associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This statement is effective
for financial statements issued for fiscal years beginning after June 15, 2002.
The Company does not expect SFAS 143 to have a material impact on its financial
statements.

In August 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("SFAS 144"), "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED
ASSETS." SFAS 144 address financial accounting and reporting for the impairment
of long-lived assets and for long-lived assets to be disposed of. The provisions
of SFAS 144 are effective for financial statements issued for fiscal years
beginning after December 15, 2001, and interim periods within these fiscal
years, with early adoption encouraged. The Company does not expect SFAS 144 to
have a material impact on its financial statements.

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

                                       41



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 3 - PROPERTY AND EQUIPMENT
-------------------------------

Property and equipment consist of the following at September 30, 2001:

                                      ESTIMATED USEFUL LIVES
                                            (IN YEARS)
                                      ------------------------

Equipment                                        3               $      64,841
Software                                         5                      25,219
                                                                 --------------
                                                                        90,060

Less accumulated depreciation                                          (50,447)
                                                                 --------------

                                                                 $      39,613
                                                                 ==============

NOTE 4 - NOTE PAYABLE
---------------------

Note payable consists of the following at September 30, 2001:

Note payable to former franchisee, interest at 8%, principal and
interest of $1,538 payable monthly from September 15, 1997 through
July 15, 2000. This note is currently in default.                   $   10,161
                                                                    ===========

Principal maturities are $10,161 for the year ending September 30, 2002.

NOTE 5 - RELATED PARTY TRANSACTIONS
-----------------------------------

The Company had interest expense on notes payable to JCR Advertising, a company
owned by a significant stockholder, of approximately $0 and $3,000 for fiscal
2001 and 2000, respectively. At September 30, 2001, the Company had no balance
owing to JCR Advertising.

During fiscal 2000, the Company borrowed funds from a shareholder. On June 30,
2001, stockholder notes totaling $150,000 were converted to equity with the
issuance of 1,200,000 shares of the Company's common stock (see Note 7). As of
September 30, 2001, all notes from stockholders were paid off. Interest expense
(including $150,000 of non-cash interest recorded in fiscal 2001 upon the
conversion of the notes - see Note 7) on these notes totaled approximately
$151,890 and $18,600 for fiscal 2001 and 2000, respectively.

A current board member received $89,480 in cash as consulting compensation for
his assistance in funding activities in fiscal 2001 prior to his appointment to
the board of directors.

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

                                       42



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 6 - INCOME TAXES
---------------------

The following is a reconciliation of federal income taxes computed at the
statutory rate of 34% to income tax expense as reported for the years ended
September 30:

                                                         2001           2000
                                                     ------------   ------------

Expected income tax benefit at 34%                   $(1,164,000)   $  (344,000)
State taxes, net of federal income tax benefit          (200,000)       (59,000)
Change in valuation allowance                          1,364,000        403,000
                                                     ------------   ------------

Income tax expense                                   $         -    $         -
                                                     ============   ============

Deferred tax assets consist of the following as of September 30, 2001:

Net operating loss carryforwards                                    $ 2,975,000
Expenses recognized for granting warrants                               744,000
Other                                                                    14,000
                                                                    ------------
                                                                      3,733,000

Less valuation allowance                                             (3,733,000)
                                                                    ------------

Net deferred tax assets                                             $         -
                                                                    ============

During fiscal 2001 and 2000, the valuation allowance increased by approximately
$1,364,000 and $403,000, respectively.

At September 30, 2001, the Company had federal and state net operating loss
carryforwards of approximately $8,100,000 and $4,080,000, respectively. If not
used to offset future income, these loss carryforwards will expire between 2002
and 2021. Pursuant to the Tax Reform Act of 1986, use of the Company's net
operating loss carryforwards may be substantially limited if a cumulative change
in ownership of more than 50% occurs within a prescribed testing period. Equity
transactions may have resulted in such a change and would likely result in a
limitation of the amount of net operating loss that may be used annually.
Further, the limitation may render a substantial portion of the Company's net
operating loss carryforward unusable.

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

                                       43



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 6 - INCOME TAXES, CONTINUED
--------------------------------

Based on numerous factors, including but not limited to the Company's historical
losses and the uncertainty regarding net operating loss carryforward limitation,
management believes that it cannot currently demonstrate that it is more likely
than not that it will fully realize all of the benefits of deferred tax assets
existing at September 30, 2001. Accordingly, a valuation allowance has been
provided for the full amount of the Company's deferred tax assets.

NOTE 7 - STOCKHOLDERS' EQUITY
-----------------------------

Stock Issuances
---------------

On December 14, 1999, the Company issued 127,844 shares of common stock in
exchange for $66,500 of indebtedness due to OWN (see Note 9).

On September 30, 2000, the Company committed to issue 36,000 shares of common
stock for consulting fees and 45,000 shares of common stock for directors' fees.
These shares were earned in fiscal 2000 and were valued at $0.25 per share for a
total of $20,250 based on an outstanding private placement offering at $0.25
(see below).

On May 4, 2000, the Company sold 400,000 shares of common stock to a third party
for $50,000. In conjunction with this sale, warrants to purchase 400,000 shares
of the Company's common stock at $0.125 per share were granted to this third
party as an incentive to purchase the stock. Therefore, the granting of the
warrants had no net impact on operations or equity.

On May 1, 2000, OWN exercised warrants to acquire 958,521 shares of common stock
for $175,000 in cash and $51,569 in services (see Note 9).

During the years ended September 30, 2001 and 2000, the Company issued 95,911
and 103,135 shares of stock, respectively, for transactions that were recorded
in the Company's fiscal 2000 and 1999 financial statements. The value of such
shares was previously recorded as shares subscribed; therefore, the issuances
had no net impact on operations or equity.

Pursuant to private placement memorandums, the Company issued 11,510,370 shares
(including 189,370 shares issued to finders) and committed to issue an
additional 400,000 shares for proceeds to the Company of $2,699,350 (net of
issuance costs of $297,271) during the year ended September 30, 2001.

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

                                       44



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 7 - STOCKHOLDERS' EQUITY, CONTINUED
----------------------------------------

The Company issued 534,500 shares of common stock for services valued at
$243,928 during the year ended September 30, 2001. Shares were valued at the
estimated market value at date of issuance (based on the closing price of the
Company's common stock).

During the year ended September 30, 2001, the Company defaulted on $150,000 of
stockholder notes and accrued interest payable (see Note 5). According to the
note agreement, the holder of the note had the right upon default to convert all
unpaid principal and accrued interest into common stock of the Company at a
conversion price of $0.125 per share. Further, upon conversion, the note holder
would also be granted warrants to purchase additional shares (equal to the
number shares converted) at an exercise price of $0.25 per share for a period of
three years. Pursuant to APB 14, EITF 98-5 and EITF 00-27, the Company has
recorded the value of the beneficial conversion feature and the related warrants
in fiscal 2001 when the conversion feature was no longer contingent on a future
event. The combined value of the beneficial conversion feature and the related
warrants was $150,000 that was recorded to additional paid-in capital and
interest expense. As a result, the Company issued 1,200,000 shares of common
stock at $0.125 per share and warrants to acquire an additional 1,200,000 shares
of common stock at $0.25 per share.

In addition, during the year ended September 30, 2001, the Company issued 51,912
shares of common stock to convert another note payable totaling $12,978 at $0.25
per share. There was no beneficial conversion associated with this note payable.

Stock Options
-------------

The Company has adopted the 1998 Stock Option Plan of Biozhem Cosmeceuticals,
Inc. (the "Plan"). The purpose of the Plan is to provide officers and employees
of the Company and other eligible individuals an incentive through grant of
options to acquire stock in the Company and encourage them to remain in the
Company's service.

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

                                       45



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 7 - STOCKHOLDERS' EQUITY, CONTINUED
----------------------------------------

Under the Plan, the Committee may, at any time prior to July 6, 2008, grant to
eligible persons either incentive stock options or non-qualified stock options
for an aggregate of 1,000,000 shares of the Company's Common Stock. Any
unexercised or canceled stock options may be re-optioned under the Plan.
Although not eligible to receive grants of incentive stock options, members of
the Board of Directors of the Company who are not full-time employees of the
Company are eligible to receive grants of non-qualified options. Directors who
are full-time employees of the Company are eligible to receive grants of either
incentive stock options or non-qualified options. The Committee may issue the
options to different optionees subject to varying vesting requirements.

The exercise price of any options granted under the Plan may not be less than
100% of the fair market value of the underlying shares of Common Stock on the
day the option is granted, except that, with respect to options granted to
persons owning more than 10% of the Common Stock on the date of the grant at
which time the price must be at least 110% of the fair market value. The Plan
was approved by a vote of the stockholders. No options were granted under the
Plan in fiscal 2000. During 2001, the Company granted Plan options to purchase
125,000 shares at an exercise price of $0.42 per share to an employee. The
options vest over a period of three years and expire in ten years.

During the year ended September 30, 2001, the Company granted non-Plan options
to purchase 1,000,000 shares at an exercise price of $0.25 per share to its
directors, valued under APB 25 at $260,000.

In fiscal 2000, the Company granted non-Plan options to purchase 1,608,000
shares at an exercise price of $0.25 per share to consultants, valued under SFAS
123 at $368,000. In fiscal 2001, the Company granted non-Plan options 1,850,000
shares at an exercise price of $0.25 per share to consultants, valued under SFAS
123 at $809,000.

The fair value of each option or warrant granted is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
assumptions:

                                                      2001            2000
                                                 -------------   --------------

      Expected dividend yield                               0%               0%
      Weighted average expected stock price
        volatility                                        129%             108%
      Risk free interest rate                             5.4%             6.0%
      Expected life of option                     1 to 3 years   3 to 3.5 years

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

                                       46



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 7 - STOCKHOLDERS' EQUITY, CONTINUED
----------------------------------------

Stock Warrants
--------------

In October 1999, the Company amended its agreement with OWN (see Note 9). As
part of that amendment, the Company agreed to lower the exercise price of
888,666 of the 1,000,000 Class A Warrants from $0.56 to $0.15 per share. The
repricing of these warrants resulted in variable award accounting under FIN 44.
Because of the decline in the Company's stock price since the date of the
original warrant grant, no additional expense was required for the year ended
September 30, 2000 under variable award accounting. 958,521 of these warrants
were exercised on May 1, 2000 and the remaining 41,479 of the Class A Warrants
were cancelled as part of the Company's termination of its management agreement
with OWN (see Note 9).

In January 2001, the Company issued 25,000 warrants with an exercise price of
$0.25 per share to an unrelated third party for interest on a note payable. The
estimated fair value of these warrants under SFAS 123 totaled $6,250 and has
been expensed during the year.

In June 2001, the Company issued 1,200,000 warrants with an exercise price of
$0.25 per share to an unrelated third party in connection with the conversion of
the related note payable (see above).

During the year ended September 30, 2001, the Company granted 245,000 warrants
with an exercise price of $0.25 per share for services rendered, valued under
SFAS 123 at $99,300.

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

                                       47



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 7 - STOCKHOLDERS' EQUITY, CONTINUED
----------------------------------------

The following is a summary of stock option and warrant activity during fiscal
2001 and 2000:

                                                                  WEIGHTED
                                                                  AVERAGE
                                                     SHARES        PRICE
                                                  -----------    ---------

         Outstanding at September 30, 1999         2,511,697     $   0.59
                  Granted                          2,008,000         0.23
                  Exercised                         (958,521)       (0.24)
                  Cancelled                          (61,479)       (0.50)
                                                  -----------    ---------

         Outstanding at September 30, 2000         3,499,697         0.39
                  Granted                          4,445,000         0.25
                  Exercised                                -            -
                  Cancelled                          (62,000)       (0.84)
                                                  -----------    ---------

         Outstanding at September 30, 2001         7,882,697     $   0.31
                                                  ===========    =========

         Exercisable at September 30, 2001         4,907,697     $   0.34
                                                  ===========    =========

         Weighted average fair market value of
            options and warrants granted:
                  Fiscal 2000                                    $   0.37
                                                                 =========
                  Fiscal 2001                                    $   0.47
                                                                 =========

The following table summarizes information about stock options and warrants
outstanding at September 30, 2001:

<TABLE>
<CAPTION>
                                           Outstanding                                     Exercisable
                      -------------------------------------------------------    --------------------------------
                                            Weighted
                                             Average
                                            Remaining           Weighted                           Weighted
    Range of                               Contractual           Average                           Average
 Exercise Price           Total               Life           Exercise Price         Total       Exercise Price
------------------    ---------------    ----------------    ----------------    ----------     ---------------
<S>                    <C>                 <C>               <C>                 <C>              <C>
$0.01 - $0.49          6,945,000           2.5 years         $   0.26            3,970,000        $     0.26
$0.50 - $1.00            937,697           1.4 years             0.68              937,697              0.68
                      -----------                            ---------          -----------       -----------
                       7,882,697                             $   0.31            4,907,697        $     0.34
                      ===========                            =========          ===========       ===========
</TABLE>

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

                                       48



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 7 - STOCKHOLDERS' EQUITY, CONTINUED
----------------------------------------

SFAS 123 Pro Forma Information
------------------------------

Pro forma information regarding net income and earnings per share is required by
SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of SFAS 123. The fair value
for these options was estimated at the date of grant using the Black-Scholes
option pricing model with the assumptions listed above.

The Black Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro-forma disclosures, the estimated fair value of the options
is amortized to expense over the option vesting period. Adjustments are made for
options forfeited prior to vesting.

If the Company had elected to recognize compensation expense based on the fair
value of the options granted at grant date as prescribed by SFAS 123, net loss
and loss per share would have been increased to the pro forma amounts indicated
in the table below:

<TABLE>
<CAPTION>
                                                                    2001              2000
                                                               --------------    --------------
<S>                                                            <C>               <C>
Net loss attributable to common stockholders, as reported      $  (3,423,690)    $  (1,010,356)
Net loss attributable to common stockholders, pro forma        $  (3,529,940)    $  (1,010,356)
Loss per share, as reported                                    $       (0.22)    $      (0.12)
Loss per share, pro forma                                      $       (0.22)    $      (0.12)
</TABLE>

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

                                       49



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 8 - COMMITMENTS
--------------------

Leases
------

The Company leases its facilities and equipment under non-cancelable operating
leases expiring in October 2004. Rent expense in fiscal 2001 and 2000 was
approximately $213,000 and $212,000, respectively, and future commitments are
approximately $60,000, $22,000, and $2,000 in fiscal 2002, 2003, and 2004,
respectively.

Marketing Agreement
-------------------

On September 22, 2000, Biozhem signed a License and Supply Agreement with
Advanced Tissue Sciences, Inc., a Delaware Corporation ("ATS"), which gives
Biozhem the exclusive right to market skin care products containing ATS'
Nutrient Solution in the direct response market for a period of ten years
providing that sales goals are reached. Biozhem will also pay to ATS a royalty
and periodic milestone payments that are dependent on achieving certain annual
and cumulative sales levels. For the years ended September 30, 2001 and 2000,
the Company has recorded no royalties to ATS under this agreement.

On August 31, 2001, Biozhem entered into a royalty agreement with the actress in
its commercial (see Note 2) requiring that Biozhem pay the actress royalties
equal to 1.5% of retail gross sales in connection with the sale of the product
advertised on the commercial. At September 30, 2001, no amounts are owing under
this agreement.

NOTE 9 - MANAGEMENT AGREEMENT
-----------------------------

The Company entered into a management agreement in fiscal 1999 with One World
Networks Integrated Technologies, Inc. ("OWN"). OWN was engaged by the Company
to exclusively provide and perform for and on behalf of the Company all
management services reasonably necessary for the proper and efficient operation
of the Company for a five-year period. For its services, OWN was to receive a
monthly management fee of 40% of pre-tax net income, 1,000,000 Class A warrants
and other contingent warrants (which were never earned). In addition, OWN agreed
to loan the Company up to $50,000 to cover operational cash flow needs.

In October 1999, the Company amended the Agreement. As part of the amendment,
OWN agreed to increase its loan available to the Company to $100,000 and to
purchase 127,844 shares common stock for $66,500. The Company opted thereafter
to cancel its debt to OWN rather than collect the $66,500 from OWN (see Note 7).
In consideration for these transactions, the Company agreed to lower the
exercise price of 888,666 of the Class A Warrants from $0.56 to $0.15 per share
(see Note 7).

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

                                       50



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 9 - MANAGEMENT AGREEMENT, CONTINUED
----------------------------------------

On May 1, 2000, the Company terminated its Agreement with OWN. In connection
with the termination, OWN agreed to exercise 958,521 shares of Class A Warrants
for $175,000 in cash and $51,569 in expense reimbursements and cancel the
remaining 41,479 warrants. OWN also agreed to acquire co-ownership of the
Company's pre-termination customer list for a guaranteed royalty of $40,000,
which has been recorded as other income.

On September 22, 2000, the Company entered into a management agreement with
Beauty Resource, Inc. ("BR"). BR was engaged by the Company to provide and
perform for the Company all management services reasonably necessary for the
proper and efficient operation of the Company for a five-year period. BR
personnel assigned to manage the day-to-day activities of the Company included
individuals designated as the Company's CEO and COO.

BR was entitled to a reimbursement, which was to be a payment of $15,000 per
month. In addition, commencing April 1, 2001 and continuing on the first day of
each quarter thereafter during the remaining term of the agreement, the Company
was to pay BR a fee in the amount of 0.5% of the sales (net of returns and
allowances) of the Company for the preceding quarter.

Upon signing of the agreement, the Company awarded the new CEO options to
purchase 100,000 shares of the Company common stock at an exercise price of
$0.25 per share, to be exercised on or before September 30, 2003.

In addition, as defined in the agreement, BR was entitled to performance options
up to 2,000,000 shares through March 31, 2006 at $0.25 per share based on
achieving certain sales targets, 3,000,000 shares through March 31, 2006 at
$0.25 per share based on achieving certain pre-tax net income levels, and cash
bonuses of up to 5% of pre-tax net income based on achieving certain ratios of
pre-tax net income to sales. As of September 30, 2000 and 2001, no such options
or cash awards had been earned by BR.

During the year ended September 30, 2001, the Company terminated the agreement
with BR and assumed all functions and duties of BR as set forth in the
agreement. For the year ended September 30, 2001, the Company recorded $302,500
(including 337,500 shares of common stock granted to BR, valued at $0.60 per
share - see Note 7) as compensation for services rendered by BR.

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

                                       51



<PAGE>

                                                    BIOZHEM COSMECEUTICALS, INC.

                                                   NOTES TO FINANCIAL STATEMENTS

                                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

================================================================================

NOTE 10 - EARNINGS PER SHARE
----------------------------

The following is a reconciliation of the numerators and denominators of the
basic and diluted loss per share computations for the years ended September 30,
2001 and 2000:

<TABLE>
<CAPTION>
                                                               2001               2000
                                                          --------------     --------------
<S>                                                       <C>                <C>
Numerator for basic and diluted loss per share:
    Net loss charged to common stockholders               $  (3,423,690)     $  (1,010,356)

Denominator for basic and diluted loss per share:
    Weighted average shares                                  15,779,337          8,711,648
                                                          --------------     --------------

      Basic and diluted loss per share                    $       (0.22)     $       (0.12)
                                                          ==============     ==============
</TABLE>

NOTE 11 - SUBSEQUENT EVENTS
---------------------------

In November 2001, the Company launched its television commercial recognizing
expense of $369,967 relating to capitalized television production costs recorded
at September 30, 2001 (see Note 2). Management has indicated that it is too
early to tell the impact of the new television commercial on future operations
of the Company.

Subsequent to September 30, 2001, the Company issued the 400,000 shares, which
were previously recorded as committed shares. As the cash receipt related to the
issuance of these shares was recorded in fiscal 2001, these issuances had no net
impact on operations or equity. In addition, the Company sold 200,000 shares of
common stock for $50,000 in cash pursuant to a private placement memorandum.

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

                                       52



<PAGE>
<TABLE>
                                    BIOZHEM COSMECEUTICALS, INC.
                                      CONDENSED BALANCE SHEETS

                                               ASSETS
<CAPTION>

                                                                       March 31         September 30
                                                                         2002               2001
                                                                     -------------      -------------
Current Assets:                                                       (unaudited)

<S>                                                                  <C>                <C>
Cash                                                                 $     74,792       $    556,179
Inventory                                                                 424,097             57,572
Capitalized television production costs                                         -            369,967
Other current assets                                                       65,594            124,565
                                                                     -------------      -------------
Total current assets                                                      564,483          1,108,283

Property and equipment, net                                                34,767             39,613

Other assets                                                               18,920             26,538
                                                                     -------------      -------------
Total assets                                                         $    618,170       $  1,174,434
                                                                     =============      =============

                           LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Accounts payable and accrued liabilities                             $    879,261       $    344,566
Accrued royalties payable                                                 526,104                  -
Accrued sales return expense                                              154,880
Notes payable                                                             513,862             10,161
                                                                     -------------      -------------
         Total current liabilities                                      2,074,107            354,727

Stockholders' Equity (Deficit):
Preferred stock, $1.00 par value; 10,000,000 shares
   authorized; no shares issued and outstanding                                 -                  -
Common stock, $.001 par value; 100,000,000 shares
   authorized;  24,337,741 and 22,967,741 shares
   issued and outstanding at March 31, 2002 and
   September 30, 2001, respectively                                        24,338             22,968
Common stock subscribed, $.001 par value;
   0 and 400,000 shares committed at
   March 31, 2002 and
   September 30, 2001, respectively                                             -                400

Additional paid-in capital                                             10,729,311         10,487,781
Accumulated deficit                                                   (12,209,586)        (9,691,442)
                                                                     -------------      -------------
Total stockholders' equity (deficit)                                   (1,455,937)           819,707
                                                                     -------------      -------------

Total liabilities and stockholders' equity                           $    618,170       $  1,174,434
                                                                     =============      =============
</TABLE>

                             The accompanying notes are an integral part
                               of the condensed financial statements

                                                 53



<PAGE>
<TABLE>
                               BIOZHEM COSMECEUITCALS, INC.
                            CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>

                                                              Three             Three
                                                              Months            Months
                                                              Ended             Ended
                                                             March 31           March 31
                                                               2002               2001
                                                          -------------      -------------
                                                           (unaudited)        (unaudited)
<S>                                                       <C>                <C>
Net sales                                                 $  1,576,854       $    181,177
Cost of sales                                                  871,368             70,063
                                                          -------------      -------------

         Gross margin                                          705,486            111,114
                                                          -------------      -------------

Expenses:
Selling, general and administrative                            526,502            505,419
Advertising                                                  1,824,595              1,936
Depreciation and amortization                                    3,298             14,169
                                                          -------------      -------------
             Total expenses                                  2,354,395            521,524
                                                          -------------      -------------

             Operating income (loss)                        (1,648,909)          (410,410)

Interest expense                                                 9,824             28,024

Other income                                                         -              3,053
                                                          -------------      -------------

             Net income (loss)                            $ (1,658,733)      $   (435,381)
                                                          =============      =============

Net income (loss) per common share                        $       (.07)      $       (.03)
                                                          =============      =============

Weighted average number of common shares outstanding        23,810,213         13,263,714
                                                          =============      =============
</TABLE>

                       The accompanying notes are an integral part
                          of the condensed financial statements.

                                            54



<PAGE>

                          BIOZHEM COSMECEUTICALS, INC.
                       CONDENSED STATEMENTS OF OPERATIONS

                                                     Six                Six
                                                    Months             Months
                                                    Ended              Ended
                                                   March 31,          March 31,
                                                     2002               2001
                                                -------------      -------------
                                                (unaudited)         (unaudited)

Net sales                                       $  1,807,523       $    367,698
Cost of sales                                        914,389             96,889
                                                -------------      -------------

        Gross margin                                 893,134            270,809

Expenses:
Selling, general and administrative                  947,180            984,208
Advertising                                        2,447,678             13,506
Depreciation and amortization                          6,596             29,049
                                                -------------      -------------
           Total expenses                          3,401,454          1,026,763
                                                -------------      -------------
           Operating income (loss)                (2,508,320)          (755,954)

Interest expense                                       9,824             29,347

Other income                                               -              9,714
                                                -------------      -------------

Net income (loss)                               $ (2,518,144)      $   (775,587)
                                                =============      =============

Net income (loss) per common share              $       (.11)      $       (.06)
                                                =============      =============

Weighted average number of common shares
outstanding                                       23,253,818         12,576,497
                                                =============      =============

                  The accompanying notes are an integral part
                     of the condensed financial statements.

                                       55



<PAGE>

                          BIOZHEM COSMECEUTICALS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS

                                                      Six               Six
                                                     Months            Months
                                                     Ended             Ended
                                                    March 31          March 31
                                                      2002              2001
                                                  ------------      ------------
                                                   (unaudited)       (unaudited)

Net cash (used in) operating activities           $(1,226,238)      $  (902,285)

Net cash (used in) investing activities                (1,750)          (19,536)

Net cash provided by financing activities             746,601           920,563
                                                  ------------      ------------

Net (decrease) increase in cash                      (481,387)           (1,258)

Cash at beginning of period                           556,179            61,215
                                                  ------------      ------------

Cash at end of period                             $    74,792       $    59,957
                                                  ============      ============

                  The accompanying notes are an integral part
                     of the condensed financial statements.

                                       56



<PAGE>

                          BIOZHEM COSMECEUTICALS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - INTERIM FINANCIAL STATEMENTS.
--------------------------------------

The accompanying condensed financial statements have been prepared in accordance
with the instructions to quarterly reports on Form 10-QSB. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
changes in cash flows at March 31, 2002 and for all periods presented have been
made. Certain information and foot note data necessary for fair presentation of
financial position and results of operations in conformity with generally
accepted accounting principles have been condensed or omitted. It is therefore
suggested that these statements be read in conjunction with the summary of
significant accounting policies and notes to financial statements included in
the Company's annual Form 10-KSB. The results of operations for the periods
ended March 31, 2002 are not necessarily indicative of operating results for the
full year.

NOTE 2 - ISSUANCE OF COMMON STOCK
---------------------------------

During the three-month period ended December 31, 2001, the Company issued
400,000 shares of common stock to third parties for transactions that were
recorded in the Company's September 30, 2001 financial statements. The value of
such shares was recorded previously as shares subscribed; therefore, the
issuance had no net impact on operations or equity.

Pursuant to a private placement memorandum dated September 3, 2001, the Company
issued 200,000 shares of "restricted" common stock valued at $0.25 per share to
an outside investor for total proceeds to the Company of $45,000 (net of
issuance costs of $5,000) during the six-month period ended March 31, 2002.

Pursuant to a private placement memorandum dated January 2, 2002, the Company
issued 770,000 shares of "restricted" common stock valued at $0.25 per share to
outside investors for total proceeds to the Company of $192,500 during the
six-month period ended March 31, 2002.

NOTE 3 - STOCK OPTIONS AND WARRANTS
-----------------------------------

In January 2002, the Company issued 770,000 warrants with an exercise price of
$0.25 per share pursuant to the private placement dated January 2, 2002.

During the six-month period ended March 31, 2002, there was no other stock
option or warrant activity.

NOTE 4 - CONVERTIBLE NOTES
--------------------------

During the six-month period ended March 31, 2002, the Company entered into notes
payable with an employee-shareholder for $500,000, maturing through April 2,
2002. Interest is calculated at 5 percent due upon the maturity date of the
notes. If any payment is not paid when due, the remaining unpaid principal
balance and any accrued interest shall become due immediately and can be
converted to common stock at a conversion price of $0.25 per share at the option
of the lender. These notes were verbally extended to June 15, 2002.

                                       57



<PAGE>

NOTE 5 - LOSS PER SHARE
-----------------------

Net loss per share is based on the weighted average number of common shares
outstanding and dilutive common stock equivalents during the periods presented.
Options and warrants to purchase 1,730,540 shares of common stock were excluded
from the computation of the diluted loss per share, as they would have been
anti-dilutive.

NOTE 6 - CAPITALIZED TELEVISION PRODUCTION COSTS
------------------------------------------------

In March 2001, the Company entered into an infomercial consultation agreement
with a third party to produce a television commercial designed to sell certain
skin care products by means of direct response by the customer. As of September
30, 2001, production costs for the television commercial totaled $369,967 and
were recorded as other assets. In accordance with Statement of Position 93-7,
"Reporting on Advertising Costs", such costs are capitalized and expensed in
total the first time the commercial is aired, which occurred in November 2001.
Therefore, such amount was expensed in the six-month period ended March 31,
2002.

NOTE 7 - GOING CONCERN
----------------------

The accompanying condensed financial statements have been prepared assuming the
Company will continue as a going concern. The Company has recurring losses from
operations and limited operating revenues for the six-month period ended March
31, 2002 and negative working capital as of March 31, 2002. These factors (among
others) raise substantial doubt about the Company's ability to continue as a
going concern. The ability of the Company to operate as a going concern is
dependent upon its ability to obtain additional debt and/or equity and to
achieve its 2002 operating plan, which contemplates significantly improved
operating results and cash flow. There can be no assurances that the Company
will be successful in these regards.

The financial statements do not include any adjustments related to the
recoverability and classification of assets carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.

NOTE 8 - SEGMENT REPORTING
--------------------------

The Company is currently operating under one business segment. Thus, no
reporting is required.

NOTE 9 - LICENSE & SUPPLY AGREEMENT
-----------------------------------

On September 25, 2000, the Company entered into a License & Supply Agreement
with Advanced Tissue Sciences, Inc., a Delaware corporation ("ATS"), which
grants the Company the exclusive rights to become the sole, worldwide direct
response marketing partner for an ATS nutrient solution, NouriCel (TM), for
Biozhem branded skin care products. On January 1, 2002, due to changes in
development timelines, the Company and ATS amended the Agreement to change the
first contract year to the period from January 1, 2002 until December 31, 2002,
to delay the payment of the first milestone payment of $1,000,000 to November
30, 2002 and to increase the annual minimum exclusivity threshold royalty
payment in contract year one from $1,500,000 to $2,000,000. Additional milestone
payments and increased minimum royalty payments in future years are outlined in
the agreement. During the six-month period ended March 31, 2002, the Company
recorded $500,000 in royalty expense pursuant to the Agreement. As of March 31,
2002, $526,104 was accrued.

                                       58



<PAGE>

NOTE 10 - SUBSEQUENT EVENTS
---------------------------

In April 2002, the Company issued 666,000 shares of common stock for cash
totaling $166,500 pursuant to a private placement memorandum dated January 2,
2002.

On April 10, 2002, the Company entered into a Management Service Agreement
("Agreement") with Thane International Inc. ("Thane"), which grants Thane the
exclusive rights to manage directly, or through the use of agents or
sub-contractors, all aspects of the worldwide marketing, sale and distribution
of the Company's RevitaCel(TM) System, in exchange for a management fee. The
Agreement is for one year with automatic one year renewals based upon minimum
performance criteria by Thane. In addition, Thane will finance certain of the
Company's marketing, sales and distribution costs through advance payments as
described in the Agreement.

                                      59



<PAGE>

                                 PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Article 2.02-1 of the Texas Business Corporation Act contains detailed
provisions for indemnification of directors and officers of Texas corporations
against any judgments, penalties, fines, settlements and reasonable expenses
which may be incurred in connection with any threatened, pending or completed
proceeding in which the director or officer is a named defendant or respondent.
The Company's Bylaws, as amended and restated, require the Company to indemnify
and advance expenses to the Company's directors and officers to the maximum
extent allowed by the Texas Business Corporation Act and expressly authorize the
Company to purchase directors and officers liability insurance.

         The Articles of Incorporation of the Company, as amended and restated
(the "Articles"), expressly provide that no director shall be personally liable
to the Company or its shareholders for monetary damage for an act or omission in
the director's capacity as a director, except to the extent otherwise expressly
provided for by a statute of the State of Texas. The Articles obligate the
Company to indemnify its officers and directors against any and all judgments,
penalties (including excise and similar taxes), fines, settlements and
reasonable expenses incurred by that person to the full extent permitted under
Texas law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. *

SEC Registration Fee                                 $ 2,185.32
Accounting Fees and Expenses                         $ 5,500.00
Legal Fees and Expenses                              $20,000.00
Miscellaneous                                        $ 3,000.00
                                                     ----------
Total                                                $30,685.32
------------------                                   ----------

         The foregoing items, except for the registration fee to the Securities
and Exchange Commission, are estimated. All expenses of the offering, other than
selling discounts, commissions and legal fees and expenses incurred separately
by the Selling Shareholders, will be borne by the Company.

ITEM 26. RECENT SALES OF REGISTERED SECURITIES

         The following sets forth information relating to all securities of the
Company sold during the past three fiscal years without registration under the
Securities Act of 1933.

FY 1999

          On February 15, 1999, the Company issued 35,000 shares as the $15,750
down payment for the purchase of the Kentucky franchise.

         On June 29, 1999, the Company issued 10,000 shares as a bonus to an
employee. On July 15, 1999, the Company issued a total of 528,750 shares of
common stock as follows: 442,540 shares of common stock were issued to
shareholders to convert $163,183 of debt to equity; 86,210 shares of common
stock were issued in lieu of cash payments for consulting fees totaling $28,566;
32,095 shares of common stock were issued in lieu of cash payments for unpaid
directors' fees for a total of $11,875. During the year ended September 30,
1999, the Company issued a total of 272,629 shares of common stock in lieu of
cash payments for public relations for a total of $124,675. The shares were
issued as follows: 66,667 shares of common stock were issued on November 16,
1998; 87,671 shares of common stock were issued on January 14, 1999; 63,291
shares of common stock were issued on February 19, 1999; 35,000 shares of common
stock were issued on March 19, 1999;and 20,000 shares of common stock were
issued on July 1, 1999.

                                       60



<PAGE>

          During 1999, the Company sold 1,181,371 shares of its common stock.
Proceeds to the Company were $370,950, net of offering costs of $77,550.

          In the year ended September 30, 1999, the Company committed 14,911
shares of common stock for $5,517 in debt cancellation and 103,135 shares of
common stock for $27,280 in consulting fees. The 103,135 shares for consulting
fees were then issued in fiscal 2000. The 14,911 shares of common stock for debt
cancellation were issued in fiscal 2001.

FY 2000

          In October 1999, the Company issued 127,844 shares of stock for the
conversion of $66,500 in debt.

          On May 1, 2000, the Company issued shares to exercise 958,521 Class A
Warrants for $175,000 in cash and in lieu of $51,569 owed for expenses.

          On May 4, 2000, the Company sold 400,000 shares of common stock to a
third party for cash of $54,000. In conjunction with this sale, warrants to
purchase 400,000 shares of the Company's common stock were granted to this third
party as an incentive to purchase the stock.

          In September 2000, the Company committed 36,000 shares in payment of
consulting fees of $9,000 and 45,000 shares for payment of directors' fees of
$11,250. These shares were then issued in fiscal 2001.

FY 2001

          The Company issued 534,500 shares of common stock for services valued
at $243,393 during the year ended September 30, 2001.

          During the year ended September 30, 2001, the Company defaulted on
$150,000 of stockholder notes and accrued interest payable. According to the
note agreement, the holder of the note had the right upon default to convert all
unpaid principal and accrued interest into common stock of the Company at a
conversion price of $0.125 per share. As a result, the Company issued 1,200,000
shares of common stock at $0.125 per share.

          In addition, during the year ended September 30, 2001, the Company
issued 51,912 shares of common stock to convert another note payable totaling
$12,978 at $0.25 per share. There was no beneficial conversion associated with
this note payable.

          The Company issued 11,510,370 shares (including 189,370 shares issued
to finders) and committed to issue an additional 400,000 shares for cash
proceeds to the Company of $2,699,350 (net of issuance costs of $297,271) during
the year ended September 30, 2001. The 400,000 committed shares were then issued
in fiscal 2002.

FY 2002

         The Company issued 1,836,000 shares for cash proceeds to the Company of
$404,000 (net of issuance costs of $5,000) during the eight months ended May 31,
2002. In conjunction with these sales, warrants to purchase 1,436,000 shares of
the Company's common stock were granted to these investors as an incentive to
purchase the stock. Therefore, the granting of the warrants had no net impact on
operations or equity.

         In April 2002, the Company issued 600,000 non-Plan options at $.25 per
share to an employee.

         In May 2002, $75,000 of notes payable was converted into 600,000 shares
of stock.

                                       61



<PAGE>

         All of the foregoing shares issued in the last three fiscal years were
issued in reliance upon the exemption from registration pursuant to Section 4(2)
of the Securities Act of 1933 and or Regulation D promulgated under the
Securities Act of 1933.

ITEM 27. EXHIBITS.

        A list of exhibits included as part of this Registration Statement is
set forth in the Exhibit Index which immediately precedes such exhibits and is
hereby incorporated by reference herein.

ITEM 28. UNDERTAKINGS.

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

         (b)  The undersigned Registrant hereby undertakes:

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

         (i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

         (ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-effective)
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
and

         (iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that paragraphs (b)(1)(i) and (b)(1)(ii) above do not apply if the
Registration is on Form S-3 or Form S-8 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.

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

                  (3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

                                       62



<PAGE>

         In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, on this 25th day of
July, 2002.

                                           BIOZHEM COSMECEUTICALS, INC.

                                              /s/ James Chapin
                                             ----------------------
                                             Chairman of the Board

         In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed below by the following persons in the
capacities indicated.

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

/s/ James Chapin              Chairman of the Board                July 25, 2002
-----------------------       and Chief Executive Officer
JAMES CHAPIN                  (Principal executive officer and
                              Principal financial officer)

/s/ Stan R Wylie              Director                             July 25, 2002
-----------------------
STAN R WYLIE

/s/ Lawrence Rheins           Director                             July 25, 2002
-----------------------
LAWRENCE RHEINS

/s/ David Lewis               Director                             July 25, 2002
-----------------------
DAVID LEWIS

/s/ Dean Hastas               Director                             July 25, 2002
-----------------------
DEAN HASTAS

/s/ Craig Sobrero             Controller                           July 25, 2002
-----------------------       (Principal accounting officer)
CRAIG SOBRERO

                                       63



<PAGE>

EXHIBIT INDEX

       Exhibit No.  Description
       ------------------------

3.1      Articles of Incorporation of Entourage International, Inc. and
         amendments thereto (incorporated by reference to Exhibit No. 3.1 to
         Amendment No l1 to Registrant's Registration Statement of Form S-18,
         filed January 16, 1986, File No. 2-99726-FW).

3.2      Bylaws of Entourage International, Inc. (incorporated by reference to
         Exhibit No. 3.2 of Registrant's Registration Statement on Form S- 18,
         filed August 16, 1985, File No. 2-99726-FW).

3.3      Amendments to Articles of Incorporation (incorporated by
         reference to Form 10-KSB for the year ended September 30, 1998 and
         schedule 14A filed August 18, 1998).

4.1      Specimen Common Stock Certificate of Entourage International, Inc.
         (incorporated by reference to Exhibit No. 4.01 of to Registrant's
         Annual Report on form 10-K for the year ended September 30, 1989, File
         No. 1-9206).

5.1      Opinion of Danzig Kaye Cooper & Fiore, LLP filed with original SB-2
         Registration on November 26, 2001

10.1     Amended Qualified Incentive Stock Option Plan for Entourage
         International, Inc. (incorporated by reference to Exhibit No. 10.26 of
         the Registrant's Annual Report on Form 10-K for the year ended
         September030, 1992, file No. 1-9206).

10.2     Amended Qualified Stock Option Plan for Entourage International, Inc.
         (incorporated by reference to Exhibit No. 10.26 of the registrant's
         Annual report of Form 10-K for the year ended September 1992, file No.
         1-9206.

10.3     Amended Non-qualified Stock Option Plan for Entourage International,
         Inc., (incorporated by reference to Exhibit No. 10.26 of the
         registrant's Annual report of Form 10-K for the year ended September
         1992, file No. 1-9206).

10.4     Master Transaction Agreement (incorporated by reference to Form 8-K
         filed on January 4, 1996).

10.5     1998 Stock Option Plan for Biozhem Cosmeceuticals, Inc. (incorporated
         by reference to Form 10-KSB for the year ended September 30, 1998, file
         #01-14725).

10.6     Management Agreement between One World Networks Integrated
         Technologies, Inc. and Biozhem Cosmeceuticals, Inc. dated July 14, 1999

10.7     Multi-Party Amendment No. 1 to Management Agreement dated July 14,
         1999, dated October 13, 1999

10.8     Termination Agreement dated May 1, 2000 terminating Management
         Agreement dated July 14, 1999

10.9     License and Supply Agreement dated September 22, 2000 between Advanced
         Tissue Sciences, Inc. and Biozhem Cosmeceuticals, Inc.

10.10    Management Agreement dated September 22, 2000 between Beauty Resource,
         Inc. and Biozhem Cosmeceuticals, Inc.

10.11    Settlement Agreement and Mutual Release of Claims dated August 13, 2001
         between Beauty Resource, Inc. and Biozhem Cosmeceuticals, Inc

10.12    First Amendment to License and Supply Agreement between Advanced Tissue
         Sciences, Inc. and Biozhem Cosmeceuticals, Inc. dated January 1, 2002

10.13    Management Service Agreement dated April 10, 2002, between Thane
         International, Inc., and Biozhem Cosmeceuticals, Inc.

23.1     Consent of Danzig Kaye Cooper & Fiore, LLP (included in Exhibit 5.1
         filed with original SB-2 Registration on November 26, 2002).

23.2     Consent of Corbin & Wertz

                                       66



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>3
<FILENAME>biozhem_ex10-6.txt
<TEXT>
<PAGE>
EXHIBIT 10.6

                              MANAGEMENT AGREEMENT

         This Agreement (the "Agreement") is effective as of July 14, 1999 (the
"Effective Date") by and among ONE WORLD NETWORKS INTEGRATED TECHNOLOGIES, INC.,
a Nevada corporation (or any affiliate of thereof) (collectively ("OWN"), and
BIOZHEM COSMECEUTICALS, INC. ("COMPANY") a Texas corporation, and made with
reference to the following facts:

         A. Company owns and operates a business developing, producing and
exploiting cosmetics and related products (the "Business").

         B. OWN has special expertise and experience in the operation,
management and marketing of companies engaged in businesses of the type operated
by Company.

         C. Company desires to engage OWN to manage all aspects of the Business
and OWN has agreed to assume management responsibilities for the operation of
the Company for a period of five (5) years (the "Term") subject to the terms and
conditions set forth below.

         NOW, THEREFORE, OWN and Company agree as follows:

         1. DEFINITIONS. The following terms when used in this Agreement shall
have the meaning ascribed to them below:

         "Books and Records" means Company's books of account, accounting and
financial records and all other records relating to and used in the conduct of
Company's Business or used in the preparation of reports and financial
statements of the Company.

         "Capital Costs" shall mean all direct expenses associated with the
production, design and marketing of any product.

         "Closing Date" shall mean the date all of the conditions set forth
herein have been satisfied.

         "Company" shall mean BIOZHEM COSMECEUTICALS, INC., a Texas corporation.

         "GAAP" means at any particular time generally accepted accounting
principles as in effect at such time. Any accounting term used in this Agreement
shall have the meaning customarily given in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP as
consistently applied and using the same method of valuation as used in the
preparation of Company's financial statements.

                                        1



<PAGE>

         "Initial Sales Threshold" shall mean total sales for the Company of at
least $400,000 for the period beginning October 1, 1999 through December 31,
1999.

         "Management Fee" shall mean a fee of 40% of Pre-Tax Net Income, if any,
for each year during the Term.

         "Manager's Reimbursement" shall mean the sum of Manager's Reimbursable
Overhead, Manager's Reimbursable Direct Expenses, Product Development Costs, and
Capital Costs.

         "Manager's Reimbursable Overhead" shall mean the sum of all directly
identifiable expenses incurred by OWN in connection with performing its
management duties under this Agreement including, without limitation, brand
managers (to the extent not included in Manager's Reimbursable Direct Expenses),
and allocable overhead for services such as legal and accounting expenses. These
costs shall also include 50% of the legal costs incurred by both parties for
this transaction. Notwithstanding the foregoing, Manager's Reimbursable Overhead
shall not include any expenses associated with the services' of Own's senior
executives, or any rent or utilities.

         "Manager's Reimbursable Direct Expenses". shall include all direct
expenses incurred by OWN in connection with performing its management duties
under this Agreement including, without limitation, costs of goods acquired or
produced, payments to third party vendors, marketing costs, all labor costs
associated with any personnel employed by OWN and dedicated to the Business of
Company or allocated to specific activities involving OWN's management of the
Company, the cost and maintenance of any equipment, supplies and software
dedicated to the services rendered by OWN hereunder.

         "OWN" shall mean ONE WORLD NETWORKS INTEGRATED TECHNOLOGIES, INC., a
Nevada corporation.

         "Product Development Cost" shall mean any marketing and advertising
costs incurred by OWN or for which OWN is responsible relating to the Company
and its business.

         "Pre-Tax Net Income" shall mean net income determined in accordance
with GAAP without any deduction or provision for the payment of income taxes but
including the deduction of Manager's Reimbursement.

         "Retained Rights" shall mean the rights customarily retained by the
Board of Directors of publicly held companies, including but not limited to the
right to sell, distribute, redeem or acquire additional securities of the
Company, the right to effectuate all filings of the Company required
documentation with the Securities and Exchange Commission, the right to approve
an acquisition of a business, the right to effectuate a sale of all or
substantially all of the Company (subject to the provisions contained herein),
the right to approve contracts for executives, and right to borrow and repay any
indebtedness or guarantee any indebtedness.

                                       2


<PAGE>

         "Term" shall mean, subject to the provisions of Section 14 hereof, a
period beginning as of the Closing Date and terminating five (5) years hence.

         2. GENERAL MANAGEMENT.

         OWN is hereby engaged by Company to exclusively provide and perform for
and on behalf of Company all management services reasonably necessary for the
proper and efficient operation of Company and the Business during the Term of
this Agreement. Such services shall include, but shall not be limited to, those
items set forth in this Section 2 and in Sections 3, 4, 5 and 6 of this
Agreement. OWN is exclusively authorized to provide and perform for and on
behalf of Company all services required of OWN pursuant to the terms of this
Agreement in such a manner as OWN deems reasonable and appropriate in order to
meet the day-to-day requirements of the Company and the Business. In performing
such services for Company, OWN may advance or pay on Company's behalf all
necessary or appropriate sums pursuant to this Agreement, including but not
limited to Manager's Reimbursement and the Management Fee. OWN may subcontract
with other persons to perform any part of the services required of OWN
hereunder. OWN hereby accepts such engagement and agrees to furnish to Company
all such management services. Company acknowledges that OWN shall only be
required to spend the hours necessary or appropriate to perform its duties
hereunder and shall not be prohibited hereby from undertaking other activities,
whether in Company's service area or otherwise. Subject to the Retained Rights
and the fiduciary duties of the Board of Directors and officers of the Company,
the Company will cooperate with OWN's business arrangements and will not
interfere with OWN's efficient management of the day-to-day operations of
Company.

         3. BOOKKEEPING AND ACCOUNTS.

         OWN (or any outside entity which OWN shall supervise and direct the
performance of) shall supervise and direct the performance of the bookkeeping
and accounting services for and on behalf of Company, including but not limited
to, maintenance, custody and supervision of all business records, papers,
documents, ledgers, journals and reports, prepare or cause to be prepared
federal and state tax filings and all bills and statements for Company;
provided, however, it is understood that all such business records, papers and
documents are the sole property of Company, and shall be available for
inspection by Company at all times. Upon termination of this Agreement all such
business records, papers and documents shall be delivered to a party to be
jointly designated in writing by OWN and Company and while in the custody of
such third party OWN and Company shall have access thereto for inspection and
other business purposes. If OWN and Company do not designate a third party
custodian by the effective date of termination of this Agreement, OWN will serve
as such custodian. Company shall provide OWN with a complete copy of all such
documents, records, and papers at Company's expense upon termination of this
Agreement. Notwithstanding the foregoing, the officers of the Company, reporting
to the Board of Directors, shall be responsible for all financial reporting,
consistent with the Company's obligations as a publicly held Company.

                                       3


<PAGE>

         4. BILLING AND COLLECTION; ACCOUNTS.

         OWN (or any outside entity which OWN reasonably believes is necessary),
shall supervise and direct the performance of, on behalf of and for Company, the
billing and collecting of all amounts due to the Company. It is expressly
understood that the extent to which OWN will endeavor to collect such charges,
the methods of collecting, the settling of disputes with respect to charges and
the writing off of charges that may be or appear to be uncollectible shall at
all times be within the sole discretion of OWN, and that OWN does not guarantee
the extent to which any charges billed will be collected. Company or its duly
authorized agent shall have the right at all reasonable times and upon the
giving of reasonable notice to examine, inspect and copy the records of OWN
pertaining to such fees, charges, billings and collections.

         5. MARKETING AND NEW PRODUCTS.

         (a) OWN shall be in charge of all marketing and distribution activities
on behalf of the Company. OWN shall be responsible for all sales activities
including determining which products to market, selling prices, target
customers, selecting distribution methods and procedures, and advertising
activities.

         (b) The parties further acknowledge and agree that OWN shall have the
right to select and introduce any new products for inclusion under the Company's
label, and Company agrees to indemnify and hold OWN harmless relative to any
products OWN designates for inclusion under the Company's label or does not so
include. The Company further agrees that OWN shall be free to compete against
the Company, and nothing herein shall be construed so as to create an
affirmative duty or obligation on the part of OWN to supply the Company with a
new product or products, or any other business or line of business.

         (c) In the event OWN identifies new products to b distributed by,
through, or on behalf of Company, OWN shall be entitled to an additional fee
equal to twenty five percent of the actual cost of the products in addition to
any other fees payable to OWN hereunder. Any new products introduced to Company
by OWN during the term of the Agreement shall revert to OWN after the Term;
provided, however, that after the Term, such products shall be deemed licensed
to Company on a non-exclusive basis on terms which approximate the then existing
economic relationship. The duration of such license will be equal to the terms
pursuant to which OWN has acquired the underlying rights to such products or
product.

         (d) Company acknowledges that OWN has made no representations, either
express or implied, as to the relative success of any of OWN's activities
hereunder.

         6. ADMINISTRATIVE ACTIVITIES.

         In addition to the activities described in Section 2,3,4 and 5 above,
OWN shall be responsible for all other administrative functions of the Company
including all personnel matters,

                                       4


<PAGE>

compensation arrangements with employees of the Company, selecting outside
advisors and consultants to the Company, choosing vendors and suppliers,
selecting and negotiating banking relationships and all other normal and
customary activities associated with operating a business. Notwithstanding the
foregoing, OWN shall not take any action which would impair the collection of
obligations owing to it under the Loan (as defined below), or undertake any
other activity which would facilitate a default under the Note.

         7. OWN'S COMPENSATION.

         (a) MANAGER'S REIMBURSEMENT. OWN shall be entitled to withdraw for its
own benefit from the Company bank accounts (the "Company Accounts") the
Manager's Reimbursements. Manager's Reimbursement shall be calculated and paid
on a monthly basis.

         (b) MANAGEMENT FEE. For its services to Company and for undertaking all
of its obligations hereunder to Company, OWN shall be paid on a monthly basis an
amount equal to the Management Fee, which may be paid on an estimated basis. The
Management Fee shall be calculated on a monthly basis at the end of each such
period during the Term; provided, however, at the end of each fiscal quarter
during the Term, the Management Fee due for the prior three (3) month period
shall be calculated and the amount due OWN shall be reconciled with the
estimated payments made during the prior three (3) month period. If the
estimated amounts previously paid to OWN exceed the Management Fee for that
period, OWN must repay the overpaid amount within the next thirty (30) day
period. If the Management Fee for such period exceeds the estimated amounts.
previously paid to OWN, OWN shall be entitled to immediately pay to itself from
the Company Account the difference.

         (c) ADDITIONAL COMPENSATION WARRANTS. On the Closing Date and
continuing thereafter, Company will issue to OWN warrants (substantially in the
form attached hereto as Exhibit A), which warrants will contain cashless
exercise provisions and protection against stock split/reverses and will have a
term of five years from their respective date of issuance. The Warrants will be
issued as follows:

                  (i) 1,000,000 Class A Warrants to purchase one share of
Company's common stock at an exercise price of the lower of $.70 or the average
of the closing price as quoted on the principal exchange for which Company's
shares trade for the five (5) day trading period immediately preceding the date
of the execution of this Agreement;

                  (ii) Commencing on the first day of the first calendar month
following the Closing Date, Company shall calculate on a monthly basis, Pre-Tax
Net Income. For each $400,000 in cumulative Pre-Tax Net Income that is generated
by Company during the Term, OWN will receive 500,000 Class B Warrants to
purchase one share of Company's common stock at an exercise price of $1.00 per
share, up to a maximum of 22,000,000 Class B Warrants;

                                       5


<PAGE>

                  (iii) 1,000,000 Class C Warrants to purchase one share of
Company's common stock at an exercise price of $1.00 upon the completion during
the Term of a strategic alliance, endorsement deal or product acquisition, the
result of which, in combination with other activities of Company, increase the
market capitalization of Company by at least $10,000,000, such determination to
be based upon a six (6) month average before and after said transaction of the
daily closing prices as quoted on the principal exchange for which Company's
shares trade;

                  (iv) 1,000,000 Class D Warrants to purchase one share of
Company's common stock at an exercise price of $1.00 upon the attainment during
the Term of the first two consecutive quarters of Pre-Tax Net Income of more
than $60,000 per quarter; and

                  (v) 1,000,000 Class E Warrants to purchase one share of
Company's common stock at an exercise price of $1.50 per share if Company,
during any consecutive six (6) month period (or less) attains gross revenues of
at least $8,000,000, provided that no Class E Warrants shall be issued if
Company does not have after tax net income from operations during such period;
and provided further, a maximum of 3,000,000 Class E Warrants its shall be
issued under this subparagraph (v).

         (d) With respect to the Warrants to be issued as set forth in(c) above,
the parties further acknowledge as follows:

                  (i) The Board of Directors. has approved the issuance thereof
notwithstanding the potentially dilutive nature of the Warrants and the issuance
of the Shares of Common Stock underlying the Warrants; and

                  (ii) OWN shall be entitled, at its expense but with the
Company's reasonable cooperation to piggyback and demand registration rights as
set forth on Exhibit B.

                  (iii) Any dispute regarding the issuance of the Warrants shall
be subject to expedited arbitration under the rules set forth on Exhibit C.

                  (iv) The Company will instruct its transfer agent to reserve
for issuance 28,000,000 shares of Common Stock with respect to the Warrants.

         8. LOANS AND EQUITY PROVIDED BY OWN.

         Upon the closing of this transaction, OWN shall loan to Company, to
cover operational cash flow problems, the sum of $50,000 ("Loan") for a one year
period in accordance with the terms of the promissory note and security
agreement attached hereto as Exhibit D and E, respectively. In addition, OWN
shall assist the Company and its advisors, and on a best effort basis and on
terms to be mutually agreed upon, in arranging for $200,000 in new equity. To
the extent that the Loan is not repaid at Maturity it may be repaid with common
stock of Company valued at $.37 per share, with piggyback registration rights.

                                       6


<PAGE>

         9. REPRESENTATIONS AND WARRANTIES OF COMPANY.

         Company makes the following representations and warranties as an
inducement to OWN to enter into this Agreement and to manage the Business:

         (a) ORGANIZATION. Company is a corporation which has been duly
incorporated and organized and is validly existing and in good standing under
the laws a of the State of Texas with corporate power and authority to own and
operate the Business and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where such qualifications
is necessary.

         (b) AUTHORITY. Company has the legal capability and. authority to enter
into and carry out the transactions contemplated by this Agreement. Neither the
execution of this Agreement, nor the consummation of the transactions
contemplated herein violates, conflicts with or results in, or will violate,
conflict with or result in, a breach by Company of the terms, conditions, or
provisions, as applicable, of its incorporating documents or by-laws or of any
security interest, deed of trust, debt instrument or loan agreement, or any
undertaking, to which it is a party or by which it is bound, or any applicable
law, regulation, by-law, ordinance or order of any jurisdiction where Company
carries on the Business.

         (c) CAPITAL STOCK. The authorized capital stock of the Company as of
the date hereof consists of 100,000,000 shares. of common stock, 7,778,971 of
which shares are issued and outstanding ("Common Stock") and 10,000,000 shares
of preferred stock, none of which is currently issued and outstanding. Except
for the Common Stock and the Warrants and options indicated on Schedule 1 (such
schedule, with the other Schedules, attached hereto, being hereinafter referred
to as the "Company Disclosure Statement"), the Company. does not have any stock
or securities convertible or exchangeable. for its capital stock or containing
any profit participation features, nor does it have outstanding any rights or
options to subscribe for or to purchase its capital stock or any stock
appreciation rights or phantom stock plans.

         (d) LEGALITY OF BUSINESS. Company is conducting the Business in
compliance with all applicable laws, rules and regulations and orders relating
thereto.

         (e) GOVERNMENTAL AUTHORIZATIONS. Company holds such licenses, permits,
consents, authorizations and orders of such governmental or regulatory
authorities as are necessary to carry on the Business and such licenses,
permits, consents, authorizations and orders are in full force and effect and
have been and are being fully complied with by Company.

         (f) FINANCIAL STATEMENTS. Schedule 2 of the Company Disclosure Schedule
includes the Company's audited consolidated financial statements (balance
sheets, income statements and statements of cash flows) as of and for the fiscal
year ending September 30, 1998 (the "9/30/98 Statements") and the Company's
unaudited consolidated financial statements (balance sheets, income

                                       7


<PAGE>

statement and statement of cash flow) as of and for the six (6) months ended
March 31, 1999 (the "3/31 Statements") (collectively, the "Financial
Statements").

         With respect to the 9/30/98 Statements, the Statements are complete and
correct and have been prepared in accordance with GAAP applied on a basis
consistent throughout the periods indicated and consistent with each other. The
9/30/98 Statements present fairly the financial condition and operating results
of the Company as of the dates and during the periods indicated therein.

         With respect to the 3/31 Statements, the 3/31 Statements are true,
complete and correct in all material respects and have been prepared in
accordance with GAAP applied on a basis consistent throughout the periods
indicated (except that the unaudited financial statements for the three months
ended March 31, 1998 do not contain the notes necessary to be in accordance with
GAAP and are subject to customary year-end adjustment). The 3/31 Statements
present fairly the financial condition and operating results of the Company as
of the dates and during the periods indicated therein.

         The audited balance sheet of the Company as of 9/30/98 is hereinafter
referred to as the "AUDITED BALANCE SHEET" The unaudited balance sheet of the
Company as of March 3l, 1999 is hereinafter referred to as the `UNAUDITED
BALANCE SHEET."

         (g) NO ADVERSE CHANGES. Since the date of the Unaudited Balance Sheet,
there have been no material adverse changes in the results of operations or
financial condition of the Business.

         (h) Proceedings. There are no actions, suits, or proceedings, pending
or threatened, before any court or governmental authority or other
administrative agency or any administrative officer which, if successful, could
adversely affect the Business or Company's right to enter into this Agreement.

         (i) EXECUTIONS. There are no judgments or executions of any kind
outstanding against Company which affect or could affect the Business.

         (j) CONTRACTS AND LEASES. Company is not and but for a requirement that
notice be given or that a period of time elapse or both, would not be, in
default in any respect under the term of any of the contract, agreement, lease
or instrument to which it is a party nor is any other party to any contract,
agreement, lease or other instrument respecting the Business in default
thereunder.

         (k) INVENTORY. Schedule 3 sets forth all inventory of the Company as of
6/30/99. At the Closing, the Company will have sufficient inventory to maintain
its operations in the ordinary course. All of the inventory in the schedule is
first class quality, marketable in the ordinary course, and fit for the purpose
for which it was intended.

                                       8


<PAGE>

         (1) EMPLOYEES. There are no collective bargaining agreements,
employment contracts or consulting agreements in place with any employees.
Company believes that there has been a satisfactory relationship with those
employees who are engaged in the Business. All obligations of Company, whether
arising by operation of law, by contract or by past custom, for payment directly
to its employees or sales representatives (including commissions and bonuses) or
to trusts or to other funds or to any governmental agency for salary or wages,
unemployment compensation benefits, contributions or taxes, social security
benefits, vacation and holiday pay, bonuses, deferred compensation and other
forms of compensation or any other benefits have been paid with respect to
obligations relating to periods prior to the date of Agreement. Set forth on
Schedule 4 is a complete list of all employees who are subject to any employment
agreements (whether written or oral) and the compensation owing pursuant
thereto.

         (m) ACCOUNTS RECEIVABLE.

                  (i) Set forth in Schedule 5 is a list of all accounts
receivable of the Company as of the 6/30/99 ("ACCOUNTS RECEIVABLE").

                  (ii) All Accounts Receivable of the Company arose in the
ordinary course of business, are carried at values determined in accordance with
GAAP consistently applied and are collectible except to the extent of reserves
therefor set forth in the Unaudited Balance Sheet. No person has any Lien on any
of such Accounts Receivable, and no request or agreement for deduction or
discount has been made with respect to any of such Accounts Receivable.

         (n) LIABILITIES.

                  (i) Schedule 6 sets forth a list of the principal amount owing
and each of noteholders of the Company's short term debt as of the Closing Date.
Prior to the effectiveness of this agreement, each noteholder, including John
Riemann and JCR Enterprises, Inc., shall convert their debt into shares of
Common Stock at a conversion price of thirty-seven cents ($.37). UCC termination
statements shall be filed with respect to any secured indebtedness.

                  (ii) Except for obligations incurred in the ordinary course of
business which are not material and not required under GAAP to be set forth or
reflected on a balance sheet or the notes thereto, the Company does not have any
liability, indebtedness, obligation, expense, claim, deficiency, guaranty or
endorsement of any type, whether accrued, absolute, contingent, matured,
unmatured or other (whether or not required to be reflected in financial
statements in accordance with generally accepted accounting principles), which
individually or in the aggregate, (i) has not been reflected in the Unaudited
Balance Sheet, or (ii) have not been specifically described in this Agreement or
in the Company Disclosure Schedule and specifically identified herein or therein
as not being included in the Unaudited Balance Sheet, or (iii) has not arisen in
the ordinary course of the Company's business since the date of the Unaudited
Balance Sheet.

                                       9


<PAGE>

         (o) TAX RETURNS AND REPORTS. All federal, state, local and foreign
income, excise, property, sales, use, information, payroll and other tax returns
and reports required to be filed by Company (the "Tax Returns") have been timely
filed with the appropriate governmental agencies in all jurisdictions in which
such returns and reports are required to be filed, and all such returns and.
reports properly reflect the taxes of Company for the period covered thereby..
All federal, state, local and foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions which are
called for as due by the Tax Returns, or which are claimed to be due, or which
are otherwise due to any taxing authority from the Company (the "Taxes"), have
been properly withheld, accrued and paid, as required. There are no tax liens on
any of the properties or assets of Company except for liens for current taxes
not yet due and payable. There is no basis for any additional assessment of any
Taxes, penalties or interest with respect to Company. Company has not waived any
law or regulations fixing, or consented to the extension of, any period of time
for assessment of any Taxes, which waiver or consent is currently in effect.
Company has not received any notice of assessment or proposed assessment by the
Internal Revenue Service ("IRS") or any other taxing authority in connection
with any Tax Returns, and there are no pending tax examinations of or tax claims
asserted against Company or its properties, and the results of any prior
examinations have been properly reflected in the Financial Statements.

         (p) ENVIRONMENTAL MATTERS. The Business has, at :all times,. been
conducted in compliance with all applicable federal, state, municipal and local
laws, regulations, orders, licenses, permits, governmental decrees, ordinances
or any and all other legislation or regulatory instruments with respect to
environmental, health or safety matters (collectively "Environmental Laws").
Company has not been notified by any governmental body or agency of any
potential or threatened violation of Environmental Laws applicable to the
Business. Any hazardous substances used by Company in the Business have been
transported, used and disposed of in accordance with all Environmental Laws.
With respect to real property leased by Company or used by Company in the
Business ("Real Property"), there are not now nor have there ever been
underground storage tanks or other vessels located on, or under the Real
Property and there have been no spills, releases, deposits, emissions, or
discharges of hazardous substances, on or near the Real Property. Company is not
required to hold any license, permit or approval under any Environmental Laws
relating in any way to the Business. For the purposes of this section,
"hazardous substance" shall mean any hazardous wastes, substances, materials,
toxic substances, hazardous air pollutants or toxic pollutants, as those terms
are used in the RESOURCE CONSERVATION AND RECOVERY ACT, the COMPREHENSIVE
ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980 ("CERCLA"), the
HAZARDOUS MATERIALS TRANSPORTATION ACT, the Toxic Substances Control Act, the
Clean Air Act And The Clean Water Act, or any amendments thereto, or any
regulations promulgated thereunder, or any "PCBs" or "PCB items" (as described
in 40 C.F.R. Section 761.3 any "asbestos" (as defined in 40 C.F.R. Section
763.63).

                                       10


<PAGE>

         10. COVENANTS OF COMPANY.

         During the Term of this Agreement, subject to the Retained Rights and
the fiduciary obligations and duties of the Board of Directors and the Company's
officers, the Company covenants and agrees with OWN as follows:

         (a) To cooperate with OWN and follow all proper directives, policies,
procedures and guidelines established by OWN relating to the conduct of the
business.

         (b) To deposit into the Company Accounts all funds, in whatever form,
received by Company in connection with the Business.

         (c) Not to incur any debts over $50,000, enter into any agreements, or
incur any expenses, make any commitments relating to the Business, or otherwise
incur obligations unless approved by OWN or undertaken pursuant to guidelines
and procedures established by OWN.

         (d) After the $200,000 equity raise contemplated hereunder, not to
issue any stock in the Company or rights to acquire any stock, options,
warrants, or securities convertible in to the stock of the Company without the
prior written consent of OWN.

         11. COMPANY ACCOUNTS.

         OWN shall have the right to designate two employees of the Company
and/or OWN who will be signatories to the Company Accounts. All checks must be
signed by the Company's CFO. A signature of the CFO and of' OWN's designee will
be required to transfer to disburse funds over $2,500. Notwithstanding the
foregoing, in the event that there arises at any time, or from time to time,
situations where current obligations exceed the Company's financial ability at
that time to pay all such obligations as they mature, the allocation of any
payments to third parties and to OWN shall be subject to the exercise by the
Board of Directors of their reasonable business judgment and their fiduciary
obligations to the Company's shareholders.

         12. BOARD OF DIRECTORS.

         Concurrently with the closing of the transaction contemplated by the
Agreement, Warren Hernand and Paul Reyff, Sr. will resign from the Board of
Directors of the Company. The vacancies created thereby will be filled, as soon
as practicable, by two new outside directors acceptable to OWN and the remaining
directors. At any subsequent time, OWN shall have the right to designate two (2)
additional nominees, and the Company shall be obligated to cause the directors
to increase the size of the Board to seven members and shall appoint the two
persons designated by OWN to fill the vacancies so created, and such directors
shall serve until the next meeting of shareholders of the Company at which
directors are elected. Upon termination of this Agreement, all directors elected
by or through OWN, if any, will resign effective immediately. OWN and Company
will effectuate amendments to Company's articles of incorporation or bylaws to
require

                                       11


<PAGE>

unanimous board approval for aspects of business relating to OWN's ability to
transfer profits or effectuate a sale of all or substantially all of the
Company.

         13. MISCELLANEOUS AUTHORITY AND DUTIES OF THE PARTIES.

         Each of the parties agrees to cooperate fully with each other in
connection with the performance of their respective obligations under this
Agreement, and the parties agree to employ reasonable efforts to resolve any
dispute that may arise under or in connection with this Agreement. Subject to
OWN maintaining the confidentiality of Company's confidential information,
Company shall provide to OWN full and complete access to Company's premises, and
to Company's charts, books, and records, in order that OWN can perform its
functions hereunder.

         Notwithstanding any other provisions contained herein, OWN shall not be
liable to Company, and shall not be deemed to be in default hereunder, for the
failure to perform any of OWN's obligations to be performed or provided by OWN
pursuant to the Agreement if such failure is a result of a labor dispute, act of
God, or any other event which is beyond the reasonable control of OWN.

         14. TERM OF AGREEMENT.

         (a) This Agreement shall remain in effect for five (5) years after the
date hereof (the "Term") unless mutually terminated or terminated as provided
herein.

         (b) Either OWN or Company may terminate this Agreement if (i) on
January 1, 2000 the Initial Sales Threshold has not been met and, if the
election to terminate is to be made by Company, all advances to Company under
the Loans have been repaid; or(ii) on January 1st of each subsequent year, sales
from the previous calendar year fail to exceed the sales from the prior calendar
year.

         (c) Unless otherwise terminated during the Term, or unless either party
gives the other party one hundred twenty (120) days advance written notice of
its intention not to renew, the Term shall automatically renew for successive
one year periods following the expiration of the Term. If either party gives a
non-renewal notice, they will meet to discuss whether there is any other basis
to continue the relationship.

         15. DEFAULT; REMEDIES ON DEFAULT.

         (a) Except as otherwise provided herein, upon the Default of a party,
in addition to all other rights and remedies, the non-defaulting party may
terminate this Agreement upon delivery of thirty (30) days prior written notice
to the other party. A "Default" shall be deemed to occur as set forth below in
Section 15(b).

                                       12


<PAGE>

         (b) In the event of a party's commitment of a breach of any material
term, covenant, or condition of the Agreement ("Material Breach"), no Default
may be declared by the non-breaching party and no remedy provided hereunder may
be undertaken until an arbitration in accordance with Exhibit C shall have been
undertaken.

         (c) OWN agrees that until such dispute is resolved, OWN will continue
to provide Company the services as required by this Agreement.

         (d) Subject to the arbitration requirement, the various rights and
remedies herein provided shall be cumulative and in addition to any other rights
and remedies the parties may be entitled to pursue under applicable California
law. The exercise of one or more of such rights or remedies shall not impair the
rights of either party to exercise any other right or remedy at law or in
equity. Termination of this Agreement shall not release or discharge any party
from any obligation, debt or liability which shall have previously accrued, and
remain to be performed as of the effective date of termination. IF THE PROCEDURE
SET FORTH ON EXHIBIT C IS UNAVAILABLE, THE PARTIES HEREBY CONSENT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF
CALIFORNIA, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES
ACCEPT THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE
OF FORUM NON-CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.

         16. CONFIDENTIAL INFORMATION AND TRADE SECRETS.

         Each party hereto recognizes that due to the nature of this Agreement,
the other party will have access to Information of a proprietary nature owned by
such first party including, but not limited to, any and all computer programs
(whether or not completed or in use) and any and all operating manuals or
similar materials, policies and procedures, and methods of doing business
developed by the other. Consequently, each party acknowledges and agrees tees
that they respectively have a proprietary interest in all such information and
that all such information constitutes confidential and proprietary information
and is the trade secret property of each such party. Each party hereby waives
any and all right, title and interest in and to such trade secrets and
confidential information of the other party, and agrees to return all copies of
such trade secrets and confidential information related thereto to the other, at
the other's expense, upon n the termination of the Agreement.

         Each party further acknowledges and agrees that the other party is
entitled to prevent its competitors from obtaining and utilizing its trade
secrets and confidential information. Therefore, each party agrees to hold the
other party's trade secrets and confidential information in strictest confidence
and not to disclose them or allow them to be disclosed, directly or indirectly,
to any person or entity other than those persons or entities who are employed y
or affiliated with OWN

                                       13



<PAGE>

or Company, as the case may be, without the prior written consent of the other
party. Each party shall not, either during the term of this Agreement, or at any
time after the expiration or sooner termination of this Agreement, disclose to
anyone other than persons or entities who are employed by or affiliated with the
other any confidential or proprietary information or trade secret information
obtained by either of them, except as otherwise required by law.

         Each party acknowledges and agrees that a breach of this Section 16
will result in irreparable harm to the other which cannot be reasonably or
adequately compensated in damages, and therefore each party shall be entitled to
injunctive and/or equitable relief to prevent a breach and to secure enforcement
thereof, in addition to any of the relief or award to which such party may be
entitled.

         17. INDEMNIFICATION.

         (a) INDEMNIFICATION OF OWN. Company shall indemnify, defend and hold
harmless OWN, its agents, representatives, employees, officers, director, and
representatives from and against any and all losses, liabilities, claims,
damages, deficiencies, and expenses, including interest, penalties, court costs
and reasonable attorneys' fees ("Losses") which may be incurred by or suffered
by such. persons or entities and which arise out of or result from any breach of
any representation, warranty, covenant or agreement of Company contained in this
Agreement or which related to the operation of the Business prior to the date
hereof, or to the operation of the Business after the date hereof unless arising
from OWN's gross negligence, .willful misconduct or any breach of its
contractual or fiduciary duty.

         (b) INDEMNIFICATION OF COMPANY. OWN shall indemnify, defend and hold
harmless Company, its agents, representatives, employees, officers, directors,
and representatives from and against any and all Losses which may be incurred by
or suffered by such persons or entities relating to the breach by OWN of any: of
its obligations under this Agreement or the gross negligence or intentional
misconduct of OWN in the performance of its duties hereunder.

         18. CONDITIONS PRECEDENT.

         At the closing of this transaction, OWN shall receive:

         (a) An officer's certificate certifying, among other things, that the
representations and warranties are true and correct as of the closing; and

         (b) An opinion of counsel to the Company, in form and substance
satisfactory to OWN and its counsel.

                                       14


<PAGE>

         19. ASSIGNMENT.

         This Agreement and the rights and obligations created hereunder shall
not be assigned or subcontracted by Company, either voluntarily or by operation
of the law, without the express prior written consent of OWN. Any assignment
without such consent shall be null and void. In addition to its rights to
delegate its duties hereunder as set forth above, OWN may only assign, transfer,
pledge or hypothecate this Agreement and OWN's rights, interests and benefits
hereunder to any entity which has beneficial ownership of a majority of OWN's
outstanding equity securities or to any entity in which OWN owns such beneficial
ownership.

         20. GOVERNING LAW.

         This Agreement shall be governed by and construed under the laws of the
State of California.

         21. WAIVER.

         The waiver of any covenant, condition or duty hereunder by either party
shall not prevent that party from later insisting upon full performance of the
same.

         22. AMENDMENT.

         No amendment to the terms of this Agreement shall be binding on any
party unless in writing and executed by the duly authorized representatives of
each party.

         23. ENTIRE AGREEMENT.

         This Agreement constitutes the entire agreement of the parties in
connection with the subject matter hereof; and supersedes all prior agreements,
whether written or oral, and whether explicit or implicit, which have been
entered into before the execution hereof.

         24. NOTICE.

         Any notice or other communication required or which may be given
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed or sent by facsimile, or sent by certified, registered or express mail,
postage prepaid, and shall be deemed given when so delivered personally,
telegraphed or telexed or sent by facsimile, or if mailed, two days after the
date of mailing, as follows:

                                       15


<PAGE>

         If to OWN:
                                    12100 Wilshire Boulevard
                                    Suite 705
                                    Los Angeles. CA. 90024

         With a copy to:            Kelly Lytton Mintz & Vann LLP
                                    1900 Avenue of the Stars, Ste. 1450
                                    Los Angeles, CA 90067
                                    Attn: Bruce P. Vann, Esq.

         If to Company:             Biozhem Cosmeceuticals, Inc.
                                    32240 Paseo Adelante, Suite A
                                    San Juan Capistrano, CA 92675

         With a copy to:            John Riemann
                                    Biozhem Cosmeceuticals, Inc.
                                    32240 Paseo Adelante
                                    Suite A
                                    San Juan Capistrano, CA 92675

         With a copy to:            Robert D. Remy, Esq.
                                    Two Memorial City Plaza
                                    820 Gessner, Suite 1360
                                    Houston, TX 77024

         25. MISCELLANEOUS PROVISIONS.

         (a) PARTIAL INVALIDITY. If any one or more of the terms, provisions,
promises, covenants or conditions of the Agreement or the application thereof to
any person or circumstance shall be adjudged to any extent invalid,
unenforceable, void or voidable for any reasons whatsoever by a court of
competent jurisdiction, each and all of the remaining terms, provisions,
promises, covenants and conditions of this Agreement or their application to
other persons or circumstances shall not be affected thereby and shall be valid
and enforceable to the fullest extent permitted by law.

         (b) HEADINGS, TITLES. The headings appearing herein are for convenience
and reference only and shall not be deemed to governed, limit, modify or in any
manner affect the scope, meaning or intent of the provision of this Agreement.

         (c) BINDING EFFECT. Subject to the provisions contained herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and upon their respective successors.

                                       16



<PAGE>

         (d) COVENANTS AND CONDITIONS. Each covenant hereof is a condition, and
each condition hereof is as well a covenant by the parties bound thereby unless
waived in writing by the parties hereto.

         (e) APPROVAL AND CONSENT. Whenever in this Agreement an approval or
consent is required by one of the parties, the same shall not be unreasonably
withheld.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.

                                          ONE WORLD NETWORKS
                                          INTEGRATED TECHNOLOGIES, INC.

                                          By: /s/ Liz Edlic
                                          Its:CEO

                                          BIOZHEM COSMECEUTICALS, INC.

                                          By: /s/ John Riemann
                                          Its: CEO

                                       17



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>4
<FILENAME>biozhem_ex10-7.txt
<TEXT>
<PAGE>

EXHIBIT 10.7

                           MULTI-PARTY AMENDMENT NO. 1

         Reference is made to (i) that certain Management Agreement (the
"Agreement"), dated as of July 14, 1999 (the "Effective Date") by and among ONE
WORLD NETWORKS INTEGRATED TECHNOLOGIES, INC., a Nevada corporation (or any
affiliate of thereof) (collectively "OWN"), and BIOZHEM COSMECEUTICALS, INC.
("COMPANY") a Texas corporation and (ii) that certain Class A. Warrant Agreement
(the "Warrant Agreement") between the Company and OWN, as warrantholder.
Capitalized terms not otherwise defined herein shall have the same meaning as
set forth in the Agreement.

                                    RECITALS

         A. OWN has agreed to increase its capital investment in the Company.

         B. In consideration for such investment, the Company has agreed to
lower the exercise price of the Class A Warrants as set forth herein.

         NOW, THEREFORE, OWN and Company agree a follows:

                 ARTICLE ONE - AMENDMENT TO MANAGEMENT AGREEMENT
                 -----------------------------------------------

         1.1 AMENDMENTS TO ARTICLE 8. Article 8 of the Management Agreement is
hereby amended as follows:

         A. In addition to the sum of $50,000 advanced to the Company at the
Closing (the "Initial Advance"), the Company has agreed to advance an additional
$50,000 (the "Additional Advance, and together with the Initial Advance, the
"Loan"), so that the aggregate amount of the Loan is $100,000. The Loan will be
evidence by a Restated Convertible Secured Promissory Note (the "Convertible
Note") attached hereto. The Convertible Note will be subject to the Security
Agreement issued by the Company at the Closing.

         B. OWN shall also acquire from the Company 127,884 of Common Stock at a
purchase price for $.52 a share, for an aggregate purchase price of $66,500. OWN
shall have no further funding obligations to the Company with respect to the
$50,000 loan obligation referred to in the management Agreement.

         C. The exercise price of 888,666 of the Class A Warrants shall be
reduced to $.15.

                                       1


<PAGE>

                  ARTICLE TWO - AMENDMENT TO WARRANT AGREEMENT
                  --------------------------------------------

                 ARTICLE THREE - REPRESENTATIONS AND WARRANTIES
                 ----------------------------------------------

         3.1 COMPANY'S REPRESENTATIONS AND WARRANTIES. In order to induce OWN to
enter into this Amendment, the Company represents and warrants to OWN that:

         (a) The Company has the power and authority and has taken all action
necessary to execute, deliver and perform this Amendment and all other
agreements and instruments executed or delivered to be executed or delivered in
connection herewith and therewith and this Amendment and such other agreements
and instruments constitute the valid, binding and enforceable obligations of the
Company.

         (b) The Company's representations and warranties contained in the Loan
Agreement are true and correct in all respects on and as of the date hereof as
though made on and as of the date hereof and no Event of Default or event which
with the passage of time or the giving of notice or both would constitute an
Event of Default has occurred and is continuing as of the date hereof.

         (c) Since the date of the most recent financial statements, if any,
furnished by the Company to OWN, there has been no material adverse change in
the business or assets or in the financial condition of the Company.

         3.2 ACKNOWLEDGMENT OF COMPANY. The Company expressly acknowledges and
agrees that as of the date of this Amendment, it has no offsets, claims or
defenses whatsoever against any of the Indebtedness or Obligations.

                        ARTICLE FOUR - GENERAL PROVISIONS
                        ---------------------------------

         4.1 FULL FORCE AND EFFECT. Except as expressly amended hereby, the
Agreement and all other documents, agreements and instruments relating thereto
are and shall remain unmodified and in full force and effect.

         4.2 COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and that all of which when taken together shall constitute one and
the same instrument, respectively. Delivery of an executed counterpart of this
Amendment by facsimile shall be equally effective as delivery of a manually
executed counterpart of this Amendment. Any party delivering an executed
counterpart by facsimile shall also deliver a manually executed counterpart of
this Amendment, but failure to do so shall not effect the validity,
enforceability, or binding effect of this Agreement.

         4.3 FINAL AGREEMENT. This Amendment is intended by the Company and OWN
to be the final, complete, and exclusive expression of the agreement between
them with respect to the

                                       2


<PAGE>

subject matter hereof. This Amendment supersedes any and all prior oral or
written agreements relating to the subject matter hereof.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.

                                          ONE WORLD NETWORKS
                                          INTEGRATED TECHNOLOGIES, INC.

                                          By: /s/ Liz Edlic
                                          Its:CEO

                                          BIOZHEM COSMECEUTICALS, INC.

                                          By: /s/ John Riemann
                                          Its: CEO




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>5
<FILENAME>biozhem_ex10-8.txt
<TEXT>
<PAGE>
EXHIBIT 10.8

                              TERMINATION AGREEMENT


         This Termination Agreement (this "Termination Agreement") is made
between One World Networks Integrated Technologies, Inc. ("OWNIT") and Biozhem
Cosmeceuticals, Inc. ("Biozhem"), as of May 1, 2000, with reference to the
following:

         A.       OWNIT and Biozhem have entered into a certain Management
                  Agreement dated as of July 14, 1999, as amended by that
                  Multi-Party Amendment No. 1 executed on or about October 24,
                  1999 (the "Multi-Party Amendment"). The Management Agreement,
                  as amended, shall be referred to as the "Management
                  Agreement".

         B.       The parties have also entered into certain other agreements
                  including a Registration Rights Agreement, dated as of July
                  14, 1999, a Secured Promissory Note dated as of July 14, 1999,
                  and a Restated Convertible Secured Promissory Note dated as of
                  October 13, 1999, a Security Agreement dated as of July 14,
                  1999, and a Class A Warrant Agreement as amended by the
                  Multi-Party Amendment (as amended, the "Warrant Agreement").

         C.       The parties desire to terminate the Management Agreement and
                  to resolve all other matters between them in an amicable
                  manner.

         D.       The parties further desire that all matters are resolved
                  between OWNIT and Clifford Fowler ("Fowler"), an individual
                  who holds two promissory notes issued by Biozhem (the
                  "Notes").

         NOW THEREFORE, in consideration of the foregoing recitals, the mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

         1. ADDITIONAL INVESTMENT BY OWNIT. OWNIT will make an additional
investment in Biozhem in the amount of $175,000, to be structured as an exercise
of Class A Warrants to purchase Biozhem's common stock, per the terms of the
Management Agreement as amended. These funds shall be wire transferred to
Biozhem's account immediately upon execution by the parties of this Termination
Agreement and execution by Fowler of the form of release attached hereto as
Exhibit A (the "Fowler Release"). Notwithstanding the foregoing, and taking into
consideration that the exercise price of 888,666 of the Class A Warrants is
$0.15 under the terms of the Management Agreement as amended, the parties have
agreed that, upon exercise of the Class A Warrants as provided under this
Section 1 and Section 4 below ("Reimbursable Expenses"), OWNIT shall receive
958,521 shares of Biozhem's common stock, representing all the remaining Class A
Warrants that are available.

<PAGE>

         2. PURCHASE OF NAMES. OWNIT will purchase Biozhem's database of
customer names, existing as of May 1, 2000, including all categories and
locations, summarized approximately in the attached Exhibit B that was prepared
by Biozhem personnel (the "Database"), for a guaranteed royalty of $40,000 to be
paid over a four-month period, payable $10,000 each month in advance, commencing
on May 1, 2000. Biozhem shall retain co-ownership of the Database. The parties
acknowledge that OWNIT's purchase of the Database is an integral part of this
Termination Agreement, and that OWNIT's failure to make the aforesaid royalty
payment would be a material default hereunder. It is understood, however, that
OWNIT shall have no obligation with respect to the purchase of the Database and
the payment of the royalty until this Termination Agreement and the Fowler
Release are fully executed by all parties.

         3. TERMINATION OF MANAGEMENT AGREEMENT. The Management Agreement as
amended is hereby terminated and neither party shall have any obligations to the
other party thereunder, except for the following provisions, which shall survive
the termination of the Management Agreement as amended: the reference and/or
arbitration provisions set forth in Section 15 and Exhibit C of the Management
Agreement as amended, the confidentiality provisions set forth in Section 16 and
any other provisions of the Management Agreement as amended and the Multi-Party
Amendment relating to the Class A Warrants.

         4. Intentionally Omitted.

         5. WAIVER OF MANAGEMENT FEES. OWNIT shall waive any claim to any
management fees under the Management Agreement as amended.

         6. UNPAID SALES TAXES. Upon receipt of the funds to be transferred by
OWNIT to Biozhem hereunder, Biozhem shall pay any and all of its outstanding
state sales tax obligations and unpaid payroll tax obligations.

         7. WEBSITE SALES. OWNIT and Biozhem shall utilize their respective best
efforts to continue to work together on mutually agreeable terms to sell Biozhem
products on the website that OWNIT created for the purpose of selling such
products.

         8. FULL SETTLEMENT AND MUTUAL RELEASE. The parties expressly
acknowledge that this Termination Agreement fully resolves all disputes and
claims arising between them, whether arising under the Management Agreement as
amended, the Notes or otherwise. In furtherance of the foregoing, OWNIT and
Biozhem each absolutely, fully and forever releases and discharges the other
party, and the other party's respective officers, directors, partners,
shareholders, affiliates, agents, representatives, employees, servants,
successors-in-interest, assigns, attorneys, consultants or other advisors,
whether past, present or future (collectively, "Agents"), from any and all
claims or disputes against each other arising out of facts occurring prior to
the date hereof, including but not limited to, any and all claims, demands,
liabilities, obligations, losses, controversies, costs, expenses and attorneys'
fees, of every kind, nature, character or description whatsoever, whether in law
or in equity, whether arising under contract, tort or securities laws or
otherwise, whether known or unknown and whether suspected or unsuspected.

                                      -2-
<PAGE>

         9. SECTION 1542 WAIVER. Each of the parties intends for this
Termination Agreement to be effective as a full and final accord and
satisfaction and release. In furtherance of this intention, each of the parties
acknowledges reading and understanding Section 1542 of the Civil Code of the
State of California, which provides as follows:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
                  EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM, MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

Each of the parties hereby knowingly and voluntarily waives and relinquishes any
and all rights and benefits which it or he has or may have under California
Civil Code Section 1542 to the fullest extent that it or he may lawfully do so.
Each party elects to, and does, assume unknown risks arising hereafter with
respect to the subject matter of this Termination Agreement. Each of the parties
hereto acknowledges that it or he may hereafter discover facts different from,
or in addition to, those which now exist or are believed to the true with
respect to the subject matter of this Termination Agreement, and agrees that
this Termination Agreement shall nevertheless remain in full and complete force
and effect. Each of the parties hereto acknowledges the waiver and
relinquishment of its or his rights and benefits under California Civil Code
Section 1542 is an essential and material term of this Termination Agreement,
without which it would not have been executed.

         10. EFFECT OF AGREEMENT. The mutual terms and conditions embodied in
this Termination Agreement shall not constitute an admission of liability, blame
or fault on the part of any of the parties.

         11. COSTS. Each of the parties shall assume responsibility for payment
of all costs incurred by each of the parties in connection with the subject
matter hereof, except as expressly provided herein.

         12. LEGAL ADVICE. Each of the parties acknowledges that it or he (a)
has received independent legal advice from its or his attorneys with respect to
the advisability of executing this Termination Agreement, (b) has made such
investigation of the facts pertaining to this Termination Agreement as each has
deemed necessary and appropriate, and (c) has not relied upon any statement or
representation of any other party, or any other party's respective Agents, in
executing this Termination Agreement. Each party has executed this Termination
Agreement free from coercion, duress or undue influence. The provisions of this
Termination Agreement shall be interpreted in a reasonable manner to effectuate
the intentions of the parties, without regard to which party was responsible for
drafting.

                                      -3-
<PAGE>

         13. ASSIGNMENT OF CLAIMS AND AUTHORITY. Each of the parties represents
and warrants that it or he has not assigned or transferred to any other person
or entity any right or claim which is the subject matter of this Termination
Agreement. Each of the parties hereto represents and warrants to each of the
others that it or he has the sole and complete right and authority to
compromise, settle, release and discharge all such rights, claims, demands and
causes of action which are the subject matter of this Termination Agreement.

         14. CORPORATE RESOLUTIONS. Prior to transfer of funds from OWNIT to
Biozhem as provided in Sections 1 and 2 hereof, Biozhem shall provide to OWNIT a
certified copy of corporate resolutions of Biozhem, in a form reasonably
satisfactory to OWNIT, indicating among other things that Biozhem is authorized
to take all actions required by it hereunder and that the person signing on
behalf of Biozhem is authorized to do so.

         15. INTEGRATION. This Termination Agreement is the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements between the parties with respect to the matters contained
herein. Any waiver or modification of any provision of this Termination
Agreement shall be effective only if it is in writing and duly executed by the
party against whom enforcement is sought.

         16. NO DISPARAGING REMARKS. Neither party shall make any disparaging
remarks about the other party or its respective Agents, in connection with any
matters relating to their relationship or dealings, the Management Agreement as
amended, this Termination Agreement, Fowler, the Notes or otherwise.

         17. GOVERNING LAW. This Termination Agreement shall be governed by and
construed in accordance with the laws of the State of California.

         18. REFERENCE AND/OR ARBITRATION. Any action brought to enforce any
provision of this Termination Agreement, including any dispute regarding
jurisdiction, shall be subject to a reference proceeding as set forth in Exhibit
C of the Management Agreement as amended. If for any reason such reference
proceeding is not available, any claim or dispute between the parties shall be
subject to binding arbitration, as further provided in Exhibit C of the
Management Agreement as amended. In any such action, whether a reference
proceeding or arbitration, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and costs.

                                      -4-
<PAGE>

         19. MISCELLANEOUS. Each party to this Termination Agreement shall
execute all instruments and documents and take all actions as may be reasonably
required to effectuate this Termination Agreement, including without limitation
the issuance of common stock of Biozhem pursuant to the terms hereof. Each
provision of this Termination Agreement shall be valid and enforceable to the
fullest extent permitted by law; if any provision shall be held to be invalid or
unenforceable, the remainder of the Termination Agreement shall not be affected.
No delay or omission in the exercise of any right or remedy shall impair such
right or remedy or be construed as a waiver.

         IN WITNESS WHEREOF, the parties have executed this Termination
Agreement as of the date first set forth above.

ONE WORLD NETWORKS
INTEGRATED TECHNOLOGIES, INC.,
a Nevada corporation



By:   /s/ Liz Edlic
Name: Liz Edlic
Title: CEO


BIOZHEM COSMECEUTICALS, INC.,
a Texas corporation




/s/  Marti Wolf
-----------------------------
By: Marti Wolf, President





                                      -5-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9\
<SEQUENCE>6
<FILENAME>biozhem_ex10-9.txt
<TEXT>
<PAGE>
EXHIBIT 10.9

                          LICENSE AND SUPPLY AGREEMENT

         This License and Supply Agreement (this "Agreement") is entered as of
the Effective Date, by and between ADVANCED TISSUE SCIENCES, INC., a Delaware
corporation ("ATS"), and BIOZHEM COSMECEUTICALS INC., A TEXAS CORPORATION
("Buyer").

         WHEREAS, ATS is a leading tissue engineering company engaged in the
development of human-based tissue products for therapeutic applications;

         WHEREAS, certain of the living cells cultured by ATS produce a nutrient
solution (the "ATS Nutrient Solution," as more specifically described in EXHIBIT
A hereto);

         WHEREAS, Buyer wishes to obtain exclusive rights to use the ATS
Nutrient Solution in Buyer's skin care products for sales in the Marketplace (as
defined below), and ATS is willing to grant such rights to Buyer and to supply
Buyer with ATS Nutrient Solution pursuant to the terms and conditions of this
Agreement;

         WHEREAS, in connection with this Agreement, Buyer is issuing ATS a
warrant to purchase 2% of its shares of Common Stock outstanding as of the
Effective Date (subject to certain adjustments) at a price per share equal to
the average closing price of its Common Stock for the five (5) business days
prior to the Effective Date pursuant to a Warrant to Purchase Common Stock of
even date herewith substantially in the form of EXHIBIT C attached hereto;

         WHEREAS, in connection with this Agreement, Buyer and ATS are entering
into the Investor Rights Agreement of even date herewith substantially in the
form of EXHIBIT D attached hereto, which provides for, among other things, ATS's
registration rights; and

         NOW, THEREFORE, in consideration of the foregoing premises and the
terms, covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, ATS
and Buyer agree as follows:

1.       DEFINITIONS
         -----------

         1.1 "ATS Nutrient Solution" has the meaning set forth in the Recitals
above.

         1.2 "ATS Patent Right(s)" means those certain inventions described in
claims of those patents set forth on attached Exhibit 1.2 or an amendment,
equivalent, counterpart, reissue, extension or continuation (including, without
limitation, a continuation-in-part or a subdivision) of the foregoing Patent(s).

         1.3 "Affiliate" means any company owned or controlled to the extent of
at least fifty percent (50%) of its issued and voting capital by a party to this
Agreement and any other company so owned or controlled (directly or indirectly)
by any such company or the owner of any such company.

         1.4 "Agreement" means this License and Supply Agreement, as amended
from time to time.

                                       1


<PAGE>

         1.5 "Buyer Product(s)" means Buyer's branded skin care products,
including lip gloss and nail care products, but excluding any of Buyer's hair
care and hair growth product(s).

         1.6 "Contract Year" shall be a twelve month period commencing on April
1st of any year the Agreement is in effect. The First Contract Year is the
period from April 1, 2001 until March 31, 2002.

         1.7 "Delivery Date" means an acknowledged and confirmed date for which
delivery of ATS Nutrient Solution is properly requested in a purchase order.

         1.8 "Effective Date" shall be the date that ATS communicates in writing
to Buyer the final ATS Board of Directors approval of the Agreement as provided
under Section 11.1 of this Agreement.

         1.9 "FDA" means the United States Food and Drug Administration or any
successor agency or authority, the approval of which is required to market
healthcare products in the United States.

         1.10 "First Commercial Sale" means the first commercial sale by Buyer
or its sublicensees (if any) of a Licensed Product.

         1.11 "Gross Sales" means, with respect to a Licensed Product, the gross
amount invoiced by Buyer to unrelated third parties for the Licensed Product,
without deduction, except for customer returns. Such amounts shall be determined
from the books and records of Buyer which shall be maintained in accordance with
generally accepted accounting principles.

         1.12 "Intellectual Property Rights" means Patent rights, copyrights,
trade secret rights and all other intellectual property rights of any sort.

         1.13 "Inventions" means all inventions, discoveries, improvements or
other technology conceived or reduced to practice during the term of this
Agreement solely or jointly by employees or others acting on behalf of Buyer or
ATS or their Affiliates to the extent relating to the ATS Nutrient Solution, the
Manufacturing Know-How or any improvements thereto.

         1.14 "Licensed Product" means any Buyer Product which incorporates the
ATS Nutrient Solution (in any concentration quantity), or if it does not contain
ATS Nutrient Solution, the manufacture or use of which would infringe an ATS
Patent Right.

         1.15 "Manufacturing Know-How" shall mean all information, techniques,
practices, methods, knowledge, skill and data, which are not generally known
including, but not limited to, a proprietary "trade secret" or other
Intellectual Property Right, whether or not patentable or copyrightable,
relating to or useful for the production, assembly, manufacture, storage and/or
transport of the ATS Nutrient Solution.

         1.16 "Marketplace" means the worldwide direct response market of sales
of Buyer Product(s) to end consumers by telephone (including Buyer infomercials
and televised shopping channels), through Buyer-branded or co-branded World Wide
Web site(s), and Buyer-branded stores and kiosks. For purposes of clarity and
without expanding the foregoing, "Marketplace" shall not include mass market
retail, physician offices, spas, or any rights outside the Marketplace.

         1.17 "Patent(s)" means all patents, both foreign and domestic
(including without limitation, all substitutions, extensions, reissues,
renewals, reexaminations, patents of addition, supplementary protection
certificates and inventors' certificates thereof), and all patent applications
(including provisional applications, divisions, continuations and
continuations-in-part), heretofore or hereafter filed or having any legal force
in any country, together with any patents that have issued or in the future
issue therefrom, owned, in whole or in part, by ATS, or licensed by ATS (with
the right to disclose and sublicense), which cover the ATS Nutrient Solution.

                                       2


<PAGE>

2.       LICENSES
         --------

         2.1 LICENSE GRANT. Subject to the terms and conditions of this
Agreement, ATS hereby grants to Buyer, under ATS's Intellectual Property Rights,
an exclusive (subject to Section 5.3.1 of this Agreement), worldwide, license to
(i) use, sell, offer for sale, market and distribute the ATS Nutrient Solution
only as incorporated into a Licensed Product and only to customers within and
for use within the Marketplace, and (ii) use and modify the ATS Nutrient
Solution for development activities solely in connection with the Marketplace.
The foregoing license will only be sublicensable with ATS's prior approval. This
Agreement will not prevent ATS from licensing the ATS Nutrient Solution for use
and sale outside of the Marketplace. Nothing herein shall be construed as
limiting in any manner ATS's marketing, distribution, development or licensing
activities or ATS's appointment of other dealers, distributors, licensees or
agents for sale or use of the ATS Nutrient Solution or other ATS products
outside of the Marketplace.

         2.2 IMPROVEMENTS. Buyer agrees to promptly disclose any modification or
improvement to the ATS Nutrient Solution made or developed before the
termination of this Agreement. Any such modification or improvement shall only
be incorporated into the ATS Nutrient Solution for purposes of this Agreement
with the prior written consent of ATS, which consent ATS may withhold in its
sole discretion.

         2.3 CONCENTRATION OF ATS NUTRIENT SOLUTION. ATS shall maintain the
right, in its sole discretion, to lower the concentration of the ATS Nutrient
Solution licensed and supplied to Buyer hereunder (the Concentration")
prospectively; PROVIDED, HOWEVER, that ATS shall not lower the Concentration if
ATS cannot demonstrate that such lower concentration is demonstrably effective
as a cosmeceutical product sold in a non-medical environment. In addition, no
other retail or mass market licensee of ATS Nutrient Solution shall be allowed
to use a concentration of the solution that is higher than the concentration
available for use by Buyer.

3.       SALE AND PURCHASE OF ATS NUTRIENT SOLUTION
         ------------------------------------------

         3.1 SALE AND PURCHASE. ATS, within the limitations contained in this
Section 3, agrees to use reasonable commercial efforts to sell to Buyer such
quantities of ATS Nutrient Solution as Buyer may require. Subject to the
provisions of Section 7 hereof, so long as this Agreement shall remain in
effect, Buyer agrees to satisfy solely through Buyer's purchase of the ATS
Nutrient Solution under this Agreement, 100% of Buyer's and Buyer's
sublicensees' (if any) requirements of the ATS Nutrient Solution. It is
understood that ATS shall have the right in connection with supply hereunder to
contract with respect to the manufacture of the ATS Nutrient Solution with such
third parties as ATS deems advisable in its sole discretion; provided, however,
that ATS shall remain fully responsible hereunder.

         3.2 QUANTITY; FORECASTS.

                  3.2.1 With respect to the purchase of the ATS Nutrient
Solution under this Section 3, Buyer shall deliver to ATS as soon as practical a
forecast of Buyer's quantity requirements for the ATS Nutrient Solution for the
calendar quarter in which the First Commercial Sale is projected to occur and,
at least one (1) full calendar quarter prior to the calendar quarter in which
the First Commercial Sale is projected to occur, Buyer's firm purchase order and
Delivery Dates for the ATS Nutrient Solution for such calendar quarter, which
shall be subject to acceptance by ATS, which acceptance shall not be

                                       3


<PAGE>

unreasonably withheld, and a good faith forecast of its quantity requirements
for the ATS Nutrient Solution for the next three (3) calendar quarters, provided
that no forecasts or purchase orders need be given for any period after the term
of this Agreement. Beginning on January 1, 2002, Buyer shall deliver to ATS at
or prior to the end of each calendar quarter, Buyer's firm purchase order and
Delivery Date for the ATS Nutrient Solution for the next calendar quarter
following such calendar quarter, which shall be subject to acceptance by ATS,
which acceptance shall not be unreasonably withheld, and a good faith forecast
of its quantity requirements for the ATS Nutrient Solution for the next three
(3) calendar quarters. If a required forecast or purchase order for a quarter is
not timely submitted for the ATS Nutrient Solution, the immediately preceding
forecast for that quarter shall become the new forecast or purchase order; if
there is no preceding forecast for a quarter, the forecast or purchase order for
the immediately preceding quarter shall become the forecast or purchase order.

                  3.2.2 After the second Contract Year, for each quarterly
forecast of ATS Nutrient Solution, the amount of any ATS Nutrient Solution
forecasted for delivery in the first of the three (3) calendar quarters
forecasted shall not be less then seventy percent (70%) nor more than one
hundred thirty percent (130%) of the most recent previous forecast for such
quarter. In addition, no firm purchase order for a particular quarter shall
cover an amount of ATS Nutrient Solution more than twenty- five percent (25%)
larger or smaller than the amount of the ATS Nutrient Solution ordered for the
previous quarter.

                  3.2.3 The total amount of the ATS Nutrient Solution ordered by
Buyer for delivery in any calendar quarter for which a purchase order is
required may not be less than seventy-five percent (75%) of Buyer's most recent
forecast of its requirements for ATS Nutrient Solution for such quarter. In
addition, ATS will not be obligated to supply more than one hundred twenty-five
percent (125%) of Buyer's most recent forecast of its requirements for ATS
Nutrient Solution for such quarter. If Buyer's ATS Nutrient Solution requirement
for any quarter exceeds 125% of Buyer's most recent forecast of its requirements
for ATS Nutrient Solution for such calendar quarter, ATS and Buyer will discuss
in good faith the additional amount, if any, which ATS is willing to accept to
supply consistent with its other obligations and Buyer will adjust its purchase
order accordingly. Buyer shall indemnify ATS and reimburse it promptly upon
request for all reasonable out-of-pocket costs and expenses, including the cost
of carrying increased inventory, to the extent caused by any deviation in order
quantities from the limits imposed by the preceding sentence, and ATS will act
reasonably to mitigate any such costs and expenses.

                  3.2.4 Buyer's forecasts and purchase orders shall reflect its
good faith expectations of customer demand and Buyer shall act in a commercially
reasonable manner to schedule orders to avoid creating production capacity
problems for ATS.

                  3.2.5 Notwithstanding the foregoing, in the event that the
total aggregate amount of ATS Nutrient Solution for which firm purchase orders
have been received by ATS from all of ATS's customers (including Buyer) in any
quarter is greater than ATS's available inventory of ATS Nutrient Solution for
such quarter, then Buyer shall be entitled only to its pro-rata portion of the
available ATS's Nutrient Solution as determined by multiplying the amount of ATS
Nutrient Solution for which firm purchase orders have been received by ATS from
Buyer for such quarter by a fraction, the numerator of which is the amount of
ATS Nutrient Solution for which firm purchase orders have been received by ATS
from Buyer for such quarter and the denominator of which is the aggregate total
of ATS Nutrient Solution for which firm purchase orders have been received by
ATS from all of ATS's customers (including Buyer) for such quarter. During any
period that ATS cannot provide the product properly requested by Buyer
hereunder, the minimum royalty thresholds will be waived until such capacity
limitations have been addressed.

                                       4


<PAGE>

         3.3 SUPPLY PRICE.

                  3.3.1 Buyer shall pay to ATS for the ATS Nutrient Solution
purchased hereunder the prices set forth in EXHIBIT C hereto (the "Purchase
Price"). The supply price specified herein shall be no less favorable to Buyer
than the prices extended by ATS to any other non-governmental customer for
substantially similar quantities and concentrations of ATS Nutrient Solution.
The Purchase Price shall be adjusted upwards or downwards, as the case may be,
as of each anniversary of the Effective Date to reflect any change in the cost
of the ATS Nutrient Solution to ATS, but in no event shall such increase or
decrease be in an amount greater than five percent (5%) of the Purchase Price
for the immediately preceding twelve (12) month period. (Unless a greater than
5% decrease was necessary to match the supply price awarded to another
non-government vendor). Notwithstanding the foregoing, ATS shall provide to
Buyer solely for development activities hereunder a batch of the ATS Nutrient
Solution, free of charge.

         3.4 DELIVERY.

                  3.4.1 All ATS Nutrient Solution delivered to Buyer shall be
F.O.B. ATS's plant or other place of shipment. ATS shall use its commercially
reasonable efforts to deliver the ATS Nutrient Solution within seven (7) days of
the applicable Delivery Dates and shall assist Buyer in arranging any desired
insurance (in amounts that Buyer shall determine) and transportation, via air
freight unless otherwise specified in writing, to any destinations specified in
writing from time to time by Buyer (subject to Section 10.12). All customs,
duties, costs, taxes, insurance premiums and other expenses relating to such
transportation and delivery shall be at Buyer's expense.

                  3.4.2 ATS shall use packaging methods and containers that are
reasonably acceptable to both parties.

         3.5 REJECTION OF ATS NUTRIENT SOLUTION IN CASE OF NONCONFORMITY.

                  3.5.1 Buyer may reject any portion of any shipment of ATS
Nutrient Solution which is not conforming in all material respects with the
description contained in EXHIBIT A hereto. In order to reject a shipment, Buyer
must (i) give notice to ATS of Buyer's intent to reject the shipment within
fifteen (15) days of receipt together with a detailed written indication of the
reasons for such possible rejection, and (ii) as promptly as reasonably possible
thereafter but in any event within an additional thirty (30) days, provide ATS
with notice of final rejection and the full basis therefor. After notice of
intention to reject is given, Buyer shall cooperate with ATS in determining
whether rejection is necessary or justified. If no such notice of intent to
reject is timely received by ATS, Buyer shall be deemed to have accepted such
shipment of ATS Nutrient Solution.

                  3.5.2 On properly rejected ATS Nutrient Solution ATS shall
provide replacement ATS Nutrient Solution at the time it is ultimately rejected,
provided that if ATS disputes the rejection, replacement shall be made, if at
all, at the time the dispute is finally resolved. ATS shall notify Buyer as
promptly as reasonably possible whether it accepts Buyer's basis for rejection.

                  3.5.3 Buyer shall, upon receipt of ATS's request for return,
promptly dispatch said batch to ATS, at ATS's cost. If ATS does not request the
return to it of a rejected batch within ninety (90) days of receipt of Buyer's
notice of rejection, Buyer shall destroy such batch promptly and provide ATS
with certification of such destruction.

         3.6 BUYER'S OBLIGATIONS. Buyer agrees:

                                       5


<PAGE>

                  3.6.1 to ascertain and comply with all applicable laws and
regulations and standards of industry or professional conduct (including without
limitation the FDA and any agency outside of the U.S. which is comparable to the
FDA) in connection with the use, distribution or promotion of the ATS Nutrient
Solution and Licensed Products, including without limitation, those applicable
to exportation, importation, product claims, labeling, approvals, registrations
and notifications;

                  3.6.2 to use best efforts, at its sole expense, to obtain and
maintain any applicable approvals, authorizations, registrations, notifications
or the like, in the United States and any countries where such approvals are
legally required, by the appropriate governmental entity or entities with regard
to manufacturing , marketing, using, selling, pricing, labeling or otherwise
promoting or making claims regarding the ATS Nutrient Solution and/or Licensed
Products or their uses or reimbursement therefor in the Marketplace; ATS will
reasonably cooperate with these efforts. Buyer shall not file any application or
document or conduct any study associated with obtaining or maintaining such
approvals, authorities, registrations, notifications or the like without ATS's
prior written consent. To the extent allowed by law (i) all approvals,
authorizations, registrations, notifications and the like (and all documents,
applications and information related thereto) and all rights thereunder or
thereto relating to the ATS Nutrient Solution shall be solely owned by and in
the name of ATS, and (ii) all approvals, authorizations, registrations,
notifications, and the like (and all documents, applications and information
related thereto) and all rights thereunder or thereto relating to the Licensed
Product shall be solely owned by and in the name of Buyer. Buyer will provide
ATS with any information regarding the foregoing that ATS may request reasonably
(with English translations);

                  3.6.3 to immediately notify ATS of any adverse or unexpected
results or any actual or potential government action relevant to ATS Nutrient
Solution and/or Licensed Products (but in no event later than 24 hours after any
such government action) and, if and to the extent requested by ATS in writing,
to suspend distribution of the Licensed Product; provided that should the
suspension continue for more than thirty (30) days, ATS will repurchase the ATS
Nutrient Solutions in Buyer's inventory at the Purchase Price paid for such ATS
Nutrient Solution;

                  3.6.4 to keep (and make reasonably available for ATS's use and
copying) for five years after termination of this Agreement (or longer if
required by applicable law) records of all Licensed Product sales and customers,
as available, sufficient to adequately administer a recall of any ATS Nutrient
Solution and to cooperate fully in any decision by ATS to recall the ATS
Nutrient Solution (by way of recalling the Licensed Product). Notwithstanding
the foregoing, Buyer has made ATS aware that Buyer will not receive the customer
name from sales derived from third parties such as The Home Shopping Network. In
addition ATS represents that it will treat all customer lists provided by Buyer
in a confidential manner.

                  3.6.5 that upon termination of the license set forth in
Section 2.1, if Buyer has any right, title or interest in anything referred to
in Sections 3.6.1 or 3.6.2 related to the affected ATS Nutrient Solution it will
immediately assign all such right, title and interest to ATS and take all
necessary action to ensure that ATS obtains the full benefit thereof or, if ATS
so requests in writing with respect to any such item, take any necessary action
to surrender and cancel such item and the related rights, title and interest;

                  3.6.6 except as limited by applicable law, Buyer shall not
knowingly sell the Licensed Product to any third party outside of or for use
outside of the Marketplace; and

                  3.6.7 to provide to ATS and make available for ATS to use, all
clinical and other data generated by Buyer related to the ATS Nutrient Solution
and/or Licensed Products, including without limitation, information related to
formulations developed by or on behalf of Buyer.

                                       6


<PAGE>

         3.7 ATS'S OBLIGATIONS. ATS agrees:

                  3.7.1 to immediately notify Buyer of any actual or potential
government action relevant to ATS Nutrient Solution and/or Licensed Product; and

                  3.7.2 to provide available data to Buyer related to the ATS
Nutrient Solution and to provide for the use of such data by Buyer to the extent
the control and use of such data is within ATS's control.

         3.8 MUTUAL OBLIGATIONS.

                  3.8.1 Buyer and ATS each agree to promptly communicate in
writing to the other all information which comes to their respective attentions
pertaining to any adverse reactions, product anomalies, stability problems or
complaints relative to or having a bearing on the ATS Nutrient Solution and/or
Licensed Product sold hereunder (or any constituent components). Buyer and ATS
shall each use reasonable commercial efforts to cooperate and to promptly
identify and resolve any such problems. In the event of a recall of any batch(s)
of any of the Licensed Product solely as a result of deficiencies in the ATS
Nutrient Solution, ATS shall bear the expense of such recall. In all other
events, Buyer shall bear the expense of such recall.

                  3.8.2 Each party shall maintain in full force and effect all
necessary licenses, permits and other authorizations required by law to carry
out its duties and obligations under this Agreement. Each party shall comply
with all laws, ordinances, rules and regulations (collectively, "Laws")
applicable to its activities under this Agreement. Buyer and ATS each shall keep
all records and reports required to be kept by applicable Laws. The parties will
reasonably cooperate with one another with the goal of ensuring full compliance
with Laws, including without limitation providing such letters, documentation
and other information on a timely basis as the other party may reasonably
require to fulfill its reporting and other obligations under applicable Laws to
applicable regulatory authorities. Except for such amounts as are expressly
required to be paid by a party to the other under this Agreement, each party
shall be solely responsible for any costs incurred by it to comply with its
obligations under applicable Laws.

                  3.8.3 Buyer and ATS each hereby agrees to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or proper to make effective the transactions
contemplated by this Agreement, including such actions as may be reasonably
necessary to obtain approvals and consents of governmental or other regulatory
authorities; PROVIDED, HOWEVER, that no party shall be required to (i) pay money
(other than as expressly required pursuant to this Agreement), or (ii) assume
any other material obligation not otherwise required to be assumed by this
Agreement.

         3.9 LIMITATION OF LIABILITY. ATS' LIABILITY TO BUYER FOR DAMAGES FROM
ANY CAUSE OF ACTION WHATSOEVER RELATING TO ATS' AGREEMENT TO SELL TO BUYER SUCH
QUANTITIES OF ATS NUTRIENT SOLUTION AS BUYER MAY REQUIRE SHALL BE LIMITED TO THE
AMOUNT PAID BY BUYER FOR THE ATS NUTRIENT SOLUTION FOR THE APPLICABLE YEAR.

4.       COMMERCIALIZATION, MARKETING AND PROMOTION
         ------------------------------------------

         4.1 COMMERCIALIZATION. Except as described elsewhere in this Section 4,
all decisions regarding commercialization, including without limitation, pricing
and terms of sale with respect to the Licensed Product, shall be determined by
Buyer in its sole discretion. Buyer agrees to use reasonable commercial efforts
to promote and market the Licensed Product under its license during the term of
this Agreement. Buyer acknowledges that its ability to commercialize the
Licensed Product is limited to within the Marketplace.

                                       7


<PAGE>

         4.2 MARKETING PARTNERS. With ATS's prior written consent, which shall
not be unreasonably withheld, Buyer shall have the right to appoint one or more
third-party marketing partners to promote, co-promote, distribute, market or
co-market the Licensed Product within the Marketplace in any country of the
world. In the event Buyer appoints a marketing partner, Buyer shall have the
right to supply the ATS Nutrient Solution to such partner at such prices as
Buyer shall determine; provided, however, that Buyer shall remain fully
responsible hereunder.

         4.3 USE OF ATS NAME. Buyer will not use the ATS name or the name of any
employee or representative of ATS without ATS's express prior written approval.
Buyer agrees that upon the request of ATS, all packaging and printed promotional
material in connection with the Licensed Product shall bear the phrase "Under
license from ATS" or other such branding language or marks identified by ATS .

         4.4 PROMOTIONAL MATERIAL. Buyer agrees to deliver to ATS, upon ATS's
request and at ATS's expense, all advertising, promotional and other printed
materials used in connection with the promotion, marketing and sale of the ATS
Nutrient Solution and/or Licensed Product.

5.       PAYMENTS
         --------

         5.1 MILESTONE PAYMENTS. Buyer shall make the following payments to ATS
in cash within thirty (30) days following receipt of notice (in form and content
reasonably acceptable to ATS) by ATS of achievement of the following milestones
(the "Milestone Payments"):

                  5.1.1.1 upon the earlier of (a) Buyer achieving Ten Million
Dollars ($10,000,000) in cumulative Gross Sales of the Licensed Product or (b)
December 31, 2001, a payment in the amount of One Million Dollars ($1,000,000);

                  5.1.1.2 upon Buyer achieving Fifty Million Dollars
($50,000,000) in cumulative Gross Sales of the Licensed Product, a payment in
the amount of One Million Five Hundred Thousand Dollars ($1,500,000);

                  5.1.1.3 upon Buyer achieving Seventy-Five Million Dollars
($75,000,000) in cumulative Gross Sales of the Licensed Product, a payment in
the amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000);

                  5.1.1.4 upon Buyer achieving One Hundred Million Dollars
($100,000,000) in cumulative Gross Sales of the Licensed Product, a payment in
the amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000).

                  5.1.1.5 upon Buyer achieving One Hundred Fifty Million Dollars
($150,000,000) in cumulative Gross Sales of the Licensed Product, a payment in
the amount of Two Million Dollars ($2,000,000);

                  5.1.1.6 upon Buyer achieving Two Hundred Million Dollars
($200,000,000) in cumulative Gross Sales of the Licensed Product, a payment in
the amount of Two Million Dollars ($2,000,000);

                                       8


<PAGE>

                  5.1.1.7 upon Buyer achieving Five Hundred Million Dollars
($500,000,000) in cumulative Gross Sales of the Licensed Product, a payment in
the amount of Ten Million Dollars ($10,000,000); and

                  5.1.1.8 upon Buyer achieving One Billion Dollars
($1,000,000,000) in cumulative Gross Sales of the Licensed Product, a payment in
the amount of Fifteen Million Dollars ($15,000,000).

         5.2 ROYALTY PAYMENTS. On a quarterly basis, Buyer shall make payments
(the "Royalty Payments") to ATS in amounts according to the following schedule:
<TABLE>
<CAPTION>
                                             AMOUNT OF ANNUAL GROSS SALES FOR EACH
         PERCENTAGE OF GROSS SALES          12-MONTH PERIOD BEGINNING ON JANUARY 1
         -------------------------          --------------------------------------
<S>                                     <C>
                    10%                         up to and including $50,000,000

                    11%                 greater than $50,000,000 and up to and including
                                                          $75,000,000

                    12%                 greater than $75,000,000 and up to and including
                                                          $100,000,000

                    13%                            greater than $100,000,000

Once the e total of the cumulative Gross Sales of Buyer Product(s) (as
calculated from the Effective Date) is equal to or greater than Two Hundred
Million Dollars ($200,000,000), Buyer shall make Royalty Payments to ATS
according to the following schedule:

                                             AMOUNT OF ANNUAL GROSS SALES FOR EACH
         PERCENTAGE OF GROSS SALES          12-MONTH PERIOD BEGINNING ON JANUARY 1
         -------------------------          --------------------------------------

                    12%                       up to and including $100,000,000

                    13%                           greater than $100,000,000
</TABLE>

Buyer shall make Royalty Payments within thirty (30) days following the end of
the applicable calendar quarter.

For purposes of clarity, the parties acknowledge the following example of the
calculation of a Royalty Payment. For the calendar quarter ending March 31,
2003, if the Gross Sales of all Licensed Product for such calendar quarter is
$20,000,000 and the Annual Gross Sales for the 12-month period beginning January
1, 2002 is $80,000,000 and the aggregate total of the cumulative Gross Sales is
$190,000,000 as of March 31, 2003, then the Royalty Payment for such quarter is
equal to 12% of $20,000,000 or $2,400,000.

         5.3 MINIMUM ROYALTY THRESHOLDS. Beginning with the Royalty Payment to
be made by Buyer to ATS for the calendar quarter ending March 31, 2002, in the
event any Royalty Payment is (i) not equal to or greater than the Exclusivity

                                       9


<PAGE>

Threshold (as defined below), then the license granted to Buyer in Section 2 of
this Agreement shall convert from exclusive to nonexclusive, or (ii) not equal
to or greater than the License Threshold (as defined below), then ATS may,
effective immediately upon notice, terminate this Agreement. The payments made
under this section shall be cumulative so that Buyer shall receive a credit in
the following period in the event the actual royalties paid in any period exceed
the minimum payments hereunder.

                  5.3.1 The "Exclusivity Threshold" shall be determined
according to the following schedule:
<TABLE>
<CAPTION>

                          Annual Minimum Royalty      Quarterly Minimum Royalty
       Contract Year            Payment                       Payment               Annual Sales Targets
       -------------      ----------------------      -------------------------     --------------------
<S>    <C>                    <C>                             <C>                        <C>
       1                      $1,500,000                      $375,000                   $15,000,000
       2                      $3,000,000                      $750,000                   $30,000,000
       3                      $4,000,000                    $1,000,000                   $40,000,000
       4                      $6,100,000                    $1,525,000                   $60,000,000
       5                      $9,600,000                    $2,400,000                   $80,000,000
       6-10                  $12,000,000/year               $3,000,000                  $100,000,000/year
</TABLE>

         The payments made under this section shall be cumulative so that Buyer
shall receive a credit in the following period in the event the actual royalties
paid in any period exceed the minimum payments hereunder. A "Contract Year" is
the twelve month period commencing on April 1st. The First Contract Year is the
period from April 1, 2001, until March 31, 2002.

                  5.3.2 The "License Threshold" shall be equal to fifty percent
(50%) of the applicable Exclusivity Threshold.

                  5.3.3 Notwithstanding the foregoing, actual payment of any
unmet quarterly balance of the Exclusivity Threshold or License Threshold for
the 2001 and 2002 calendar years may be deferred at the option of Buyer until
April 30 following the end of the respective Contract Year. Beginning with the
Royalty Payment to be made by Buyer to ATS for the calendar quarter ending March
31, 2003, the Exclusivity Threshold and License Threshold must be paid thirty
(30) days following the end of the applicable calendar quarter

         5.4 SUPPLY PRICE. The Milestone Payments and the Royalty Payments made
by Buyer under this Section 5 are in addition to the payments made by Buyer
pursuant to Section 3.3.

         5.5 METHOD OF PAYMENT; TAXES. All payments due under this Agreement to
ATS shall be paid to ATS in United States dollars. If Buyer is required by the
United States government or other authorities to withhold any tax on the amounts
payable by Buyer to ATS under this Agreement, Buyer shall be allowed to do so,
and shall in such case remit payments to the ATS net of such withheld amount,
provided that Buyer furnishes ATS with reasonable evidence of such withholding
payment in electronic or written form as soon as practicable after such
withholding in order that ATS may use the withholding tax paid as a tax credit.

                                       10


<PAGE>

6.       INFORMATION AND REPORTS
         -----------------------

         6.1 SALES REPORTS. Concurrently with the delivery of each Royalty
Payment, Buyer will provide a report to ATS covering the calendar quarter for
which the Royalty Payment is made and will show (a) unit sales of Licensed
Products during the most recently completed calendar quarter, (b) cumulative
Gross Sales for the 12-month period beginning April 1 and (c) total cumulative
Gross Sales.

         6.2 RECORDS. Buyer shall keep books and records accurately showing unit
sales and Gross Sales under the terms of this Agreement for a period of two (2)
years following the year in which the sale was made. Upon written request and
after reasonable notice, Buyer shall permit an independent, nationally
recognized certified public accountant selected by ATS and reasonably acceptable
to Buyer ("Accountant") to inspect such books and records after notice at
reasonable times for the purpose of verifying the accuracy of the quarterly
reports, the Royalty Payments due and the Milestone Payments due; PROVIDED,
HOWEVER, there shall not be more than one (1) such inspection per calendar year.
Upon the expiration of two (2) years following the end of any calendar year, the
calculation of amounts payable with respect to such fiscal year shall be binding
and conclusive upon ATS, and Buyer, and its sublicensees and marketing partners,
if any, shall be released from any liability or accountability with respect to
payments for such year. The fees and expenses of the Accountant performing such
an examination shall be borne by ATS; PROVIDED, HOWEVER, that if errors of two
percent (2%) or more in ATS's favor are discovered as a result of such
examination, Buyer shall reimburse ATS for the fees and expenses of such
examination and pay the deficiency (with interest) immediately. As a condition
to such examination, the Accountant shall execute a written agreement,
reasonably satisfactory in form and substance to Buyer, to maintain in
confidence all information obtained during the course of any such examination
except for disclosure to ATS as necessary for the above purpose. The opinion of
the Accountant shall be binding on the parties hereto.

         6.3 OTHER INFORMATION. BUYER AGREES TO PROVIDE TO ATS, COPIES OF ALL
PRESS RELEASES BY BUYER AS WELL AS COPIES OF ALL SECURITIES FILINGS BY BUYER
DURING THE TERM OF THIS AGREEMENT PRIOR TO OR COINCIDENT WITH SUCH PRESS
RELEASES OR FILINGS. BUYER AGREES TO PROVIDE ATS A COPY OF ANY AND ALL MARKETING
PLANS PREPARED BY BUYER RELATED TO THE LICENSED PRODUCT. IN THE EVENT BUYER IS
REQUIRED TO FILE THIS AGREEMENT WITH ANY GOVERNMENTAL OR REGULATORY AGENCY,
BUYER AGREES TO USE ITS BEST EFFORTS TO PROTECT PROVISIONS OF THIS AGREEMENT
THAT ARE CONFIDENTIAL AND PROPRIETARY TO ATS INCLUDING, BUT NOT LIMITED TO, THE
ROYALTY RATES AND MILESTONE PAYMENTS.

7.       TERMINATION, RIGHTS AND OBLIGATIONS UPON TERMINATION
         ----------------------------------------------------

         7.1 TERM. Unless terminated by ATS pursuant to Section 5.3 of this
Agreement, or either party pursuant to this Section 7, this Agreement shall
continue in effect until March 31, 2011. (the "Initial Term"). At the expiration
of the Initial Term, the parties shall negotiate in good faith toward the
extension of the Agreement. Upon mutual written agreement between the parties,
this Agreement may renew for subsequent two (2) year terms following the Initial
Term if Buyer has made all payments required under this Agreement.

                                       11


<PAGE>

         7.2 TERMINATION FOR DEFAULT. If either party materially defaults in the
performance of any material agreement, condition or covenant of this Agreement,
and such default or noncompliance shall not have been remedied, or steps
initiated to remedy the same to the other party's reasonable satisfaction,
within ninety (90) days (or ten (10) days in the case of non-payment) after
receipt by the defaulting party of a notice thereof from the other party, the
party not in default may terminate this Agreement. For purposes of this
Agreement, failure by ATS to timely deliver at least sixty-five percent (65%) of
the amount of the ATS Nutrient Solution ordered by Buyer as required hereunder
for any reason, including, without limitation, FORCE MAJEURE, as measured over
any period of forty-five (45) or more consecutive days, shall be deemed to be a
material default in the performance of a material agreement. Properly rejected
ATS Nutrient Solution shall not be considered delivered.

         7.3 FAILURE TO MEET MINIMUM THRESHOLDS. Buyer's failure to meet the
Exclusivity Threshold set forth in Section 5.3.1 of this Agreement shall not
permit ATS to terminate this Agreement. Buyer's failure to meet the License
Threshold set forth in Section 5.3.2 of this Agreement shall permit ATS to
terminate this Agreement as set forth therein.

         7.4 ATS NUTRIENT SOLUTION PATENT. In the event that ATS is ultimately
unable to successfully obtain any patent protection for the ATS Nutrient
Solution, then the parties agree to enter into good faith negotiations regarding
the Royalty Payments to be made by Buyer hereunder, and if the parties are
unable to successfully re-negotiate such Royalty Payments within ninety (90)
days following commencement of such negotiations, then Buyer may terminate this
Agreement upon thirty (30) days prior written notice.

         7.5 RIGHTS AND OBLIGATIONS ON EXPIRATION OR TERMINATION. Except to the
extent expressly provided to the contrary, the following provisions shall
survive the termination of this Agreement: Sections 3.6.3-3.6.6, Section 3.9,
Section 5, Section 6, Section 7.7, Section 8, Sections 9.3-9.8 and Section 10.
Any rights of ATS to payments accrued through termination as well as obligations
of the parties under firm purchase orders for purchase and delivery of ATS
Nutrient Solution at the time of such termination shall remain in effect, except
that in the case of termination under Section 7.5, the terminating party may
elect whether obligations under firm purchase orders will remain in effect. ATS
shall have the option, in its sole discretion, to repurchase from Buyer all or
any portion of Buyer's remaining inventory of ATS Nutrient Solution at the
Purchase Price paid by Buyer (the "Repurchase Right"). If ATS does not exercise
its Repurchase Right or does not repurchase all of Buyer's inventory of ATS
Nutrient Solution within thirty (30) days of termination of this Agreement, then
Buyer shall have the option to sell its remaining inventory of ATS Nutrient
Solution to any third party at a price no less than fifty percent (50%) of the
average price of the Licensed Product for the two (2) calendar quarters
immediately preceding termination of this Agreement.

         7.6 TERMINATION BY ATS. NOTWITHSTANDING ANYTHING TO THE CONTRARY, ATS
SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT IMMEDIATELY UPON WRITTEN NOTICE
TO BUYER IN THE EVENT BUYER FAILS TO COMPLY WITH ANY OF THE FOLLOWING:

                  7.6.1 Buyer must have filed a securities filing with the SEC
simultaneous with the execution of this Agreement setting forth detailed
information relative to the changes in the management structure of Buyer
contemplated by the parties and provide ATS with an executed copy of the
management agreement relating to such structure;

                  7.6.2 Buyer must close and demonstrate to ATS's satisfaction,
financing with net proceeds received by Buyer at a level of no less than one
million dollars ($1,000,000), within twenty-one (21) days of execution of this
Agreement;

                  7.6.3 Buyer must make the first commercial sale of a Licensed
Product no later than March 31, 2001;

                                       12


<PAGE>

                  7.6.4 Notwithstanding anything in Section 5.3.1 to the
contrary, Buyer must meet the Exclusivity Thresholds in Section 5.3.1 during the
First Contract Year or ATS may, at its election, terminate the Agreement rather
than convert it to non-exclusive unless Buyer has both (i) met the License
Threshold AND (ii) raised an additional five million dollars ($5,000,000) in
financing. In that case, ATS shall only have the option of converting the
license to non-exclusive. However, in the event Buyer fails to meet the License
Threshold in Section 5.3.2 during the First Contract Year, the agreement may be
terminated by ATS at its election as provided in Section 5;

                  7.6.5 Buyer must deliver to ATS executed copies of the Warrant
and Investor Rights Agreement within 5 days of the date of this Agreement.

                  7.6.6 Buyer must contract with a cosmetics formulator
reasonably acceptable to ATS within thirty (30) days from execution of the
Agreement.

         7.7 LOSS OF KEY MANAGEMENT. ATS SHALL HAVE THE RIGHT TO TERMINATE THIS
AGREEMENT UPON THIRTY (30) DAYS WRITTEN NOTICE IN THE EVENT BUYER LOSES THE
SERVICES OF MS. GAYLE WALKER, JOSEPH VICTOR OR ARNOLD SCHUCHTER AND BUYER CANNOT
SECURE THE SERVICES OF ANOTHER EXECUTIVE REASONABLY EQUIVALENT IN SKILL AND
EXPERIENCE OF THESE EXECUTIVES TO THE SATISFACTION OF ATS.

8.       CONFIDENTIALITY; OWNERSHIP
         --------------------------

         8.1 CONFIDENTIALITY.

                  8.1.1 NONDISCLOSURE AND NONUSE OBLIGATIONS. Except as
otherwise provided in this Section 8, each party shall maintain in confidence,
and use only for purposes of this Agreement, all Confidential Information of the
other party. "Confidential Information" of Buyer shall mean all cell lines,
biological materials, chemical formulas, names and expertise of employees and
consultants, know-how, formulas, processes, ideas, inventions, schematics, and
other business, financial, customer and product development plans, forecasts,
strategies and information and data, whether disclosed prior to or after the
date of this Agreement and whether disclosed in written, electronic or oral
form, by Buyer to ATS under this Agreement and marked "Confidential."
"Confidential Information" of ATS shall mean all cell lines, biological
materials, chemical formulas, names and expertise of employees and consultants,
know-how, formulas, processes, ideas, inventions, schematics, and other
business, financial, customer and product development plans, forecasts,
strategies and information and data, whether disclosed prior to or after the
date of this Agreement and whether disclosed in written, electronic or oral
form, (a) that constitutes, embodies or relates to any portion of the ATS
Nutrient Solution, or (b) all cell lines, biological materials, chemical
formulas, names and expertise of employees and consultants, know-how, formulas,
processes, ideas, inventions, schematics, and other business, financial,
customer and product development plans, forecasts, strategies and information
and data not described in clause (a) above but supplied by ATS to Buyer under
this Agreement and marked "Confidential.".

                  8.1.2 PERMITTED DISCLOSURES. To the extent it is reasonably
necessary or appropriate to fulfill its obligations or exercise its rights under
this Agreement, (i) a party may disclose Confidential Information it is
otherwise obligated under this Section 8.1 not to disclose to its Affiliates,
sublicensees, consultants, outside contractors and clinical investigators, on a

                                       13


<PAGE>

need-to-know basis, provided that such persons have entered into a written
agreement obligating them to keep the Confidential Information confidential and
not use the Confidential Information for the same time periods and to the same
extent as such party is required under this Agreement; and (ii) a party may
disclose such Confidential Information to government or other regulatory
authorities to the extent that such disclosure is required by applicable law,
regulation or court order, or is reasonably necessary to obtain Patents or
authorizations to conduct clinical trials with, and to commercially market the
Licensed Product, provided that the disclosing party shall provide written
notice to the other party and sufficient opportunity to object to such
disclosure or to request confidential treatment thereof.

                  8.1.3 INFORMATION THAT IS NOT CONFIDENTIAL. The obligation not
to disclose or use Confidential Information shall not apply to any part of such
Confidential Information that (i) is or becomes patented, published or otherwise
part of the public domain other than by acts of the party obligated not to
disclose such Confidential Information or its Affiliates, sublicensees,
consultants, outside contractors or clinical investigators in contravention of
this Agreement; (ii) is disclosed to the receiving party or its Affiliates,
sublicensees, consultants, outside contractors or clinical investigators by a
third party, provided such Confidential Information was not obtained by such
third party directly or indirectly from the other party under this Agreement on
a confidential basis; or (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving party or its Affiliates,
sublicensees, consultants, outside contractors or clinical investigators,
provided such Confidential Information was not obtained directly or indirectly
from the other party under this Agreement. Notwithstanding the foregoing, all
Confidential Information designated as owned by or assigned to a party in
connection with this Agreement shall be deemed Confidential Information of such
party disclosed by such party to the other and exception (iii) above will not be
applicable thereto.

                  8.1.4 INJUNCTIVE RELIEF. Each party acknowledges and agrees
that due to the unique nature of the other's Confidential Information, there can
be no adequate remedy at law for any breach of its obligations under this
Section 8.1 and, therefore, that upon any such breach or threat thereof, the
other party shall be entitled, notwithstanding anything to the contrary in this
Agreement, to injunctive relief and other appropriate equitable relief in
addition to whatever remedies it may have at law from any court of competent
jurisdiction in any jurisdiction authorized to grant the relief necessary to
prohibit the breach or threatened breach.

                  8.1.5 TERMS OF THIS AGREEMENT. Buyer shall not disclose any
terms or conditions of this Agreement to any third party without the prior
consent of ATS, except as required by applicable law, regulation or court order,
provided that Buyer shall provide written notice to ATS and sufficient
opportunity to object to such disclosure or to request confidential treatment
thereof.

                  8.1.6 DISCLOSURE. Should either party be required by law to
make a public disclosure about this Agreement, then the party required to
disclose may do so; PROVIDED, HOWEVER, it gives at least two (2) business days
prior written notice to the other party and, during such two (2) day period,
allow such other party to comment on the proposed disclosure and incorporate
such other party's reasonable comments in such disclosure. Otherwise, Buyer
shall not make any press release or other public disclosure of the terms or
conditions of this Agreement without the prior written consent of ATS.

         8.2 OWNERSHIP. As between the parties, ATS exclusively shall have all
right, title and interest (including all Intellectual Property Rights throughout
the world) in any Inventions, the ATS Nutrient Solution (either alone or as
incorporated into another product, including the Licensed Product),
works-of-authorship, know-how, ideas or information, made or conceived or
reduced to practice by ATS, Buyer or the parties jointly in the course of
development under this Agreement. Buyer will have no right or license in the
foregoing, except as expressly provided in this Agreement.

         8.3 ASSIGNMENT. Buyer hereby makes any assignments necessary to
accomplish the ownership provision of Section 8.2. In interpreting such
ownership provision anything made or conceived or reduced to practice by an
employee or contractor of Buyer in the course of performance under this
Agreement will be deemed so made or conceived or reduced to practice by Buyer.

                                       14


<PAGE>

Buyer has and will have appropriate agreements with all such employees and
contractors necessary to fully effect the provisions of this Section. ATS will
have the exclusive right to, and, at ATS's expense, Buyer agrees to assist ATS
in every proper way (including, without limitation, becoming a nominal party)
to, evidence, record and perfect the assignment and to apply for and obtain
recordation of and from time to time enforce, maintain and defend such
proprietary right. In the event that ATS is unable for any reason whatsoever to
secure Buyer's signature to any document it is entitled to under this Section,
Buyer hereby irrevocably designates and appoints ATS and its duly authorized
officers and agents, as its agents and attorneys-in-fact to act for and in its
behalf and instead of Buyer, to execute and file any such document and to do all
other lawfully permitted acts to further the purposes of the foregoing with the
same legal force and effect as if executed by Buyer.

         8.4 ENFORCEMENT OF PATENT RIGHTS. ATS in the case of all ATS Patent
Rights, shall have the right, at its expense, to determine the appropriate
course of action to enforce such rights or otherwise abate the infringement
thereof, to take (or refrain from taking) appropriate action to enforce such
rights, to control any litigation or other enforcement action and to enter into,
or permit, the settlement of any such litigation or other enforcement action
with respect to such rights. Buyer shall fully cooperate with ATS in any action
to enforce any such rights.

9.       REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION
         ----------------------------------------------------------

         9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF ATS. ATS represents,
warrants and covenants to Buyer as follows:

                  9.1.1 ORGANIZATION OF ATS. ATS is a corporation duly
organized, validly existing and in good standing under the laws of Delaware with
full corporate power and authority adequate for executing and delivering and
performing its obligations under this Agreement;

                  9.1.2 AUTHORIZATION. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary corporate action on
the part of ATS and this Agreement, when executed and delivered, shall
constitute a legal, valid and binding obligation of ATS, enforceable against ATS
in accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors;

                  9.1.3 COMPLIANCE WITH OTHER INSTRUMENTS. The execution,
delivery and performance of this Agreement do not and will not conflict with or
contravene any provision of the charter documents or by-laws of ATS or any
material agreement, document, instrument, indenture or other obligation of ATS;

                  9.1.4 OTHER AGREEMENTS. ATS shall not enter into any
agreement, make any commitment, take any action or fail to take any action that
would contravene any material provision of this Agreement;

                  9.1.5 INTELLECTUAL PROPERTY RIGHTS. To the best of ATS's
knowledge, ATS has sufficient legal and/or beneficial title and ownership to
grant the license and other Intellectual Property Rights provided in Section 2
of this Agreement; and

                  9.1.6 GRANT OF RIGHTS. ATS has not, and shall not during the
term of this Agreement, grant any right to any third party which would violate
the terms of or conflict with the rights granted to Buyer hereunder.

                                       15


<PAGE>

         9.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. Buyer
represents, warrants and covenants to ATS as follows:

                  9.2.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas with
full corporate power and authority adequate for executing and delivering and
performing its obligations under this Agreement;

                  9.2.2 AUTHORIZATION. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary corporate action on
the part of Buyer, and this Agreement, when executed and delivered, shall
constitute a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors;

                  9.2.3 COMPLIANCE WITH OTHER INSTRUMENTS. The execution,
delivery and performance of this Agreement do not and will not conflict with or
contravene any provision of the charter documents or by-laws of Buyer or any
material agreement, document, instrument, indenture or other obligation of
Buyer; and

                  9.2.4 OTHER AGREEMENTS. Buyer shall not enter into any
agreement, make any commitment, take any action or fail to take any action that
would contravene any material provisions of this Agreement.

         9.3 LIMITATION ON REMEDIES. ATS AND BUYER ACKNOWLEDGE THAT THE ATS
NUTRIENT SOLUTION IS LICENSED AND SOLD TO BUYER "AS IS" AND ATS AND BUYER
EXPRESSLY DISCLAIM AND HEREBY WAIVE, RELEASE AND RENOUNCE ANY WARRANTY, EXPRESS
OR IMPLIED, WITH RESPECT TO THE ATS NUTRIENT SOLUTION, INCLUDING, WITHOUT
LIMITATION ANY WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE
OR NON-INFRINGEMENT. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ATS AND
BUYER DISCLAIM ALL WARRANTIES OF ANY NATURE, EXPRESS OR IMPLIED.

         9.4 ATS INDEMNIFICATION. ATS shall indemnify Buyer against any and all
liability, damages, cost and expenses, including reasonable attorneys' fees made
against or sustained by Buyer arising from the death of, or bodily injury to,
any person on account of the use of any ATS Nutrient Solution (within the
Licensed Product), and any reasonable ATS-approved out-of-pocket costs to Buyer
of the recall of any Licensed Product (solely because it contains ATS Nutrient
Solution) (collectively "Buyer Losses") to the extent such Buyer Losses are
finally determined by a court of competent jurisdiction or by specific reference
in a settlement of litigation consented to by ATS pursuant to Section 9.7 to
have been caused by ATS's gross negligence or willful misconduct.

         9.5 BUYER INDEMNIFICATION. Buyer shall indemnify ATS against any and
all liability, damages, cost and expenses, including reasonable attorneys' fees
made against or sustained by ATS arising from the death of, or bodily injury to,
any person on account of the use of any Licensed Product (collectively "ATS
Losses") to the extent such ATS Losses are finally determined by a court of
competent jurisdiction or by specific reference in a settlement of litigation
consented to by Buyer pursuant to Section 9.7 to have been caused by (a) Buyer's
gross negligence or willful misconduct or (b) Buyer's (or its direct or indirect
distributors') failure to properly disclaim to their customers all warranties
and liabilities on behalf of ATS to the same extent as disclaimed herein.

                                       16


<PAGE>

         9.6 LIMITATIONS TO INDEMNITY. The indemnities of Sections 9.4 and 9.5
shall not apply (i) if the indemnified party fails to give the indemnifying
party prompt notice of any claim it receives and such failure materially
prejudices the indemnifying party, or (ii) unless the indemnifying party is
given the opportunity to approve any settlement, which approval shall not be
unreasonably withheld. Furthermore, the indemnifying party shall not be liable
for attorneys' fees or expenses of litigation of the indemnified party unless
the indemnified party gives the indemnifying party the opportunity to assume
control of the defense or settlement. In addition, if the indemnifying party
assumes such control, it shall only be responsible for the legal fees and
litigation expenses of the attorneys it designates to assume control of the
litigation. In no event shall the indemnifying party assume control of the
defense of the indemnified party without the consent of the indemnified party
(which consent shall be given or not at its sole discretion).

         9.7 SETTLEMENT. In no event shall the indemnified party be entitled to
settle any of the above-mentioned claims without the consent of the indemnifying
party, which consent shall not be unreasonably withheld.

         9.8 INSURANCE. Each party hereto agrees to use its best efforts to
procure, and at all times during the term of this Agreement and for a period of
three (3) years after the termination hereof, to maintain in full force and
effect liability insurance coverage of at least one million dollars ($1,000,000)
per occurrence. Such insurance shall be designed to cover any and all of the
other party's losses (Buyer Losses or ATS Losses, as applicable) for which
indemnification is provided by Sections 9.4 and 9.5 above. Each party, upon the
request of the other, will provide appropriate certificates of insurance
evidencing the insurance required under this Section 9.8.

10.      MISCELLANEOUS
         -------------

         10.1 ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties regarding the subject matter hereof and supersedes all prior
agreements, understandings and negotiations regarding the same. This Agreement
may not be changed, modified, amended or supplemented except by a written
instrument signed by both parties. Furthermore, it is the intention of the
parties that this Agreement be controlling over additional or different terms of
any order, confirmation, invoice or similar document, even if accepted in
writing by both parties, and that waivers and amendments shall be effective only
if made by non-pre-printed agreements clearly understood by both parties to be
an amendment or waiver.

         10.2 ASSIGNABILITY. This Agreement may not be assigned by either party
without the prior consent of the other party (and any attempt to do so will be
void); PROVIDED, HOWEVER, either party may assign this Agreement to any entity
which acquires substantially all of its stock or its assets or business to which
this Agreement relates.

         10.3 SEVERABILITY. If any provision of this Agreement shall be held
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.

         10.4 FURTHER ASSURANCES. Each party hereto agrees to execute,
acknowledge and deliver such further instruments, and to do all such other acts,
as may be necessary or appropriate in order to carry out the purposes and intent
of this Agreement.

         10.5 USE OF PARTY'S NAME. No right, express or implied, is granted by
this Agreement to either party to use in any manner the name of the other or any
other trade name or trademark of the other in connection with the performance of
this Agreement.

         10.6 NOTICE AND REPORTS. All notices, consents or approvals required by
this Agreement shall be in writing sent by internationally recognized overnight
carrier or by facsimile to the parties at the following addresses or such other
addresses as may be designated in writing by the respective parties:

                                       17


<PAGE>

         To ATS:                    ADVANCED TISSUE SCIENCES, INC.
                                    10933 North Torrey Pines Road
                                    La Jolla, CA 92037
                                    Attn:  President
                                    Facsimile:  (858) 713-7910

         With a copy to:            Brobeck, Phleger & Harrison LLP
                                    12390 El Camino Real
                                    San Diego, CA 92130
                                    Attn:  Faye H. Russell, Esq.
                                    Facsimile:  (858)720-2555

         To Buyer:                  BIOZHEM COSMECEUTICALS INC.
                                    32238 Paseo Adelanto, Suite A
                                    San Juan Capistrano, CA  92675
                                    Attn:  John Reimann
                                    Facsimile:  (949) 707-0505

         With a copy to:            Robert D. Remy
                                    820 Gessner
                                    Suite 1360
                                    Houston, Texas 77024
                                    Facsimile: (713) 465-8018

Notices shall be deemed effective one day following delivery to such overnight
courier or by facsimile.

         10.7 RELATIONSHIPS OF THE PARTIES. Both parties are independent
contractors under this Agreement. Nothing contained in this Agreement is
intended nor is to be construed so as to constitute ATS and Buyer as partners,
agents or joint venturers with respect to this Agreement. Neither party hereto
shall have any express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other party or to bind the other
party to any contract, agreement or undertaking with any third party.

         10.8 WAIVER. The waiver by either party of a breach of any provisions
contained herein shall be in writing and shall in no way be construed as a
waiver of any succeeding breach of such provision or the waiver of the provision
itself.

         10.9 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the state of California without regard to the
conflicts of laws provisions thereof. The exclusive jurisdiction and venue of
any action with respect to this Agreement shall be the state or federal courts
located within the state of California and each of the parties hereto submits
itself to the exclusive jurisdiction and venue of such courts for the purpose of
any such action. Service of process in any such action may be effected in the
manner provided in Section 10.6 for delivery of notices. The prevailing party in
any legal action to enforce or interpret this Agreement shall be entitled to
reasonable costs and attorney's fees.

         10.10 CAPTIONS. Paragraph captions are inserted for convenience only
and in no way are to construed to define, limit or affect the construction or
interpretation hereof.

                                       18


<PAGE>

         10.11 FORCE MAJEURE. A party shall not be liable for nonperformance or
delay in performance (other than of obligations regarding confidentiality)
caused by any event reasonably beyond the control of such party including,
without limitation, wars, hostilities, revolutions, riots, civil commotion,
national emergency, strikes, lockouts, unavailability of supplies, epidemics,
fire, flood, earthquake, force of nature, explosion, embargo, or any other Act
of God, or any law, proclamation, regulation, ordinance, or other act or order
of any court, government or governmental agency.

         10.12 EXPORT CONTROL. Buyer agrees to comply with all applicable export
laws, restrictions and regulations of the U.S. Department of Commerce, the U.S.
Department of Treasury and any other United States or foreign agency or
authority. Buyer will not export or re-export, or allow the export or reexport
of any ATS Nutrient Solution and/or Licensed Product (or technical data or
information related thereto) or any direct product thereof in violation of any
such restrictions, laws or regulations, or, without all necessary licenses and
approvals, to any country to which such export or reexport is prohibited,
including, without limitation, export or re-export to or any country subject to
U.S. trade embargoes, or to any party on the U.S. Export Administration Table of
Denial Orders or the U.S. Department of Treasury List of Specialty Designated
Nationals, or to any prohibited destination in any of the Country Groups
specified in the then current Supplement No. 1 to Port 740 or the Commerce
Control List specified in the then current Supplement No. 1 to part 738 of the
U.S. Export Administration Regulations (or any successor supplement or
regulations). Buyer shall obtain and bear all expenses relating to any necessary
licenses and/or exemptions with respect to the export from the U.S. of the ATS
Nutrient Solution and/or Licensed Product to any location in compliance with all
applicable laws and regulations.

         10.13 BASIS OF BARGAIN. EACH PARTY RECOGNIZES AND AGREES THAT THE
WARRANTY DISCLAIMERS AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE
MATERIAL BARGAINED FOR BASES OF THIS AGREEMENT AND THAT THEY HAVE BEEN TAKEN
INTO ACCOUNT AND REFLECTED IN DETERMINING THE CONSIDERATION TO BE GIVEN BY EACH
PARTY UNDER THIS AGREEMENT AND IN THE DECISION BY EACH PARTY TO ENTER INTO THIS
AGREEMENT.

12.      ARBITRATION
         -----------

         12.1 Any dispute arising out of or relating to this Agreement,
including any alleged breach or fraud in the inducement hereof, shall be settled
in accordance with the commercial rules of the American Arbitration Association.
The results of such arbitration proceedings shall be binding upon the parties
hereto, and judgment may entered upon the arbitration award in any court having
jurisdiction thereof. Notwithstanding the foregoing, either party may seek
interim injunctive relief from any court of competent jurisdiction.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first written above.

                                          ADVANCED TISSUE SCIENCES, INC.

                                          By: /s/ Gail K. Naughton

                                          Title: President

                                          Print Name: Gail K Naughton

                                          BIOZHEM COSMECEUTICALS INC.

                                          By: /s/ John R. Riemann

                                          Title: CEO

                                          Print Name: JOHN R. RIEMANN

                                       19



<PAGE>

                                    EXHIBIT A

                              ATS NUTRIENT SOLUTION
                              ---------------------

The ATS Nutrient Solution is a byproduct of ATS manufacturing process for its
tissue engineered products. The ATS Nutrient Solution contains the following:

         INORGANIC SALTS (including)
                 Calcium Chloride (CaCl2) (anhyd.)
                 Ferric Nitrate (Fe(NO3)3-9H2O)
                 Potassium Chloride (KCl)
                 Magnesium Sulfate (MgSO4)
                 Sodium Chloride (NaCl)
                 Sodium Bicarbonate (NaHCO3)
                 Sodium Phosphate (NaH2PO4-H2O)
         OTHER COMPONENTS
                   D-Glucose
                   Phenol red
                   Bovine calf serum
         AMINO  ACIDS (including)
                   L-Arginine-HCl
                   L-Cystine 2HCl
                   L-Glutamine
                   Glycine
                   L-Histidine HCl-H2O
                   L-Isoleucine
                   L-Leucine
                   L-Lysine-HCl
                   L-Methionine
                   L-Phenylalanine
                   L-Serine
                   L-Threonine
                   L-Tryptophan
                   L-Tyrosine 2Na 2H20
         VITAMINS (including)
                 D-Ca pantothenate
                 Choline Chloride
                 Folic Acid
                 i-Inositol
                 Niacinamide
                 Pyridoxine HCl
                 Riboflavin
                 Thiamine HCl
         NON ESSENTIAL AMINO ACIDS
         HUMAN COLLAGENS
         NATURAL ANTI-OXIDANTS
         NATURALLY SECRETED GROWTH FACTORS (including)
                 TGF beta
                 VegF
                 IL-6

                                      A-1


<PAGE>

                                    EXHIBIT B

                                     PRICES
                                     ------

PRICES ARE EXPRESSED IN TERMS OF CONCENTRATION FROM THE SOLUTION THAT IS A
DIRECT BYPRODUCT OF THE MANUFACTURING PROCESS. FOR EXAMPLE, 1X NUTRIENT SOLUTION
IS THE MATERIAL GENERATED BY MANUFACTURING WITHOUT ANY ADDITIONAL CONCENTRATION.
CONSEQUENTLY 2X, 5X OR 10X SOLUTION IS MATERIAL THAT HAS BEEN CONCENTRATED IN BY
THE APPROPRIATE FACTOR.

----------------------------------- -------------------------
Concentration                       Price Per Liter
----------------------------------- -------------------------
1X NUTRIENT SOLUTION                $0.50
2X NUTRIENT SOLUTION                $1.00
5X NUTRIENT SOLUTION                $2.50
10X NUTRIENT SOLUTION               $5.00

                                      B-1


<PAGE>

                                    EXHIBIT C

                                 FORM OF WARRANT
                                 ---------------

         THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
         AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
         ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED, OR THE AVAILABILITY OF AN EXEMPTION FROM
         REGISTRATION UNDER SUCH ACT.

                        WARRANT TO PURCHASE COMMON STOCK
                                       OF
                           BIOZHEM COSMECEUTICALS INC.

                            VOID AFTER ________, 2005

         This Warrant is issued to Advanced Tissue Sciences, Inc., or its
registered assigns ("Holder"), by BIOZHEM COSMECEUTICALS, INC., a Texas
corporation, (the "Company"), on ___________, 2000 (the "Warrant Issue Date").
This Warrant is issued in consideration of Holder's entering into the License
and Supply Agreement with the Company of even date herewith (the "License and
Supply Agreement").

         10.13.1 PURCHASE SHARES. Subject to the terms and conditions
hereinafter set forth, the Holder is entitled, upon surrender of this Warrant at
the principal office of the Company (or at such other place as the Company shall
notify the Holder hereof in writing), to purchase from the Company up to
[_______________] fully paid and nonassessable shares of Common Stock of the
Company, [$_________] par value per share (the "Common Stock") [TWO PERCENT (2%)
OF THE CAPITAL STOCK OF THE COMPANY OUTSTANDING AS OF THE DATE OF EXECUTION OF
THE LICENSE AND SUPPLY AGREEMENT (ASSUMING FULL CONVERSION OF ALL CONVERTIBLE
SECURITIES)]. The number of shares of Common Stock issuable pursuant to this
Section 1 (the "Shares") shall be subject to adjustment pursuant to Section 8
hereof.

         10.13.2 EXERCISE PRICE. The per share purchase price for the Shares
shall be [$ _____] [THE PER SHARE AVERAGE CLOSING PRICE OF THE COMMON STOCK FOR
THE FIVE (5) BUSINESS DAYS PRIOR TO THE DATE OF EXECUTION OF THE LICENSE AND
SUPPLY AGREEMENT], as adjusted from time to time pursuant to Section 8 hereof
(the "Exercise Price"). It is acknowledged that the Exercise Price is based on
negotiated terms and is not intended to reflect the current fair market value of
the Common Stock.

         10.13.3 EXERCISE PERIOD. This Warrant shall be exercisable, in whole or
in part, during the term commencing on the Warrant Issue Date and ending at 5:00
p.m. California time on [_____________], 2005.

         10.13.4 METHOD OF EXERCISE. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:

                  10.13.4.1 the surrender of the Warrant, together with a duly
executed copy of the form of Notice of Exercise attached hereto, to the
Secretary of the Company at its principal offices; and

                                      C-1


<PAGE>

                  10.13.4.2 the payment to the Company of cash equal to the
aggregate Exercise Price for the number of Shares being purchased.

         10.13.5 NET EXERCISE. In lieu of exercising this Warrant pursuant to
Section 4, the Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Common Stock equal to the value of the
"spread" on the Shares (or the portion thereof being canceled) by surrender of
this Warrant at the principal office of the Company together with the Notice of
Exercise, in which event the Company shall issue to the holder hereof a number
of shares of Common Stock computed using the following formula:

                                    Y (A - B)
                                    ---------
                          X =           A

         Where:   X =      The number of shares of Common Stock to be issued
                           to the Holder pursuant to this net exercise;

                  Y =      The number of Shares in respect of which the net
                           issue election is made;

                  A =      The fair market value of one share of the Common
                           Stock at the time the net issue election is made;

                  B =      The Exercise Price (as adjusted to the date of the
                           net issuance).

For purposes of this Section 5, the fair market value of one share of Common
Stock as of a particular date shall be determined as follows: (i) if traded on a
securities exchange or through The Nasdaq National Market, the value shall be
deemed to be the average of the closing prices of the securities on such
exchange over the five (5) day period ending one (1) day prior to the net
exercise election; (ii) if traded over-the-counter but not on the Nasdaq
National Market, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the five (5) day period ending one
(1) day prior to the net exercise; and (iii) if there is no active public
market, the value shall be the fair market value thereof, as determined in good
faith by the Board of Directors of the Company.

         10.13.6 CERTIFICATES FOR SHARES. Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the number of
Shares so purchased shall be issued as soon as practicable thereafter (with
appropriate restrictive legends, if applicable), and in any event within ten
(10) days of the delivery of the Notice of Exercise.

         10.13.7 ISSUANCE OF SHARES. The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens, and charges
with respect to the issuance thereof.

         10.13.8 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number
of and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:

                  10.13.8.1 SPECIAL DEFINITIONS. For purposes of this Section 8,
the following definitions apply:

                  (i)      "Options" shall mean rights, options, or warrants to
                           subscribe for, purchase or otherwise acquire either
                           Common Stock or Convertible Securities (defined
                           below);

                                      C-2


<PAGE>

                  (ii)     "Change in Control Transaction" shall mean a
                           consolidation of the Company with, or merger of the
                           Company into, another corporation or business
                           organization (other than a consolidation or merger in
                           which the Company is the continuing corporation), or
                           any sale or conveyance to another corporation or
                           other business organization of all of the Company's
                           stock or all or substantially all of the assets of
                           the Company.

                  (iii)    "Convertible Securities" shall mean any evidences of
                           indebtedness, shares (other than Common Stock) or
                           other securities convertible into or exchangeable for
                           Common Stock;

                  (iv)     "Additional Shares of Common Stock" shall mean all
                           shares of Common Stock issued (or, pursuant to
                           Section 8(c) deemed to be issued) by the Company
                           after the Warrant Issue Date (i) to any celebrity
                           endorser of the Licensed Product (as defined in the
                           License and Supply Agreement), (ii) in a Change of
                           Control Transaction with Beauty Technology Institute
                           ("BTI"), whether issued to BTI or to the employees
                           and/or shareholders of BTI, or (ii) to Sierra
                           Silicon, Jim Chapman or Steve Ricketts.

         10.13.8.2 NO ADJUSTMENT OF EXERCISE PRICE. Any provision herein to the
contrary notwithstanding, no adjustment in the Exercise Price shall be made in
respect of the issuance of Additional Shares of Common Stock unless the
consideration per share (determined pursuant to Section 8(d) hereof) for an
Additional Share of Common Stock issued or deemed to be issued by the Company is
less than the Exercise Price in effect on the date of, and immediately prior to
such issue.

         10.13.8.3 DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. In the
event the Company at any time or from time to time after the Warrant Issue Date
shall issue any Options or Convertible Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein designed to protect against dilution) of Common
Stock issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or grant or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided further that in
any such case in which Additional Shares of Common Stock are deemed to be
issued:

                  (i)      no further adjustments in the Exercise Price shall be
                           made upon the subsequent issue of Convertible
                           Securities or shares of Common Stock upon the
                           exercise of such Options or conversion or exchange of
                           such Convertible Securities;

                  (ii)     if such Options or Convertible Securities by their
                           terms provide, with the passage of time or otherwise,
                           for any increase in the consideration payable to the
                           Company, or decrease in the number of shares of
                           Common Stock issuable, upon the exercise, conversion
                           or exchange thereof, the Exercise Price computed upon
                           the original issue thereof (or upon the occurrence of
                           a record date with respect thereto), and any
                           subsequent adjustments based thereon, shall, upon any
                           such increase or decrease becoming effective, be
                           recomputed to reflect such increase or decrease

                                      C-3


<PAGE>

                           insofar as it affects such Options or the rights of
                           conversion or exchange under such Convertible
                           Securities (provided, however, that no such
                           adjustment of the Exercise Price shall affect Common
                           Stock previously issued upon exercise of this
                           Warrant).

         10.13.8.4 DETERMINATION OF CONSIDERATION. For purposes of this Section
8, the consideration received by the Company for the issue of any Additional
Shares of Common Stock shall be computed as follows:

                  (i)      CASH AND PROPERTY. Such consideration shall:

                           (a)      insofar as it consists of cash, be computed
                                    at the aggregate amount of cash received or
                                    to be received by the Company excluding
                                    amounts paid or payable for accrued interest
                                    or accrued dividends;

                           (b)      insofar as it consists of property other
                                    than cash, be computed at the fair value
                                    thereof at the time of such issue, as
                                    determined in good faith by the Board of
                                    Directors of the Company; and

                           (c)      in the event Additional Shares of Common
                                    Stock are issued together with other shares
                                    or securities or other assets of the Company
                                    for consideration which covers both, be the
                                    proportion of such consideration so
                                    received, computed as provided in clauses
                                    (a) and (b) above, as determined in good
                                    faith by the Board of Directors of the
                                    Company.

                  (ii)     OPTIONS AND CONVERTIBLE SECURITIES. The consideration
                           per share received by the Company for Additional
                           Shares of Common Stock deemed to have been issued
                           pursuant to Section 8(c), relating to Options and
                           Convertible Securities shall be determined by
                           dividing

                           (a)      the total amount, if any, received or
                                    receivable by the Company as consideration
                                    for the issue of such Options or Convertible
                                    Securities, plus the minimum aggregate
                                    amount of additional consideration (as set
                                    forth in the instruments relating thereto,
                                    without regard to any provision contained
                                    therein designed to protect against
                                    dilution) payable to the Company upon the
                                    exercise of such Options or the conversion
                                    or exchange of such Convertible Securities,
                                    or in the case of Options for Convertible
                                    Securities, the exercise of such Options for
                                    Convertible Securities and the conversion or
                                    exchange of such Convertible Securities by

                                      C-4


<PAGE>

                           (b)      the maximum number of shares of Common Stock
                                    (as set forth in the instruments relating
                                    thereto, without regard to any provision
                                    contained therein designed to protect
                                    against the dilution) issuable upon the
                                    exercise of such Options or conversion or
                                    exchange of such Convertible Securities.

         10.13.8.5 ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF ADDITIONAL
SHARES OF COMMON STOCK. In the event the Company, at any time after the Warrant
Issue Date shall issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 8(c)) without
consideration or for a consideration per share less than the Exercise Price in
effect on the date of and immediately prior to such issue, then and in such
event, the Exercise Price shall be reduced, concurrently with such issue, to a
price (calculated to the nearest cent) determined by multiplying such Exercise
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issue plus the number of
shares of Common Stock which the aggregate consideration received by the Company
for the total number of Additional Shares of Common Stock so issued would
purchase at such Exercise Price in effect immediately prior to such issuance,
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of such Additional
Shares of Common Stock so issued. For the purpose of the above calculation, the
number of shares of Common Stock outstanding immediately prior to such issue
shall be calculated on a fully diluted basis, as if all Convertible Securities
had been fully converted into shares of Common Stock and any outstanding
warrants, options or other rights for the purchase of shares of stock or
convertible securities had been fully exercised (and the resulting securities
fully converted into shares of Common Stock, if so convertible) as of such date.

         10.13.8.6 ADJUSTMENTS TO EXERCISE PRICE FOR STOCK DIVIDENDS AND FOR
COMBINATIONS OR SUBDIVISIONS OF COMMON STOCK. In the event that the Company at
any time or from time to time after the Warrant Issue Date shall declare or pay,
without consideration, any dividend on the Common Stock payable in Common Stock
or in any right to acquire Common Stock for no consideration, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or in the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, then the Exercise Price (and the number of shares covered by
the warrant) in effect immediately prior to such event shall, concurrently with
the effectiveness of such event, be proportionately decreased or increased, as
appropriate. In the event that this Company shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration then the Company shall be deemed to have made
a dividend payable in Common Stock in an amount of shares equal to the maximum
number of shares issuable upon exercise of such rights to acquire Common Stock.

         10.13.8.7 CHANGE OF CONTROL TRANSACTION, RECLASSIFICATION AND
REORGANIZATION. If any Change of Control Transaction, or any capital
reorganization or reclassification of the capital stock of the Company shall be
effected in such a way that holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a condition of such Change of Control Transaction, reorganization or
reclassification, lawful and adequate provisions shall be made whereby the
Holder shall thereupon have the right to receive, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore receivable upon the exercise of the Warrant, such shares
of stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such Common Stock immediately theretofore receivable upon
such exercise had such Change of Control Transaction, reorganization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of the Holder to the end
that the provisions hereof (including, without limitation, provisions for

                                      C-5


<PAGE>

adjustments of the Exercise Price) shall thereafter be applicable, as nearly as
may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights. Notwithstanding
anything to the contrary contained herein, the Holder shall have the right to
exercise the Warrant instead of giving effect to the provisions contained in
this Section.

         10.13.8.8 NOTICE OF ADJUSTMENT. When any adjustment is required to be
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Warrant Price, the Company shall promptly notify the holder of such
event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of this Warrant.

     10.13.9 NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.

         10.13.10 NO SHAREHOLDER RIGHTS. Prior to exercise of this Warrant, the
Holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise preemptive rights or be
notified of shareholder meetings, and such holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
However, nothing in this Section 10 shall limit the right of the Holder to be
provided the Notices required under this Warrant.

         10.13.11 TRANSFERS OF WARRANT. Subject to compliance with applicable
federal and state securities laws, this Warrant and all rights hereunder are
transferable in whole or in part by the Holder to any person or entity upon
written notice to the Company. The transfer shall be recorded on the books of
the Company upon the surrender of this Warrant, properly endorsed, to the
Company at its principal offices, and the payment to the Company of all transfer
taxes and other governmental charges imposed on such transfer. In the event of a
partial transfer, the Company shall issue to the holders one or more appropriate
new warrants.

         10.13.12 SUCCESSORS AND ASSIGNS. The terms and provisions of this
Warrant and the Purchase Agreement shall inure to the benefit of, and be binding
upon, the Company and the Holder and their respective successors and assigns.

         10.13.13 AMENDMENTS AND WAIVERS. Any term of this Warrant may be
amended and the observance of any term of this Warrant may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Holder.

         10.13.14 NOTICES. All notices required under this Warrant and shall be
deemed to have been given or made for all purposes (i) upon personal delivery,
(ii) upon confirmation receipt that the communication was successfully sent to
the applicable number if sent by facsimile; or (iii) one day after being sent,
when sent by professional overnight courier service. Notices to the Company
shall be sent to the principal office of the Company (or at such other place as
the Company shall notify the Holder hereof in writing). Notices to the Holder
shall be sent to the address of the Holder on the books of the Company (or at
such other place as the Holder shall notify the Company hereof in writing).

         10.13.15 INVESTOR RIGHTS AGREEMENT. The Holder and the Company are
entering into the Investor Rights Agreement of even date herewith, which
provides for, among other things, Holder's right to require registration of the
Shares issuable hereunder.

                                      C-6


<PAGE>

         10.13.16 CAPTIONS. The section and subsection headings of this Warrant
are inserted for convenience only and shall not constitute a part of this
Warrant in construing or interpreting any provision hereof.

         10.13.17 GOVERNING LAW. This Warrant shall be governed by the laws of
the State of California as applied to agreements among California residents made
and to be performed entirely within the State of California.

         10.13.18 INVESTMENT INTENT. By acceptance of this Warrant, the Holder
represents that it is acquiring this Warrant, and would acquire the underlying
Shares, for its own account for investment purposes only, and not for resale or
with a view to distribution of such shares or any part thereof.

         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by an officer thereunto duly authorized.

                                           BIOZHEM COSMECEUTICALS INC.

                                           By:
                                               ---------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                      C-7


<PAGE>

                               NOTICE OF EXERCISE
                               ------------------

To:  BIOZHEM COSMECEUTICALS INC.

         The undersigned hereby elects to [check applicable subsection]:

________ (a)      Purchase _________________ shares of Common Stock of BIOZHEM
                  COSMECEUTICALS INC., pursuant to the terms of the attached
                  Warrant and payment of the Exercise Price per share required
                  under such Warrant accompanies this notice;

         OR

________ (b)      Exercise the attached Warrant for [all of the shares]
                  [________ of the shares] [cross out inapplicable phrase]
                  purchasable under the Warrant pursuant to the net exercise
                  provisions of Section 5 of such Warrant.

         The undersigned hereby represents and warrants that the undersigned is
acquiring such shares for his own account for investment purposes only, and not
for resale or with a view to distribution of such shares or any part thereof.

                                       WARRANTHOLDER:

                                       _____________________________________

                                       By: _________________________________
                                       Its: ________________________________
                                       Name: _______________________________

                                       Address: ____________________________
                                                ____________________________

Date: _______________________

Name in which the shares should be registered:

___________________________________

                                      C-8


<PAGE>

                                    EXHIBIT D

                            INVESTOR RIGHTS AGREEMENT
                            -------------------------

                            INVESTOR RIGHTS AGREEMENT

                           __________________________

                              ______________, 2000

                                       by

                           BIOZHEM COSMECEUTICALS INC.

                                       and

                         ADVANCED TISSUE SCIENCES, INC.



<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

1. Registration Rights.........................................................1

     1.1. Definitions..........................................................1

     1.2. Request for Registration.............................................2

     1.3. Company Registration.................................................3

     1.4. Obligations of the Company...........................................3

     1.5. Furnish Information..................................................5

     1.6. Expenses of this Section 1 Registration..............................5

     1.7. Underwriting Requirements............................................5

     1.8. Delay of Registration................................................6

     1.9. Indemnification......................................................6

     1.10. Reports Under Securities Exchange Act of 1934.......................7

     1.11. Form S-3 Registration...............................................8

     1.12. Assignment of Registration Rights...................................9

     1.13. Limitations on Subsequent Registration Rights.......................9

     1.14. Termination of Registration Rights..................................9

2. Covenants of the Company....................................................9

3. Miscellaneous...............................................................9

     3.1. Successors and Assigns...............................................9

     3.2. Governing Law.......................................................10

     3.3. Counterparts........................................................10

     3.4. Titles and Subtitles................................................10

i


<PAGE>

     3.5. Notices.............................................................10

     3.6. Expenses............................................................10

     3.7. Amendments and Waivers..............................................10

     3.8. Severability........................................................10

     3.9. Aggregation of Stock................................................10

     3.10. Entire Agreement; Amendment; Waiver................................11

ii


<PAGE>

                           INVESTORS' RIGHTS AGREEMENT

     THIS INVESTORS' RIGHTS AGREEMENT is made as of the _________ day of
______________, 2000, by and between BIOZHEM COSMECEUTICALS INC., a Texas
corporation (the "Company"), and ADVANCED TISSUE SCIENCES, INC., a Delaware
corporation (the "Investor").

                                    RECITALS

         WHEREAS, the Company and the Investor are parties to the License and
Supply Agreement of even date herewith (the "License and Supply Agreement");

         WHEREAS, the Company and the Investor are parties to the Warrant to
Purchase Common Stock of even date herewith (the "Warrant");

         WHEREAS, in order to induce the Investor to enter into the License and
Supply Agreement, the Investor and the Company hereby agree that this Agreement
shall govern the rights of the Investor to cause the Company to register shares
of Common Stock issuable to the Investor and certain other matters as set forth
herein and provide that these rights are most favorable rights offered to any
other holders of the Company's securities.

         NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

11. REGISTRATION RIGHTS. The Company covenants and agrees as follows:

         11.1 DEFINITIONS. For purposes of this Section 1:

                  11.1.1 The term "Act" means the Securities Act of 1933, as
amended.

                  11.1.2 The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.

                  11.1.3 The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.12 hereof.

                  11.1.4 The term "1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.

                  11.1.5 The term "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.

                  11.1.6 The term "Registrable Securities" means the Common
Stock issuable or issued upon exercise of the Warrant.

                  11.1.7 The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.

                                      D-1


<PAGE>

                  11.1.8 The term "SEC" shall mean the Securities and Exchange
Commission.

         11.2 REQUEST FOR REGISTRATION.

                  11.2.1 If the Company shall receive at any time after
[SEPTEMBER 1, 2003] a written request from the Holders of a majority of the
Registrable Securities then outstanding that the Company file a registration
statement under the Act covering the registration of at least forty percent
(40%) of the Registrable Securities then outstanding (or a lesser percent if the
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $7,500,000), then the Company shall:

                           11.2.1.1 within ten (10) days of the receipt thereof,
give written notice of such request to all Holders; and

                           11.2.1.2 effect as soon as practicable, and in any
event within 60 days of the receipt of such request, the registration under the
Act of all Registrable Securities which the Holders request to be registered,
subject to the limitations of subsection 1.2(b), within twenty (20) days of the
mailing of such notice by the Company in accordance with Section 3.5.

                  11.2.2 If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to subsection 1.2(a) and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by the Initiating Holders
and shall be reasonably acceptable to the Company. In such event, the right of
any Holder to include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in subsection 1.4(e)) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder; provided, however, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from the
underwriting.

                  11.2.3 Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
taking action with respect to such filing for a period of not more than 60 days
after receipt of the request of the Initiating Holders; provided, however, that
the Company may not utilize this right more than once in any twelve-month
period.

                                      D-2


<PAGE>

                  11.2.4 In addition, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 1.2:

                           11.2.4.1 After the Company has effected [ONE (1)]
registration pursuant to this Section 1.2 and such registration has been
declared or ordered effective;

                           11.2.4.2 During the period starting with the date
thirty (30) days prior to the Company's good faith estimate of the date of
filing of, and ending on a date one hundred eighty (180) days after the
effective date of, a registration subject to Section 1.3 hereof; provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or

                           11.2.4.3 If the Initiating Holders propose to dispose
of shares of Registrable Securities that may be immediately registered on Form
S-3 pursuant to a request made pursuant to Section 1.11 below.

         11.3 COMPANY REGISTRATION. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.7, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.

         11.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

                  11.4.1 Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for a period of up to one hundred twenty
(120) days or until the distribution contemplated in the Registration Statement
has been completed; provided, however, that (i) such 120-day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (ii) in
the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such 120-day period
shall be extended, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold, provided that Rule 415, or any
successor rule under the Act, permits an offering on a continuous or delayed
basis, and provided further that applicable rules under the Act governing the
obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (I) includes any prospectus required by Section
10(a)(3) of the Act or (II) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the 1934 Act in the registration statement.

                                      D-3


<PAGE>

                  11.4.2 Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.

                  11.4.3 Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.

                  11.4.4 Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Act.

                  11.4.5 In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

                  11.4.6 Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.

                  11.4.7 Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.

11.4.8 Provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration.

                                    (i) 11.4.9 Furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.

         11.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.

                                      D-4


<PAGE>

         11.6 EXPENSES OF THIS SECTION 1 REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to this Section 1, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company
(including fees and disbursements of counsel for the Company in its capacity as
counsel to the selling Holders hereunder; if Company counsel does not make
itself available for this purpose, the Company will pay the reasonable fees and
disbursements of one counsel for the selling Holders) and the reasonable fees
and disbursements of one counsel for the selling Holders shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2; provided further, however, that if
at the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that known
to the Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2.

         11.7 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by those
persons entitled to select the underwriters, and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by shareholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata, according to the total amount of securities entitled to be included, among
the Holders' Registrable Securities first, and then, to the extent that the
number of the Holders' Registrable Securities to be included in such offering is
less that the total amount of securities entitled to be included therein,
apportioned pro rata, according to the total amount of securities entitled to be
included therein, among the other selling shareholders) but in no event shall
the amount of Registrable Securities of the selling Holders included in the
offering be reduced if the number of the Holders' Registrable Securities to be
included in such offering is less that the total amount of securities entitled
to be included therein.

         11.8 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.

         11.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:

                                      D-5


<PAGE>

                  11.9.1 To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, or the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.

                  11.9.2 To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.9(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.9(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this subsection 1.9(b) exceed the gross proceeds
from the offering received by such Holder.

                  11.9.3 Promptly after receipt by an indemnified party under
this Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.9.

                                      D-6


<PAGE>

                  11.9.4 If the indemnification provided for in this Section 1.9
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

                  11.9.5 Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.

                  11.9.6 The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.

         11.10 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:

                  11.10.1 make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times during the term
of this Agreement;

                  11.10.2 take such action, including the voluntary registration
of its Common Stock under Section 12 of the 1934 Act, as is necessary to enable
the Holders to utilize Form S-3 for the sale of their Registrable Securities;

                  11.10.3 file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and

                  11.10.4 furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Act and the 1934 Act or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.

         11.11 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:

                                      D-7


<PAGE>

                  11.11.1 promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and

                  11.11.2 as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.11: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $250,000; (3) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than 60 days after receipt of
the request of the Holder or Holders under this Section 1.11; provided, however,
that the Company shall not utilize this right more than once in any twelve month
period; (4) if the Company has, within the twelve (12) month period preceding
the date of such request, already effected two registrations on Form S-3 for the
Holders pursuant to this Section 1.11; or (5) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.

                  11.11.3 Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.11 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.

         11.12 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities, provided: (a) the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee agrees
in writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.13 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act.

         11.13 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company which would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.2 hereof, unless under

                                      D-8


<PAGE>

the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of either of the dates set forth in subsection 1.2(a) or within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2.

         11.14 TERMINATION OF REGISTRATION RIGHTS.

                  11.14.1 The right of any Holder to request registration or
inclusion in any registration pursuant to Section 1.3 shall terminate if all
shares of Registrable Securities held or entitled to be held upon conversion by
such Holder may immediately be sold under Rule 144 during any 90-day period,
provided, however, that the provisions of this Section 1.14(b) shall not apply
to any Holder who owns more than two percent (2%) of the Company's outstanding
stock until such time as such Holder owns less than two percent (2%) of the
outstanding stock of the Company.

12. COVENANTS OF THE COMPANY. The Company agrees that in the event the Company
offers registration and any similar rights provided hereunder to any third party
holder of the Company's securities which are superior or more favorable than the
rights granted to Investor hereunder, then the Company shall promptly and at its
sole expense take all necessary actions to amend or modify this Agreement in
order to provide Investor with such superior or more favorable rights.

13. MISCELLANEOUS.

         13.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

         13.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.

         13.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         13.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

         13.5 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.

         13.6 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

                                      D-9


<PAGE>

         13.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.

         13.8 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

         13.9 AGGREGATION OF STOCK. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.

         13.10 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including
the Exhibits hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.

                                      D-10


<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                         [BIOZHEM COSMECEUTICALS INC.]

                                         By:
                                             --------------------------------

                                         Its:
                                              -------------------------------

                                         Name:
                                               ------------------------------

                                         Address:
                                         ------------------------------------

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

                                         INVESTOR:

                                         ADVANCED TISSUE SCIENCES, INC.

                                         By:
                                             --------------------------------

                                         Its:
                                              -------------------------------

                                         Name:
                                               ------------------------------

                                         Address:  10933 North Torrey Pines Road
                                                   La Jolla, CA  92037

                                      D-11


<PAGE>

                             BIOZHEM LICENSE FINAL
                             ---------------------

                                      E-1


<PAGE>

                                   EXHIBIT 1.2

                                ATS PATENT RIGHTS
                                -----------------

US Patent Application Serial No. 09/313,538, by Naughton et al., entitled
"Conditioned Cell Medium Compositions and Methods of Use"; filed May 14, 1999.

International Patent Application No. PCT/US00/13016, entitled "Conditioned Cell
Medium Compositions and Methods of Use"; filed May 12, 2000 (Designating all
countries, including the US).




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>7
<FILENAME>biozhem_ex10-10.txt
<TEXT>
<PAGE>

EXHIBIT 10.10
                              MANAGEMENT AGREEMENT

         THIS MANAGEMENT AGREEMENT (this "Agreement") is entered into the ____
day of September, 2000 (the "Effective Date") by and between BEAUTY RESOURCE,
INC., a Nevada corporation ("B.R."), and BIOZHEM COSMECEUTICALS, INC., a Texas
corporation (the "Company").

         WHEREAS, the Company is in the business of developing, manufacturing
and marketing certain cosmetics, skin care products and related products (the
"Business");

         WHEREAS, B.R. has special expertise and experience in the operation,
management and marketing of companies engaged in activities similar to the
Business; and

         WHEREAS, the Company desires to engage B.R. to manage the Business and
B.R. agrees to assume management responsibilities of the Business.

         NOW, THEREFORE, for and in consideration of the premises and conditions
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged and agreed, the parties hereto agree as
follows:

         1. DEFINITIONS. When used in this Agreement, the following terms shall
have the meanings ascribed to them below:

                  "GAAP" means, at any particular time, generally accepted
accounting principles as in effect at such time. Any accounting term used in
this Agreement shall have the meaning customarily given to such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP as consistently applied and using the same method of
valuation as used in the preparation of the Company's financial statements.

                  "Management Fee" has the meaning set forth on Exhibit A.

                  "Pre-Tax Net Income" shall mean net income determined in
accordance with GAAP without any deduction or provision for the payment of
income taxes.

                  "Retained Rights" shall mean the rights and obligations of the
Board of Directors of the Company in accordance with the Articles of
Incorporation and the Bylaws of the Company and any applicable Texas or other
law, including but not limited to the right to sell, award, distribute, redeem
or acquire additional securities of the Company, the obligation to effectuate
all filings of the Company with the Securities and Exchange Commission or any
other federal, state or other regulatory authority, the right to approve an
acquisition or disposition of a business or assets of a business, the right to
initiate and effectuate a sale of all or substantially all of the Company's
assets or ownership interest of the Company, the right to approve contracts for
executives and officers, and the right to borrow and repay any indebtedness or
guarantee any indebtedness on behalf of the Company.

                                       1


<PAGE>

                  "Term" shall mean, subject to the provisions of Section 10
hereof, a period beginning as of the Effective Date and terminating five (5)
years thereafter.

         2. GENERAL MANAGEMENT. The Company hereby engages B.R. to provide and
perform for and on behalf of the Company all management services reasonably
necessary for the proper and efficient operation of the Business during the Term
of this Agreement. Such services shall include, but shall not be limited to,
those items set forth in Sections 2, 3, 4 and 5 of this Agreement. B.R. is
authorized to provide and perform for and on behalf of the Company all services
required of B.R. pursuant to the terms of this Agreement in such manner as B.R.
deems reasonable and appropriate in order to meet the day-to-day requirements of
operating the Business. B.R. hereby accepts such engagement and agrees to
furnish to the Company all management services necessary for the proper and
efficient operation of the Business. Subject to the Retained Rights and the
fiduciary duties of the Board of Directors and officers of the Company, the
Company will cooperate with B.R.'s day-to-day operation of the Company. B.R.
personnel currently assigned to provide management services on behalf of B.R.
hereunder to the Company include Gayle Walker, Arnold Schuchter, Joe Victor and
Tom McGovern. Additional B.R. personnel may be assigned to perform services to
the Company hereunder, provided that B.R. advises the Company of such proposed
assignment and the Board of Directors of the Company agrees thereto.

         3. BOOKKEEPING AND ACCOUNTS. B.R. shall supervise the bookkeeping and
accounting services for and on behalf of the Company, including but not limited
to, maintenance, care and supervision of all business records, papers,
documents, ledgers, journals and reports, the preparation of all federal and
state tax filings for the Company and the payment, collection and accounting of
all accounts receivable and payables of the Company. B.R. understands that all
such business records, papers and documents are and will remain the sole
property of the Company, and shall be available for inspection by the Company at
all times. Upon termination of this Agreement, all such business records, papers
and documents shall be delivered to the Company. Notwithstanding the foregoing,
the officers of the Company, reporting to the Board of Directors of the Company,
shall be responsible for all financial reporting, consistent with the Company's
obligations as a publicly-held Company.

         4. MARKETING OF COMPANY PRODUCTS. B.R. shall be responsible for all
marketing and distribution activities on behalf of the Company including, but
not limited to, determining which products to market, sales prices, target
markets and customers, selecting distribution methods and procedures and
advertising activities.

         5. ADMINISTRATIVE ACTIVITIES. In addition to the activities described
in Sections 2, 3, 4 and 5 of this Agreement, B.R. shall be responsible for all
other administrative functions of the Company including, without limitation,

                                       2


<PAGE>

hiring and personnel matters, compensation arrangements with employees of the
Company, selecting outside advisors and consultants to the Company, choosing
vendors and suppliers, selecting and negotiating banking relationships and all
other normal and customary activities associated with operating a business. Any
employees of the Company shall report to B.R. although the Company shall pay the
compensation of such employees.

         At all times during the Term of this Agreement, B.R. shall:

                  (a) operate the Business in the usual, regular and ordinary
course of business;

                  (b) preserve the Company's relationships with customers,
clients, accounts and others having a business relationship with the Company;

                  (c) maintain insurance policies of the Company at or above the
current coverage amounts; and

                  (d) make all normal and customary repairs to the Company's
offices and assets in order to maintain such offices and assets in at least
their current conditions.

         6. COMPENSATION. The Company shall pay or grant to B.R., as
compensation for the services it provides to the Company pursuant to this
Agreement, the Management Fee and other consideration described on Exhibit A
attached hereto and made a part hereof. Exhibit A may be amended from
time-to-time only upon the execution of a written amendment by both parties
hereto.

         7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company makes the
following representations and warranties to B.R. as an inducement to B.R. to
enter into this Agreement and to manage the Business:

                  (a) ORGANIZATION. The Company is a corporation duly
incorporated and organized and validly existing and in good standing under the
laws of the State of Texas with corporate power and authority to own and operate
the Business and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where such qualification is necessary.

                  (b) AUTHORITY. The Company has the legal capability and
authority to enter into and carry out the transactions contemplated by this
Agreement. Neither the execution of this Agreement, not the consummation of the
transactions contemplated herein violates, conflicts with or results in, or will
violate, conflict with or result in, a breach by the Company of the terms,
conditions, or provisions, as applicable, of its Articles of Incorporation or
Bylaws or of any security interest, deed of trust, debt instrument or loan
agreement, or any undertaking to which it is a party or by which it is bound, or
any applicable law, regulation, bylaw, ordinance or order of any jurisdiction
where the Company carries on the Business.

                                       3


<PAGE>

                  (c) Capital Stock. The authorized capital stock of the Company
as of the date hereof consists of 100,000,000 shares of common stock, 9,589,956
of which shares are issued and outstanding ("Common Stock") and 10,000,000
shares of preferred stock, none of which are currently issued and outstanding.

                  (d) Governmental Authorizations. The Company holds such
licenses, permits, consents, authorizations and orders of such governmental or
regulatory authorities as are necessary to carry on the Business and such
licenses, permits, consents, authorizations and orders are in full force and
effect and have been and are being fully complied with by the Company.

                  (e) Proceedings. There are no actions, suits, or proceedings,
pending or threatened, before any court or government authority or other
administrative agency or any administrative officer which, if successful, could
adversely affect the Business or the Company's right to enter into this
Agreement.

         8. COMPANY BANK ACCOUNTS. B.R. shall designate Gayle Walker and the
Company shall have the right to designate one officer of the Company, each of
whom shall be signatories on the Company's bank accounts. The signature of both
such signatories will be required to transfer or disburse funds in excess of
$50,000 from any of the Company's bank accounts. B.R. may substitute another of
its employees in place of Gayle Walker as a signatory on Company bank accounts
provided that such substituted employee is approved by the Board of Directors of
the Company. Notwithstanding the foregoing, in the event that there arises at
any time, or from time to time, situations where current obligations exceed the
Company's financial ability at that time to pay all such obligations as they
mature, the allocation of any payments to third parties and to B.R. shall be
subject to the exercise by the Board of Directors of the Company of its
reasonable business judgment and fiduciary duty to the Company's shareholders.

         9. COOPERATION. Each of the parties hereto agrees to cooperate
reasonably with the other in connection with the performance of its respective
obligations under this Agreement.

         10. TERM; TERMINATION OF AGREEMENT. This Agreement shall remain in
effect for five (5) years after the Effective Date hereof (the "Term") unless
mutually terminated or terminated as herein provided.

                  (a) The Company may terminate this Agreement upon thirty (30)
days written notice to B.R. for "cause". As used herein "cause" shall exist if:

                           (i) B.R. has engaged in gross negligence, gross
incompetence or willful misconduct in the performance of, or B.R.'s willful
refusal without proper reason to perform, the duties and services required of
B.R. pursuant to this Agreement;

                                       4


<PAGE>

                           (ii) B.R. or any of its officers has been convicted
of a felony;

                           (iii) B.R. has breached any material provision of
this Agreement, which breach has not been cured within thirty (30) days of
receipt by B.R. of written notice from the Company;

                           (iv) B.R. is insolvent, or there has been an
appointment of a receiver for all or any part of the property of B.R., an
assignment for the benefit of creditors of B.R., or there has been filed a
proceeding under any bankruptcy laws by or against B.R;

                           (v) The Company has not achieved at least the
following net sales and net income levels for the indicated periods:

          Contract Period            Net Sales                Net Income
          ---------------            ---------                ----------

      4/01/2001-9/30/2001            $4,000,000                    N/A
      4/01/2001-3/31/2002           $15,000,000                 $250,000
      4/01/2002-3/31/2003           $30,000,000               $2,500,000
      4/01/2003-3/31/2004           $40,000,000               $3,500,000
      4/01/2004-3/31/2005           $60,000,000               $5,500,000
      4/01/2005-3/31/2006           $80,000,000               $7,500,000

For purposes hereof, the term "net income" shall mean the Pre-Tax Net Income of
the Company for the indicated period, increased by the amount of any deductions
recognized by the Company in determining its Pre-Tax Net Income in respect of
stock option awards received by B.R. for such period pursuant to the provisions
of Exhibit A hereto.

                           (vi) Voluntary or involuntary dissolution proceedings
in respect of B.R. have been commenced.

         (b) B.R. may terminate this Agreement if the Company has breached any
material provision of this Agreement, which breach has not been cured within
thirty (30) days of receipt by the Company of written notice from B.R. of such
breach.

The right to terminate this Agreement as herein provided shall be cumulative and
in addition to any other rights and remedies the parties may be entitled to
pursue under applicable law. The exercise of one or more of such rights or
remedies shall not impair the rights of either party to exercise any other right
or remedy at law or in equity. Termination of this Agreement shall not release
or discharge any party from any obligation, debt or liability which shall have
previously accrued, and remain to be performed as of the effective date of
termination.

         11. CONFIDENTIALITY. B.R. recognizes and agrees that the Business of
the Company and its business interests require a confidential relationship
between it and B.R. and the fullest practical protection and confidential
treatment of its trade secrets, proprietary business practices, customer and
supplier lists, and other proprietary information regarding the business or
financial affairs of the Company. Accordingly, B.R. agrees that during the term
of this Agreement and at all times thereafter it will:

                                       5


<PAGE>

                (a) Keep secret and confidential all such confidential
information, trade secrets, proprietary trade practices, customer and supplier
lists and proprietary business practices of the Company (written or unwritten),
and B.R. shall not divulge, disclose or reveal for any reason or in any manner
to any person who is not an officer, director or employee of the Company any of
the foregoing information; but excluding information:

                           (i) that has been disclosed by the Company to the
public;

                           (ii) that has been received by B.R. from a third
party without breaching an obligation owed to the Company; or

                           (iii) that is generally known in the trade or
industry or that has been disclosed to a third party by the Company without
similar restriction.

                  (b) Not use or aid others in using, directly or indirectly,
the same in competition with the Company, unless required by a valid order of a
court or other governmental authority of competent jurisdiction;

                  (c) Not:

                           (i) offer, induce, solicit, influence or attempt to
influence any employee of the Company to terminate his or her employment with
the Company for the purpose of working for a competitor of the Company;

                           (ii) influence or attempt to influence any agent,
customer or supplier who has a business relationship with the Company to cease
or adversely alter that business relationship; or

                           (iii) contact, solicit or do business with any person
who is, or has been at any time during the two years preceding the termination
of this Agreement, a customer of the Company for the purpose of diverting,
soliciting or accepting any business in competition with the Company.

In addition, upon termination of this Agreement for any reason, B.R. shall not
retain or remove, without the Company's advance written consent, any list, data,
book, record, manual, drawing, document, schedule, source code, specification,
computer tape, program, diskette or software or other written or recorded
information pertaining to the business and financial affairs of the Company.

         12. NONCOMPETITION. In consideration of the compensation payable to
B.R. hereunder, during the Term of this Agreement and for a period of two (2)
years after termination of this Agreement by either B.R. or the Company, B.R.
will not, directly or indirectly, own, manage, operate, participate in,
undertake any employment with or have any interest in any business enterprise

                                       6


<PAGE>

within the United States which is competitive with the Business. B.R. expressly
acknowledges and stipulates that the time and area restrictions of the foregoing
obligations do not unduly oppress B.R.'s present or future business
opportunities. In addition, B.R. acknowledges that the restrictions set forth in
Sections 11 and 12 hereof are reasonable limitations necessary to protect the
legitimate business interests of the Company in guarding the trade secrets,
preserving the goodwill of its customers and business, preventing solicitation
of its existing customers, and preventing unauthorized use of its proprietary or
confidential business lists, records and information. To the extent that the
duration, geographical area, or scope of activity of any of the preceding
restrictions would cause them to be unenforceable in a particular jurisdiction,
the restrictions automatically will be reformed for purposes of enforcement in
that jurisdiction to a duration, geographical area, or scope of activity that is
valid and enforceable in that jurisdiction. Reformation of a restriction to
validate its enforcement in any particular jurisdiction, however, will not
affect the enforcement of the restriction as stated in any other jurisdiction in
which it is enforceable as stated. Also, the invalidity of a restriction in a
particular jurisdiction will not affect the validity or enforcement of the
restriction in another jurisdiction where it is otherwise valid.

         13. REMEDIES FOR BREACH. B.R. stipulates that a breach by it of any of
the restrictive covenants set forth in Sections 11 and 12 of this Agreement will
diminish the value of the Company and will cause irreparable and continuing
injury to the Company for which an adequate legal remedy will not exist.
Accordingly, the Company is hereby granted and shall have the right of
injunction (any requirements for posting of bonds for injunction are hereby
expressly waived) and such other and further relief, both in law and in equity,
as the Company may be entitled to receive under the laws of the State of
California in the event B.R. breaches or threatens to breach any of the
covenants or agreements contained herein.

         14. MISCELLANEOUS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.

         15. INDEMNIFICATION.

                  (a) INDEMNIFICATION OF B.R. The Company shall indemnify,
defend and hold harmless B.R., its agents, representatives, employees, officers,
directors and representatives from and against any and all losses, liabilities,
claims, damages, deficiencies and expenses, including interest, penalties, court
costs and reasonable attorneys' fees ("Losses") which may be incurred by or
suffered by persons or entities and which arise out of or result from any breach
of any representation, warranty, covenant or agreement of the Company contained
in this agreement or which is related to the operation of the Business prior to
the Effective Date, or to the operation of the Business after the date hereof
unless arising from B.R.'s negligence, misconduct or any breach of its
contractual duties hereunder.

                                       7


<PAGE>

                  (b) INDEMNIFICATION OF THE COMPANY. B.R. shall indemnify,
defend and hold harmless the Company, its agents, representatives, employees,
officers, directors and representatives from and against any and all Losses
which may be incurred by or suffered by persons or entities relating to the
breach by B.R. of any of its obligations under this Agreement or the negligence,
misconduct or any breach of B.R.'s contractual duties hereunder.

         16. ASSIGNMENT. This Agreement and the rights and obligations created
hereunder shall not be assigned or subcontracted by B.R., either voluntarily or
by operation of the law, without the express prior written consent of the
Company. Any assignment or subcontracting without such consent shall be null and
void.

         17. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California without regard to any conflict-of-laws
rules.

         18. WAIVER. Any failure of either party to comply with any obligation,
covenant, agreement or condition herein may be waived by the other party, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.

         19. AMENDMENT. Except as provided otherwise herein, this Agreement may
be amended, modified or supplemented only by written agreement of each of the
parties hereto.

         20. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties hereto with respect to the subject matter
contained herein, and supercedes all prior agreements and understandings between
the parties with respect to the subject matter hereof, whether written or oral,
and whether explicit or implicit, which have been entered into between the
parties prior to the execution hereof. There are no restrictions, provisions,
representations, warranties, covenants or understandings, other than those
expressly set forth or referred to herein.

         21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         22. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the other party at
the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):

                                       8


<PAGE>

                  If to Company:            Biozhem Cosmeceuticals, Inc.
                                            19641 Descartes
                                            Foothill Ranch, CA  92610

                  With a copy to:           Robert D. Remy, Esq.
                                            Two Memorial City Plaza
                                            820 Gessner, Suite 1360
                                            Houston, Texas  77024

                  If to B.R.:               Beauty Resource, Inc.
                                            32545B Golden Lantern #3025
                                            Dana Point, CA  92629

                  With a copy to:           Sanford Sherman
                                            Jeffer, Shaff, Falk, LLP
                                            18881 Von Karmen Avenue, Suite 1400
                                            Irvine, CA 92612

         23. PARTIAL INVALIDITY. If any one or more of the terms, provisions,
promises, covenants or conditions of the Agreement or the application thereof to
any person or circumstance shall be adjudged to any extent invalid,
unenforceable, void or voidable for any reasons whatsoever by a court of
competent jurisdiction, each and all of the remaining terms, provisions,
promises, covenants and conditions of this Agreement or their application to
other persons or circumstances shall not be affected thereby and shall be valid
and enforceable to the fullest extend permitted by law.

         24. HEADINGS; TITLES. The headings appearing herein are for convenience
and reference only and shall not be deemed to govern, limit, modify or in any
manner affect the scope, meaning or intent of the provisions of this Agreement.

         25. BINDING EFFECT. Subject to the provisions contained herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and upon their respective successors.

         26. JURISDICTION AND VENUE. THE PARTIES HEREBY CONSENT TO THE
JURISDICTION OF THE STATE OR FEDERAL COURTS LOCATED WITHIN THE STATE OF
CALIFORNIA, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES
ACCEPT THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE
OF FORUM NON-CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.

                                       9


<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.

                                           BEAUTY RESOURCE, INC.

                                           By: /S/ Gayle Walker
                                           Its:  President

                                           BIOZHEM COSMECEUTICALS, INC.

                                           By:  /s/ Marti Wolf
                                           Its:   President

                                       10


<PAGE>

                                    EXHIBIT A
                                    ---------

MANAGEMENT FEE:
---------------

For its services to the Company and for undertaking all of its obligations
hereunder to the Company, B.R. shall be paid a fee of $15,000 per month. In
addition, commencing April 1, 2001 and continuing on the first day of each
quarter thereafter during the Term, the Company shall pay to B.R. a fee in the
amount of 0.5% of the sales (net of returns and allowances) of the Company for
the preceding quarter.

CEO SIGNING BONUS:
------------------

Upon execution of this Agreement, the Company shall elect Gayle Walker President
of the Company, to serve at the pleasure of the Board of Directors of the
Company, and shall award her options to purchase 100,000 shares of common stock
of the Company at an exercise price of $0.25 per share, such options to be
exercised on or before September 30, 2003.

INTERIM BONUSES:
----------------

For achieving an increase of 25% in net sales for the three months ending
December 31, 2000 over the three-month period ending September 30, 2000, the
Company shall award B.R. options to purchase 100,000 shares of common stock of
the Company at an exercise price of $0.25 per share, such options to be
exercised on or before December 31, 2003.

For achieving an increase of 50% in net sales for the three months ending March
31, 2001 over the three-month period ending September 30, 2000, the Company
shall award B.R. options to purchase 100,000 shares of common stock of the
Company at an exercise price of $0.25 per share, such options to be exercised on
or before March 31, 2004.

REVENUE-BASED AWARDS:
---------------------

Upon achieving the following net sales levels of the Company for the periods
indicated below, the Company shall award B.R. options to purchase shares of
common stock of the Company at an exercise price of $0.25 per share as set forth
below, such options to be exercised on or before the indicated expiration date:

                              Page 11 of Exhibit A


<PAGE>

<TABLE>
<CAPTION>
                                            CUMULATIVE NET            NUMBER OF     EXPIRATION
             PERIOD                       SALES DURING PERIOD          OPTIONS          DATE
             ------                       -------------------          -------          ----
<S>                                          <C>                       <C>            <C>
Quarter ending 6/30/2001                      $1,875,000               150,000        3/31/2005
Six months ending 9/30/2001                   $4,500,000               300,000*       3/31/2005
Nine months ending 12/31/2001                 $9,000,000               450,000*       3/31/2005
Twelve months ending 3/31/2002               $15,000,000               600,000*       3/31/2005

Contract year beginning 4/1/2002
     and ending 3/31/2003                    $30,000,000               300,000        3/31/2006

Contract year beginning 4/1/2003
     and ending 3/31/2004                    $40,000,000               300,000        3/31/2007

Contract year beginning 4/1/2004
     and ending 3/31/2005                    $60,000,000               300,000        3/31/2008

Contract year beginning 4/1/2005
     and ending 3/31/2006                    $80,000,000               300,000        3/31/2009
------
</TABLE>

 *Less the number of options awarded in one or more prior quarters in the
contract year beginning April 1, 2001.

In the event that the net sales of the Company for any of the applicable
contract years exceeds the foregoing threshold net sales amounts, the amount of
such excess shall be carried forward and credited to the net sales of the
subsequent contract year for the purposes of determining whether the threshold
net sales for the subsequent contract year have been achieved.

PRE-TAX NET INCOME AWARDS:
--------------------------

         OPTIONS
         -------

         In addition, the Company shall award B.R. options to purchase shares of
common stock of the Company at an exercise price of $0.25 per share based upon
the Pre-Tax Net Income of the Company for full fiscal years during the Term, as
set forth below:

                              Page 12 of Exhibit A



<PAGE>
<TABLE>
<CAPTION>

                                                                                       NUMBER OF
                              PRE-TAX NET INCOME                                        OPTIONS
                              ------------------                                        -------
<S>                                 <C>                                                 <C>
Contract year
beginning  4/1/2001                 At least $0 but less than $500,000                  100,000
                                    At least $500,000 but less than $1,000,000          200,000
                                    At least $1,000,000 but less than $1,500,000        400,000
                                    At least $1,500,000 but less than $2,000,000        500,000
                                    $2,000,000 or more                                  600,000

Contract year
beginning  4/1/2002                 At least $3,000,000 but less than $4,00,000         200,000
                                    At least $4,000,000 but less than $5,000,000        350,000
                                    At least $5,000,000 but less than $6,000,000        500,000
                                    $6,000,000 or more                                  600,000
Contract year
beginning  4/1/2003                 At least $4,000,000 but less than $5,500,000         200,000
                                    At least $5,500,000 but less than $6,750,000         350,000
                                    At least $6,750,000 but less than $8,000,000         500,000
                                    $8,000,000 or more                                   600,000

Contract year
beginning  4/1/2004                 At least $6,000,000 but less than $8,000,000         200,000
                                    At least $8,000,000 but less than $10,000,000        350,000
                                    At least $10,000,000 but less than $12,000,000       500,000
                                    $12,000,000 or more                                  600,000

Contract year
beginning  4/1/2005                 At least $8,000,000 but less than $10,500,000        200,000
                                    At least $10,500,000 but less than $13,000,000       350,000
                                    At least $13,000,000 but less than $16,000,000       500,000
                                    $16,000,000 or more                                  600,000

</TABLE>

         CASH
         ----

         In addition, the Company will pay B.R. cash bonuses based upon the
Company achieving specified percentages of Pre-Tax Net Income (excluding the
cash bonus) to the net sales of the Company for full fiscal years during the
Term, as set forth below:

                              Page 13 of Exhibit A


<PAGE>

               PRE-TAX NET INCOME                      CASH BONUS
          (EXCLUDING THE CASH BONUS)       AS A PERCENTAGE OF PRE-TAX NET INCOME
          AS A PERCENTAGE OF NET SALES        (EXCLUDING THE CASH BONUS)

          0% but less than 15%                                -0-
          At least 15% but less than 20%                       2%
          At least 20% but less than 25%                       4%
          25% or more                                          5%

         Any bonuses earned by B.R. hereunder which are payable in options to
purchase common stock of the Company will be issued pursuant to the terms of
option agreements containing customary provisions, including non-dilution and
adjustment provisions resulting from the subdivision or combination of shares of
common stock of the Company or the issuance by the Company of dividends payable
in shares of its common stock. Such options, if earned by B.R., will be issued
reasonably promptly by the Company following the determination that such awards
have been earned by B.R. pursuant to the terms hereof. All options to be issued
to B.R. based upon the Pre-Tax Net Income of the Company shall be exercisable at
any time during the three-year period after the end of the fiscal year in
respect of which the option was earned and awarded. Any cash bonuses earned by
B.R., hereunder, shall be paid to B.R. by no later than 120 days after the end
of the fiscal year in respect of which such cash bonus was earned.

                              Page 14 of Exhibit A




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.11
<SEQUENCE>8
<FILENAME>biozhem_ex10-11.txt
<TEXT>
<PAGE>
EXHIBIT 10.11

                SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS
                -------------------------------------------------

         This Settlement Agreement and Mutual Release of Claims (`Agreement") is
made and entered into as of August 13, 2001 by and among Beauty Resource, Inc.
("Beauty Resource") and Biozhem Cosmecuticals, Inc. ("Biozhem").

                                    RECITALS
                                    --------

         WHEREAS on or about August 7, 2001, Beauty Resource filed an action
against Biozhem and others in the Los Angeles County Superior Court styled
Beauty Resource, Inc. v. Biozhem Cosmecuticals, Inc., David H. Berglass and Does
1 through 100, inclusive, Case No. BC 255691 (the "Action"). In the Action,
Beauty Resource asserts a claim against Biozhem for breach of the Management
Agreement between Beauty Resource and Biozhem.

         WHEREAS the parties to this Agreement desire to fully and forever
resolve their disputes and differences.

         NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and agreements herein contained, the parties hereto agree as
follows:

                                   AGREEMENT
                                   ---------

         1. PAYMENT TO BEAUTY RESOURCE. Biozhem agrees to pay Beauty Resource
the sum of One Hundred thousand Dollars ($100,000.00) (the "Settlement Sum") as
follows: $50,000.00 upon the execution of this Agreement; $25,000.00 on or
before October 31. 2001; and $25,000.00 on or before December 31, 2001.



<PAGE>

         2. ISSUANCE OF BIOZHEM COMMON STOCK TO BEAUTY RESOURCE. Upon the
execution of this Agreement, Biozhem will issue to Beauty Resource 337,500
shares of Biozhem common stock.

         3. CEO SIGNING BONUS. Biozhem confirms that it has issued to (Gayle
Walker warrants to purchase 100,000 shares of Biozhem common stock having an
exercise price of $0.25 per share and expiring September 30, 2003 as the CEO
Signing Bonus under the Management Agreement.

         4. REGISTRATION OF THE STOCK AND WARRANTS WITH THE SEC. Biozhem agrees
to register the common stock described in paragraph 2, on an S-1 B-2 or S-3
Registration Statement, whichever it is qualified to use, on or before September
or 30, 2001 to permit the sale of this stock by Beauty Resource. Biozhem agrees
to similarly register the 100,000 warrants described in paragraph 3 as well as
the shares of Biozhem common on stock underlying these warrants on or before
September 30, 2001. Biozhem will diligently pursue these registrations with the
Securities and Exchange Commission and take whatever steps necessary to ensure
that they become effective.

         5. DISMISSAL OF THE ACTION WITH PREJUDICE. Upon receipt by Beauty
Resource of the first installment payment in paragraph 1, Beauty Resource will
file a Request for Dismissal of the Action with prejudice.

         6. BEAUTY RESOURCE'S RELEASE OF BIOZHEM. Upon receipt of the final
installment of the Settlement Sum, Beauty Resource, its affiliates, and their
respective officers, directors, shareholders, agents, employees,
representatives, attorneys, agents, successors and assigns will have fully and
forever released and discharged Biozhem and its officers, directors,
shareholders, agents, employees, representatives, attorneys, agents, successors
and assigns from

                                       2


<PAGE>

any and all claims, demands, actions, causes of action, liabilities and damages
asserted in the Action or which could have been asserted in the action relating
to or arising from the Management Agreement and from all future obligations
under the Management Agreement except as expressly set forth herein.

         7. BIOZHEM'S RELEASE OF BEAUTY RESOURCE. Biozhem and its officers,
directors, shareholders, agents, employees, representatives, attorneys, agents,
successors and assigns hereby fully and forever release and discharge Beauty
Resource, its affiliates and their respective officers, directors, shareholders,
agents, employees, representatives, attorneys, agents, successors and assigns
from any and all claims, demands, actions, causes of action, liabilities and
damages, relating to or arising from the Management Agreement or the Action
which could have been asserted by Biozhem in the Action by way of
cross-complaint or otherwise and from all future obligations under the
Management Agreement except as expressly set forth herein.

         8. RELEASE OF UNKNOWN CLAIMS. Beauty Resource and Biozhem acknowledge
that they are familiar with and have been advised regarding the provisions of
Section 1542 of the California Civil Code, which provides as follows:

                  A general release does not extend to claims which the creditor
                  does not know or suspect to exist in his favor at the time of
                  executing the release, which if known by him must have
                  materially affected his settlement with the debtor.

Beauty Resource and Biozhem acknowledge that they may have sustained damages,
leases, costs or expenses that are presently unknown or unsuspected, and that
such damages, losses, costs, or expenses may give rise to additional damages,
losses, costs or expenses in the future. Beauty Resource and Biozhem acknowledge
that this Agreement has been en negotiated and agreed upon in light of Civil
Code Section 1542, and they hereby expressly waive any and all rights which they
may have under that statute or under any other statute or rule of similar
effect.

                                       3


<PAGE>

         9. NO ADMISSIONS. This Agreement is part of the compromise and
settlement of contested claims. No action taken by the parties hereto, either
previously or in connection with the compromise reflected in this Agreement,
shall be deemed or construed to be an admission of the truth or falsity of any
matter pertaining to any claim, demand, or cause of action referred to herein or
relating to the subject matter of this Agreement, or any acknowledgement by
them, or any of them, of any fault or liability to any party hereto or to any
other person in connection with any matter or thing.

         10. NO ASSIGNMENTS. The parties hereto represent and warrant to each
other that no portion of any claim, demand, cause of action, or other matter
released herein has been assigned to any other person or entity, either directly
or by Way of subrogation or operation of law.

         11. INDEMNIFICATION OF BEAUTY RESOURCE. Biozhem shall indemnify, defend
and hold harmless Beauty Resource, its affiliates and their respective officers,
directors, shareholders, agents, employees, representatives. attorneys, agents,
successors and assigns from and against any and all losses, liabilities, claims,
damages, deficiencies and expenses, including interest, penalties, court costs
and reasonable attorneys' fees which may be incurred by or suffered by persons
or entities and which arise out of or result from any breach of any
representation, warranty, covenant or agreement of Biozhem contained in this
Agreement.

         12. INDEMNIFICATION OF BIOZHEM. Beauty Resource shall indemnify, defend
and hold harmless Biozhem, its officers, directors, shareholders, agents,
employees, representatives, attorneys, agents, successors and assigns from and
against any and all losses, liabilities, claims, damages, deficiencies and
expenses. including interest, penalties, court costs and reasonable attorneys'
fees which may be incurred by or suffered by persons or entities and

                                       4


<PAGE>

which arise out of or result from any breath of any representation, warranty,
covenant or agreement of Beauty Resource contained in this Agreement.

         13. INTEGRATED AGREEMENT. This Agreement is an integrated agreement and
contains the entire understanding of the parties regarding the matters set forth
herein. The parties acknowledge that they have not relied on any representation,
statement of fact, promise, warranty, or opinion except those expressly set
forth or incorporated in this Agreement, in deciding to enter into this
Agreement. This Agreement supercedes and. controls any and all prior
communications between the parties or their representatives relative to the
matters contained herein. This Agreement may not be changed, amended, or
modified except by a writing signed by the party affected by any such change,
amendment or modification.

         14. JOINT DRAFTING. This Agreement has been jointly drafted by each of
the parties hereto, and the parties are jointly responsible for all of the
language contained herein. The rule of interpretation contained in California
Civil Code section 1654 providing for the interpretation of contract language
against the party responsible for any ambiguity or uncertainty shall not apply
to the interpretation of this Agreement.

         15. BINDING NATURE OF TERMS AND REPRESENTATIONS OF THE PARTIES. Each of
the terms of this Agreement shall inure to the benefit of, and is binding upon,
each of the signatories hereto and upon their respective predecessors,
successors, transferees, and assigns.

         16. APPLICABLE LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of California applicable
to contracts between California domiciliaries which are to be performed wholly
within the State of California.

                                       5


<PAGE>

         17. ATTORNEY'S FEES. In the event that any party brings any action or
proceeding against the other because of breach of a covenant, condition, or
provision hereof; or for any other relief, declaratory or otherwise, including
appeals therefrom, and whether being an action in tort or contract, then the
prevailing party in such action or proceeding shall be paid by the other party
reasonable attorney's fees and all costs of such action or proceeding whether or
not such action or proceeding is prosecuted to

         18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts.

BEAUTY RESOURCE, INC.                        BIOZHEM COSMECUTICALS, INC.

By: /s/ Gayle Walker                         By: /s/ John C. Riemann
    ------------------------------               -------------------------------
    Gayle Walker                                 John C. Riemann
    President                                    Chairman

APPROVED AS TO FORM AND CONTENT:

HENNELLY & GROSSFELD LLP                     STEPHENS & KRAY

By: /s/ Paul T. Martin                       By: /s/ Lon T. Stephens
    ------------------------------               -------------------------------
    Paul 1. Martin                               Lon T. Stephens
    Attorneys for Beauty Resource, Inc.          Attorney for Biozhem
                                                  Cosmecuticals, Inc.

                                       6



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>9
<FILENAME>biozhem_ex10-12.txt
<TEXT>
<PAGE>

EXHIBIT 10.12

                 FIRST AMENDMENT TO LICENSE AND SUPPLY AGREEMENT

         This First Amendment to License and Supply Agreement (this "Amendment")
is entered as of January 1, 2002 (the "Effective Date"), by and among ADVANCED
TISSUE SCIENCES, INC., a Delaware corporation ("ATS"), and BIOZHEM
COSMECEUTICALS, INC. a Texas corporation ("Buyer").

         WHEREAS, ATS And Buyer have entered into a Development, License and
Supply Agreement dated September 25, 2000;

         WHEREAS, certain changes have occurred in development timelines and
strategies which require adjustments to the terms of the Agreement.

         NOW, THEREFORE, in consideration of the foregoing premises and the
terms, covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, ATS
and Buyer agree that the License and Supply Agreement will be amended as
follows:

I.       The parties agree that Section 1.6 of the Agreement shall be deleted
         and replaced with the following new Section 1.6:

                  1.6 "Contract Year" shall be a twelve month period commencing
         on January 1st of any year the Agreement is in effect. The First
         Contract Year is the period from January 1, 2002 until December 31,
         2002.

II.      The parties agree that Section 5.1.1.1 of the Agreement shall be
         deleted and replaced with the following new Section 5.1.1.1:

                  5.1.1.1 on or before November 30, 2002 a payment in the amount
         of One Million Dollars ($1,000,000);

III.     The parties agree to add the following new Section 3.6.8 related to
         Buyer's Obligations:

                           3.6.8 that the apportionment of revenue to the
                  Licensed Product shall be according to the following schedule:

                                    3.6.8.1 100% to ATS on individual purchases
                           of Licensed Product

                                    3.6.8.2 80% to ATS on purchased of one
                           licensed Product packaged with one or two Buyer or
                           other third party products

                                    3.6.8.3 70% to ATS on purchases of one
                           Licensed Product packaged with three or more Buyer or
                           other third party products

                                       1


<PAGE>

                                    3.6.8.4 For offerings, if any, containing
                           more than one Licensed Product, the parties will
                           negotiate in good faith to determine apportionment of
                           revenues.

IV.      The parties agree that Section 5.3.1 of the Agreement shall be deleted
         and replaced with the following new Section 5.3.1:

                  5.3.1 The "Exclusivity Threshold" shall be determined
         according to the following schedule:

<TABLE>
<CAPTION>
                   Annual Minimum Royalty      Quarterly Minimum Royalty
Contract Year         Payment                       Payment               Annual Sales Targets
-------------         -------                       -------               --------------------
<S>                 <C>                            <C>                         <C>
1                    $2,000,000                      $500,000                   $20,000,000
2                    $3,000,000                      $750,000                   $30,000,000
3                    $4,000,000                    $1,000,000                   $40,000,000
4                    $6,100,000                    $1,525,000                   $60,000,000
5                    $9,600,000                    $2,400,000                   $80,000,000
6-10                $12,000,000/year               $3,000,000                  $100,000,000/year

</TABLE>

         The payments made under this section shall be cumulative so that Buyer
         shall receive a credit in the following period in the event the actual
         royalties paid in any period exceed the minimum payments hereunder.

         For the First Contract Year only, the following terms will apply:

                  o        Payment for Q1 and Q2 actual royalties will be made
                           within 5 days following the end of the quarter.

                  o        No later than July 1, 2002 payment of the difference
                           between the actual royalties and minimum royalties
                           for Q1, if any.

                  o        No later than September 30, 2002, payment of the
                           minimum royalty for Q3.

                  o        No later than October 1, 2002, payment of the
                           difference between the actual royalties and minimum
                           royalties for Q2, if any.

                  o        No later than December 31, 2002, payment of the
                           minimum royalty for Q4.

                  o        If actual royalties exceed the minimums for any
                           quarter, the difference will be paid to ATS no later
                           than 30 days following the end of the applicable
                           quarter.

                                       2


<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
be effective as of the date first written above.

                         ADVANCED TISSUE SCIENCES, INC.

                         By: /s/ Gail K Naughton
                             --------------------
                         Title:  President

                         Print Name: Gail K Naughton

                         BIOZHEM COSMECEUTICALS, INC.

                         By: /S/ J. S. CHAPIN
                             --------------------
                         Title: CEO

                         Print Name: J. S. CHAPIN

                                       3




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>10
<FILENAME>biozhem_ex10-13.txt
<TEXT>
<PAGE>

EXHIBIT 10.13

                          MANAGEMENT SERVICE AGREEMENT

         THIS MANAGEMENT AGREEMENT (the "AGREEMENT") is made and entered into
with an "EFFECTIVE DATE" of April 10, 2002, by and among Thane International,
Inc., a Delaware Corporation ("THANE"), having a principal place of business at
78-140 Calle Tampico, La Quinta, CA 92253, and Biozhem Cosmeceuticals, a Texas
Corporation ("BIOZHEM"), having a principal place of business at 11884 Tammy
Way, Grass Valley, CA 95949 (singly "PARTY," collectively "PARTIES").

                                    RECITALS

         Biozhem is the licensed distributor of skin care products known as the
RevitaCel System(TM) pursuant to its Licensing Agreement with Advanced Tissue
Sciences, Inc. ("ATS"), the holder of the patents for the Product ingredients.
Biozhem desires to contract with Thane to perform the management and other
duties associated with the sale and distribution of the Product within the
Territory as set forth herein on the terms and conditions as set forth in this
Agreement. All defined terms within this Agreement shall be as more specifically
defined in Section 1 below.

         Thane is an international marketing company and desires to provide its
services to manage and operate the Project in accordance with the terms and
conditions, and in exchange for the compensation provided, herein.

         The Parties, in consideration of the promises and of the mutual
covenants and conditions contained in this Agreement, agree as follows.

                                    AGREEMENT

1.       DEFINITIONS.

         (a) ACCOUNTING PROCEDURES. Initially, all Product sales revenues
         received by Thane from its management of the Project shall be deposited
         into a bank account that shall be managed by Thane. In addition, Thane
         shall maintain a separate operating account and shall prepare accurate
         accounting statements according to generally accepted accounting
         principals ("GAAP") consistently applied, setting forth all Gross
         Revenue, Net Revenue, including expenses deducted in determining Net
         Revenue, Finance Amounts, expenses, assets, liabilities, and other
         detail as reasonably necessary to verify the foregoing amounts. At such
         time as the Project becomes self-financing, the Parties shall mutually
         agree upon an arrangement whereby all Product revenues received by
         Thane for its management of the Project shall be deposited in a Biozhem
         bank account that shall be managed by Thane. Thane shall distribute
         monthly accounting statements, prepared in accordance with GAAP
         consistently applied, within thirty (30) business days of month's end.
         Net Revenue shall be disbursed monthly within thirty (30) days of the
         end of each month, or at other times as determined by mutual agreement.



<PAGE>

         (b) AUDIT RIGHTS. Biozhem shall have the ability and right to inspect
         and audit all books and records concerning the Product and the Project,
         including Gross Revenue, Net Revenue, Finance Amounts, costs, unit
         sales, returns, taxes, expenses, and inventory. Thane's books and
         records subject to Biozhem's audit rights shall include, without
         limitation, sales reports, returns reports, and credit card processing
         reports relative to discount fees and chargebacks, in addition to, in
         electronic format, applicable computer programs, computer print-outs,
         computer databases, and computerized spreadsheets. Biozhem, or its duly
         appointed representative, will conduct the inspection only during
         normal business hours upon a written request submitted to Thane at
         least ten (10) business days prior to the day of the inspection or at
         least thirty-five (35) business days in advance if Thane is conducting
         its annual independent audit at such time. If required by Biozhem's
         independent certified public accountant for purposes of preparing its
         audit, Thane shall provide audited annual accounting statements as part
         of Thane's annual audited financial statements and charge the Project
         the marginal cost of such Project audited financial statements. Biozhem
         shall have the inspection and audit rights hereunder during the Term
         hereof and the period ending two (2) years after the Termination of
         this Agreement. Biozhem shall pay for the cost of any such inspection
         and audit, unless it is determined that for any one (1)-year period
         there has been an understatement of revenues due hereunder and the
         amount of such underpayment (excluding interest) exceeds the total
         actually paid for said one (1)-year period by more than five percent
         (5%). In such event the reasonable cost of inspection and audit shall
         be paid by Thane. Any underpayment shown by Biozhem's inspection shall
         be paid immediately by Thane to Biozhem. Any underpayment or
         overpayment shown by the Biozhem inspection shall be paid immediately
         respectively by Biozhem to Thane or Thane to Biozhem

         (c) COMPETING PRODUCT: A competing product is any beauty skin care
         product other than the Product.

         (d) CUSTOMER LIST: A list of all of Biozhem's future customers related
         to the Project, commencing from the execution date of this Agreement,
         and all direct response customer names, addresses and phone numbers
         generated by Thane from the management of the Project.

         (e) DOMESTIC SALES: Domestic sales shall be all sales from telephone or
         mail orders pursuant to the Infomercial or any short-form infomercials
         shown in the United States or any orders resulting from print or
         catalog advertising distributed in the United States.

                                       2


<PAGE>

         (f) FINANCE AMOUNTS: Those amounts that Thane has advanced on behalf of
         the Project, said Finance Amounts to be interest free, to cover the
         following: all Project related costs, including, without limitation,
         patent, formulation, producer and talent royalties and royalty
         milestones all as listed in Section 3.8, inventory purchases, and
         fulfillment, media and telemarketing costs, and the financing of the
         outstanding balance of the inventory upon execution of this Agreement.

         (g) GROSS REVENUE: Gross Revenue shall be calculated utilizing GAAP,
         consistently applied, and shall include any and all revenue received by
         Thane from the sale of the Product during the Term of this Agreement
         less any Product returns, cancellations and bad debts.

         (h) INFOMERCIAL: The existing twenty-eight (28) minute commercial
         promoting the sale of the Product produced for and owned by Biozhem,
         including all associated intellectual property rights. Biozhem warrants
         that all claims made in the Infomercial have appropriate substantiation
         as required by governmental agencies. Upon execution of this Agreement,
         Biozhem shall provide Thane with a mixed beta master and an unmixed
         textless master, and all testimonial and other required talent release
         forms and agreements, and any and all claims substantiation. Biozhem
         retains ownership of the Infomercial and all associated intellectual
         property rights including any remixed or edited versions.

         (i) INTERNATIONAL AND NON-DOMESTIC SALES: International and
         Non-Domestic Sales is defined as all sales other than Domestic Sales,
         and includes, without limitation, all Internet sales, home shopping
         channel sales, all sales in Canada and sales in any country other than
         the United States.

         (j) LICENSING AGREEMENT: The Licensing Agreement between Biozhem
         Cosmeceuticals and ATS attached hereto as "EXHIBIT A" requiring a
         royalty payment for use of the NouriCel ingredient.

         (k) "NET REVENUE" shall be calculated in accordance with GAAP,
         consistently applied, and shall mean the sum remaining after
         subtracting from Gross Revenue the following expenses fairly and
         reasonably incurred under the terms of this Agreement: (i) a reasonable
         amount to create and maintain a rolling reserve fund, initially at
         twelve percent (12%) of gross revenue but after six (6) months to be
         reviewed and adjusted monthly to reflect a reasonably accurate actual
         return rate base on recent historical performance; (ii) payment of all
         sales taxes; (iii) payment of all actual outbound and inbound
         fulfillment costs, including shipping fees, handling charges, and
         merchant account charges; (iv) payment of all gross media/advertising

                                       3


<PAGE>

         actual costs including standard media commissions paid to third parties
         and/or paid in-house, depending on media buys and management services
         provided; (v) actual cost to refurbish return merchandise for resale;
         (vi) all Product purchase, manufacturing, insurance costs; (vii)
         payment of all royalties as and when due; (viii) payment of all costs
         and expenses for viewing cassettes and broadcast dubs for television
         stations and cable networks; (ix) payment of all advances on
         compensation paid by Thane to Biozhem, the total amortized over a six
         (6) month period, commencing at the beginning of the Term unless Net
         Revenue to Biozhem exceeds the sum of one hundred and fifty thousand
         dollars ($150,000) in any one month period, then payment on said
         advances shall accelerate to one hundred percent (100%) of payment on
         advances for the balance of the Net Income for that month, such
         calculation to occur for each month until said advances have been
         repaid in full; (x) Thane's Management Fee; (xi) payment for reasonable
         costs for development, production and distribution of marketing
         materials, if any; (xii) payment for export, documentation and
         clearance costs, if any; (xiii) payment for travel and entertainment as
         mutually agreed upon; (xiv) commencing December 1, 2002, a set-aside of
         a proportionate amount for the payment of milestone royalties;
         provided, however, that Thane shall have no obligation to pay said
         milestone royalty payments if the Project is in the Recoupment Period,
         as defined in Section 5.4; and (xv) third party legal fees as mutually
         agreed upon by the Parties. With respect to any of the foregoing, if
         Biozhem can produce and market the Product or acquire services of equal
         quality, as mutually determined by the Parties, at a lower cost, Thane
         or its subcontractor(s), if any, shall adopt such cost-saving
         production and/or marketing practices and cost or pricing structure or
         utilize the lower cost alternative. Unless otherwise provided herein,
         in no event shall Net Revenue be decreased by costs or expenses
         attributable to the general administrative or overhead expenses of
         Thane or any subsidiary or affiliate of Thane.

         (l) PRODUCT: The Product is a set of skin creams, cleanser and serum
         (collectively known as the "REVITACEL(TM)SYSTEM") as follows: one 4.0
         oz bottle of RevitaCel Foaming Cleanser, one 2.0 oz bottle of RevitaCel
         Activating Serum, one 1.6 oz bottle of RevitaCel Replenishing Complex,
         one 2.0 oz bottle of 24-Hour Moisturizer, an instructional pamphlet in
         English, along with Product packaging ("BASIC UNIT"), and two eye skin
         products as follows: one 50 ml bottle of RevitaCel Firming Eye Gel and
         one 50 ml bottle of RevitaCel Replenishing Complex (collectively "UP
         SELL EYE UNIT") as more fully described in that "EXHIBIT B" attached
         hereto and incorporated herein by reference. The Product includes any
         improvements to these six (6) named creams, cleanser and serum. Biozhem
         has applied for a trademark for the name "RevitaCel" and is the
         licensee of the patents for the proprietary formula contained in the
         RevitaCel Replenishing Complex. The Product does not include hair,
         nail, lip or other applications or products not specified on "EXHIBIT
         B."

         (m) PROJECT: All aspects of the management of the worldwide marketing,
         selling, and distribution of the Product, limited, however, to those
         rights as described in the Licensing Agreement, and the accounting for
         the Product sales, Gross Revenue and Net Revenue (as more specifically

                                       4


<PAGE>

         described in Section 1 herein), through the marketing channels
         described below in the Territory, for the Term herein, by airing the
         Infomercial and utilizing other Product marketing materials.

         (n) TERRITORY: The Territory includes all countries of the world in all
         possible market areas available today and those that will be available
         in the future in which Biozhem holds the distribution rights pursuant
         to and to the extent set forth in the Licensing Agreement, including
         without limitation: print; retail; radio; television; cable; satellite
         cable and television; catalog; credit card syndication; continuity club
         and database; the Internet; and home shopping networks.

2.       WARRANTIES & COVENANTS.

         2.1. THANE. Thane warrants, promises, and covenants that it has the
complete right, power and authority to enter into this Agreement, and that it is
a corporation duly organized and validly existing under the laws of the State of
Delaware, and is duly qualified and in good standing as a foreign corporation
authorized to transact business in the State of California. Thane shall use
commercially reasonable efforts to manage, sell, market and distribute the
Product during the term of this Agreement.

         2.2. BIOZHEM. Biozhem warrants, promises, and covenants that it: (i) is
a corporation duly organized and validly exiting under the laws of the State of
Texas, and that it has the full corporate right and power to enter into this
Agreement; (ii) has the ability, power and authority to grant the rights to
Thane as set forth in this Agreement; (iii) will take all steps necessary to
protect all intellectual property rights and other property rights of the
Product, the Product name, the Product's proprietary formulation, and the
Infomercial, including, but not limited to, copyrights, patents, trademarks,
releases, contractual rights and releases from talent, and any and all required
governmental approvals that currently exist or may exist for the Product for the
Term of this Agreement, and will maintain and have the sole and exclusive right
during the Term to defend all such rights in full force; (iv) has not and will
not knowingly violate any third parties' intellectual property rights; and (v)
has disclosed to Thane all agreements, arrangements and encumbrances affecting
the Product and/or the Product's financial viability.

         2.3. CONFIDENTIALITY. The Parties each agree not to disclose
confidential information regarding the Product's formulations, technical
information, designs, drawings, concepts, ideas, sketches, wordings, pricing,
cost and expenses, media or marketing strategies, trade secrets, or Customer
List, not to disclose confidential information regarding the Infomercial
production and airings, and not to disclose confidential information regarding
the other Parties, their affiliated companies, their products, their operations,

                                       5


<PAGE>

or any other company information which may be deemed a trade secret, or is
sensitive in nature and not otherwise known to the public, including the
contents of this Agreement ("CONFIDENTIAL INFORMATION"), or use such
Confidential Information for commercial purpose unless such Confidential
Information is readily available to the public, without the prior written
consent of the other Party and further shall treat all such Information in
strict confidence, and not disclose it to anyone outside of the relevant
Party(s') organization. This provision shall survive Termination of this
Agreement.

         2.4. NON-COMPETITION. The management rights granted herein are
exclusive and Biozhem agrees not to manufacturer, market, authorize a third
party to manufacture or market the Product for itself or for third parties in
the Territory in competition with Thane's management and marketing efforts
during the Term of this Agreement. Thane agrees not to recommend any Competing
Product (i) when taking orders for the Product, (ii) communicating with any
person on the Customer List or (iii) utilizing the Customer List in any manner
to market, sell or distribute any Competing Product; provided, however, that the
foregoing shall not preclude Thane from selling Competing Products to customers
on the Customer List that were Thane customers prior to the date hereof or
directly derived in response to Competing Product advertisement and marketing.

3.       MANAGEMENT DUTIES/MANAGEMENT FEE.

         3.1. MANAGEMENT OF PRODUCT DISTRIBUTION. With respect to Domestic
Sales, Thane shall function in a management capacity only, managing directly, or
through the use of agents or sub-contractors, all aspects of the marketing, sale
and distribution of the Product in the Territory, including, but not limited to,
the management of accounts receivable, accounts payable, inbound and outbound
fulfillment, customer service, merchant processing, database, inbound continuity
club, purchasing, inventory control, air tape trafficking, marketing planning,
media planning and buying, Internet sales, direct response print, package
inserts, after-market sales, and accounting and operational reporting
(collectively "MANAGEMENT DUTIES"). Thane shall use commercially reasonable
efforts to manage such Product distribution. All revenues, costs, inventories,
account receivables, and profits generated from Thane's management services
remains the sole property of Biozhem. Thane shall consult with Biozhem on an
ongoing basis and seek Biozhem's input and approval of Thane's overall marketing
plan, product pricing, distribution, obtaining new manufacturers and suppliers,
changes in Product formulations or configurations, creative approval of
marketing materials, and other management issues requested by Biozhem. Biozhem
shall use commercially reasonable efforts in obtaining direct contractual
relationships between its current manufacturers, suppliers, vendors, and Thane,
and shall assist Thane in all ways necessary to ensure a successful and smooth
transition of the existing marketing activities. Thane's right to manage and
market the Product throughout the Territory shall be exclusive, subject to any
Early Terminating Event, as described in Section 5.2. Thane shall abide by all
national, state and local laws.

                                       6


<PAGE>

         3.2. MANUFACTURE/INSURANCE. Thane will have the sole and exclusive
responsibility to control all manufacturing aspects of the Project and shall be
responsible for establishing and maintaining appropriate standards of quality
for the manufacture of the Product, excepting that Thane shall use Biozhem's
designated manufacturer and suppliers and may not utilize new or additional
manufacturers and suppliers without Biozhem's prior written approval. Thane
shall acquire and maintain adequate product liability insurance for the Product,
for not less than two million dollars, in full force for the Term of this
Agreement, with Biozhem named as an additional insured under a standard broad
form vendor endorsement to the policy; provided, however, that the Project shall
pay for its relative share of the cost of such product liability insurance
policy with an annual audit adjustment.

         3.3. USE OF SUBCONTRACTORS. Notwithstanding Section 11 prohibiting
assignment of this Agreement, Thane may subcontract any and all Management
Duties to its agents and subcontractors, including subcontracting to a
subsidiary, parent or other affiliated company, so long as such subsidiary,
parent, or affiliates provide such services at or below market price, and their
services are of like quality as mutually agreed upon by the Parties.

         3.4. THANE DISTRIBUTION. For International and Non-Domestic Sales,
other than Canada, which is set forth in Section 3.5, Thane shall acquire the
Product at the prices set forth in this Section 3.4 and sell the Product within
the countries and via the channels for its own account and at its own expense.
Thane shall use its best efforts to reasonably sell and distribute the Product
under this Section 3.4. All Product to be sold in all countries other than the
United States or as provided in Section 3.5, shall be purchased by Thane at
$15US per Basic Unit; provided, however, that Product for all Internet sales
shall be purchased at $35US. All Product sold via QVC or home shopping network
shall be sold in accordance with Biozhem's contract with Fox Marketing. Up Sell
Eye Units shall be purchased at $3.75US per Up Sell Eye Unit. Purchase terms for
all sales shall be net 30 days, FOB point of manufacture. Components of the
Product shall be purchased for a comparable purchase prices. The Management Fee
defined in Section 3.9 shall not apply to any International and Non-Domestic
Sales. Thane shall notify Biozhem if it does not intend to market in a
particular international country/territory. If Thane so notifies Biozhem of its
intent not to market in a particular international country/territory or if there
are no purchase orders for the Product within a particular international
country/territory within the first nine (9) months of this Agreement, all rights
to said country/territory under this Agreement shall revert to Biozhem
("REVERTED TERRITOR(IES)". At Biozhem's sole and absolute discretion, it shall
have the right, but not the obligation, to utilize the services of any company
other than Thane to market and distribute Product in a Reverted Territory and
Thane shall receive no payment for sales in said Reverted Territory. In the
alternative, Biozhem may, in its sole and absolute discretion, elect to choose
Thane and Thane would hereby agree to sell to Biozhem the Product for sales in a
Reverted Territory and to pick and pack the product for Biozhem to pick up at
the fulfillment house, all for a price of one hundred and seven percent (107%)
of Thane's cost of production. Thane shall account to Biozhem for costs of
production with respect to such Product pursuant to Section 3.1 but otherwise,
the duties set forth in Section 3.1 shall not apply to Thane with respect to
such Product.

                                       7


<PAGE>

         3.5. SALES WITHIN CANADA. With respect to all sales to customers within
Canada, Thane shall receive a management fee of two percent (2%) of the Gross
Revenue. The Parties agree to divide the net profits from such sales, as
determined by GAAP, consistently applied, on an equal basis. The provisions set
forth in Section 1(k), Net Revenue, with respect to cost savings and prohibition
against overhead allocation, and the provisions of Section 3.3, shall both apply
to Thane's management of the Canadian market. The Parties shall determine the
application of this Section 3.5 in good faith in accordance with normal business
customs.

         3.6. FINANCE PROJECT COSTS. Thane shall finance, by advancing on behalf
of the Project, interest free funds to cover the Finance Amounts ("FINANCE"),
and, upon execution of this Agreement, Thane shall assume management of the
existing Product inventory, and Finance the outstanding balance of same, but not
to exceed the value of such inventory. Thane shall recoup all Finance Amounts as
described in Section 1(k), Net Income.

         3.7. MANAGEMENT OF CUSTOMER LIST. The Parties agree that the Customer
List shall be solely owned by Biozhem, however, during the Term herein, only
Thane shall manage the Customer List in accordance with all applicable local,
state and federal privacy and trade secret laws. Biozhem shall at all times have
the right to view, copy, and use the Customer List for purposes other than sale
of the Product during the Term of this Agreement. Thane shall not sell or lease
the Customer List to third parties without Biozhem's prior written consent,
which consent may be withheld in its sole and absolute discretion.

         3.8. DISBURSE TALENT, PRODUCER, FORMULATOR AND PATENT ROYALTIES. Thane
shall be responsible for accounting for and Finance of "PRODUCT ROYALTIES" and
disbursing pursuant to this Agreement the amounts due and owing to ATS, Beauty
Resource, Inc., Lindsay Wagner, Script to Screen, Inc., Marion Simms and Charles
Keenan, MD, in accordance with the royalty structures set forth on "EXHIBIT C"
hereto; provided further that Thane shall also be responsible to Finance the
payment for the April 19, 2002 royalty payment to Lindsay Wagner and the April
30, 2002 royalty payment to ATS; provided further, however, that Thane shall
have no obligation to pay said royalty payments if the Project is in the
Recoupment Period, as defined in Section 5.4.

         3.9. THANE'S MANAGEMENT FEE. As compensation for Thane's Management
Duties herein, beginning on the date of Thane's first air date of the
Infomercial, Thane shall receive a "MANAGEMENT FEE" equal to seven percent (7%)
of the Gross Revenue of all Product Domestic Sales generated by Thane and its
subsidiaries.

                                       8


<PAGE>

         3.10. PROJECT LOSSES. Thane shall not be responsible for any losses
incurred by Biozhem unless directly caused by Thane's gross negligence or
willful mismanagement of the Project.

         3.11. MOVING AND MANAGEMENT OF EXISTING DATABASE. Upon execution of
this Agreement, Biozhem shall pay the costs associated with moving its existing
customer database to a location designated by Thane. Thane shall manage said
existing customer database separately from the Project and the Customer List in
return for a management fee of seven percent (7%) of the Gross Revenue generated
by sales to customers on that existing customer database, including continuity
customers. Biozhem shall pay Thane all reasonable costs incurred by Thane in
providing, picking, packing and shipping the Product. All revenue from this
existing customer database, less Thane's seven percent (7%) management fee and
Thane's costs pursuant to this Section 3.11, shall belong to Biozhem, and shall
not be subject to any other terms of this Agreement. At such time as there are
no further orders from this existing customer database, and no further legal
requirements to retain such information, Thane shall promptly return to Biozhem
the records and information contained in this customer database.

         3.12. MEDIA TEST. Upon execution of this Agreement, Thane shall, within
thirty (30) days of the execution date, edit the Infomercial to change the claim
of reduction in fine lines and wrinkles to sixty percent (60%), and retest the
Infomercial using comparable media at comparable rates as used previously in the
Biozhem test ("MEDIA TESTING PERIOD").

4.       DISBURSEMENT OF BIOZHEM REVENUES/ADVANCES.

         4.1. NET REVENUE ACCOUNTING/PAYMENT. Thane shall determine, account,
and pay to Biozhem Net Revenue in accordance with its Accounting Procedures, and
subject to all Audit Rights.

         4.2. EXECUTION ADVANCE. Under the terms of this Section 4.2, Thane
shall pay to Biozhem, six hundred thousand dollars ($600,000) as an "EXECUTION
Advance" against future Net Revenue compensation. The Execution Advance shall be
on a NON-REFUNDABLE BUT RECOUPABLE BASIS, as defined in Section 5.4 below, and
shall offset any and all Net Revenue compensation due and payable to Biozhem
hereunder. Thane shall pay two hundred and fifty thousand dollars ($250,000) of
the Execution Advance upon execution of this Agreement. The three hundred and
fifty thousand dollar ($350,000) balance of the Execution Advance shall be due
and payable on or before the end of the Media Testing Period, if Thane
determines that the media test results of Section 3.12 warrant continuing the
Project.

         4.3. ROLL-OUT ADVANCE. On or before ninety days (90) days from Thane's
first air date of the Infomercial, Thane shall pay to Biozhem an additional
"ROLL-OUT ADVANCE" of six hundred thousand dollars ($600,000). The Roll-out
Advance shall be on a non-refundable but recoupable basis and shall offset any
and all Net Revenue compensation due and payable to Biozhem hereunder. If Thane
fails to pay the $600,000 Roll-out Advance by September 15, 2002, Biozhem may
terminate this Agreement in accordance with Section 5.2 herein.

                                       9


<PAGE>

         4.4. NON-REFUNDABLE EXCEPTION. Monies advanced herein shall be on a
non-refundable basis, excepting that advanced monies shall be refundable to
reimburse Thane's out-of-pocket costs upon termination of this Agreement by the
an event which materially impairs Thane's ability to manage the Project as
contemplated herein, including without limitation, Biozhem misrepresenting a
material fact herein, and action on the part of governmental authorities
preventing substantial performance of this Agreement.

5.       TERM/TERMINATION.

         5.1. TERM. The term of this Agreement shall begin on the Effective Date
and continue for one year after the first air date of the Infomercial, such date
to be no later than forty-five (45) days after signing this Agreement ("INITIAL
TERM"). The Initial Term shall be automatically renewed for additional one year
periods thereafter, so long as Thane has met its Minimum Performance
Disbursements set forth below, and subject to Section 5.2 ("TERM").

         5.2. EARLY TERMINATING EVENTS. This Agreement may be terminated upon 30
days written notice to the other Party ("TERMINATION DATE"), upon the occurrence
of any one or more of the following events:

         (a) Thane fails to pay the balance of the Execution Advance on or
         before the end of the Media Testing Period;

         (b) Thane fails to pay the Roll-out Advance by September 15, 2002;

         (c) Thane reasonably determines the Project is no longer financially
         feasible. Thane shall have no further obligation to Finance the Project
         upon termination, but shall continue to manage the wind down of the
         Project as provided for herein and shall disburse Patent, Producer and
         Talent Royalties on Product sold;

         (d) If either Party is declared insolvent or bankrupt, or makes an
         assignment for the benefit of creditors, or a receiver is appointed or
         any proceeding is demanded by, for or against the other under any
         provision of the Federal Bankruptcy Act or any amendment thereof which
         is not removed within sixty (60) days after notice from the
         non-bankrupt party;

         (e) Thane fails to meet its Minimum Performance Disbursements, as
         defined below; or

                                       10


<PAGE>

         (f) Either Thane or Biozhem breaches a material provision of this
         Agreement ("MATERIAL BREACH") and such breach remains uncured for a
         period of sixty (60) days after the non-breaching party informs the
         breaching party in writing of the existence of the Material Breach.

         5.3. MINIMUM PERFORMANCE DISBURSEMENTS. Upon 30 day written notice to
Thane, Biozhem may terminate this Agreement if Thane fails to disburse to
Biozhem five million dollars ($5,000,000) by the end of the Initial Term or by
failing to disburse additional five million dollar ($5,000,000) amounts yearly
for the extended term hereafter. Thane may advance monies to Biozhem in order to
meet the Minimum Performance Disbursement, which advances may be recoupable
against Net Revenues in the subsequent years.

         5.4. WIND-DOWN/RECOUPMENT OF COSTS. Following the expiration,
termination or early termination of this Agreement, for any reason, all rights
to manage the marketing of the Product shall revert to Biozhem, excepting that
Thane shall retain the right to market the Products to the then existing
customers on the Customer List, on an exclusive basis, UNTIL SUCH TIME AS IT HAS
RECOUPED the following costs and payments that have not yet been repaid to Thane
("RECOUPMENT PERIOD"): (i) any and all advances made to Biozhem during the Term
herein; (ii) all milestone royalties advanced to Talent, Producer or Patent
Owner; (iii) all Management Fees earned; and (iv) all financing and operational
deficits for Management Duties related to Domestic Sales, excluding those costs
incurred after the Termination Date, but including without limitation, inventory
costs, returns, and chargebacks; provided however, that Biozhem shall have the
right, but not the obligation, to buy out these above listed recoupment costs;
provided, further, that the first seven percent (7%) of all Adjusted Gross
Revenue (as defined at the end of this section 5.4) shall be paid to Biozhem on
a monthly basis until the Recoupment Period has ended. Following the Recoupment
Period, Thane shall have no further rights to market, distribute or sell the
Product and shall cease any further use of the Customer List. During the
Recoupment Period, Biozhem may market, sell and distribute the Product to new
customers. For the purposes of this Section 5.4 only, "ADJUSTED GROSS REVENUE"
shall mean all gross revenue received by Thane from sales of the Product, less
shipping and handling charges received from customers, returns, credits, bad
debt, payment of any applicable sales taxes, and a rolling return reserve
initially set at twelve percent (12%) of Gross Revenue, and subsequently
adjusted to reflect the actual return rate when such becomes known.

         5.5. RETURN OF MATERIALS. Following the termination of the Recoupment
Period, as defined in Section 5.4, Thane shall have ten (10) days to return the
following materials to Biozhem, and further shall retain no copies of same: (i)
the Infomercial and any associated masters produced by Biozhem and associated
testimonials, talent release forms and agreements and claims substantiation that
Biozhem provide to Thane; (ii) all but one copy of the Licensing Agreement, said
copy to be used solely for auditing and potential litigation purposes; and (iii)

                                       11


<PAGE>

the Product and all components thereof, the same to be purchased by Biozhem at
Thane's cost of production; provided however that Thane may retain an amount of
the Product reasonably required to fulfill its prior sales commitments.
Following the end of the Recoupment Period, Thane shall return within thirty
(30) days all Confidential Information that originated with Biozhem that can
reasonably be returned and shall not utilize any such information that cannot
reasonably be returned to Biozhem. It is the Parties intent that Thane may use
the Customer List for six (6) months after end of the Recoupment Period solely
for the purpose of fulfilling any legal requirements that Thane may have
relating to sales of the Product. Thereafter, Thane shall promptly return to
Biozhem all copies of the Customer List in its possession or under its control.

6.       INDEMNIFICATION.

         6.1. BIOZHEM. Biozhem agrees to defend and hold Thane, its successors,
assigns, licensees, agents, associates, subsidiary and parent companies,
directors and employees harmless from any and all claims, damages, costs and
expenses, attorney's fees, damages, recoveries, and settlements which arise
from, or may arise out of, any representation, claim, statement, promise,
warranty, and presentation that Biozhem makes about the Product, from any
infringement of Biozhem on the intellectual property rights of another, and from
the breach by Biozhem of any of its representations, warranties, covenants,
obligations, agreements or duties under this Agreement.

         6.2. THANE. Thane agrees to defend and hold Biozhem, its successors,
assigns, licensees, agents, associates, subsidiary and parent companies,
directors and employees harmless from any and all claims, damages, costs and
expenses, attorney's fees, damages, recoveries, and settlements which arise
from, or may arise out of, any representation, claim, statement, promise,
warranty, and presentation that Thane makes about the Product, or that any of
Thane's representatives, sales people, public relations people, agents, and
marketing people make about the product , which Biozhem has not approved or
ratified, from product liability and Product defects, and from the breach by
Thane of any of its representations, warranties, covenants, obligations,
agreements or duties under this Agreement.

         6.3. DEFENSE. If either Party is sued in any court for damages by
reason of any of the acts of the other Party referred to herein, such other
Party shall defend said action (or cause same to be defended) at its own expense
and shall pay and discharge any judgment that may be rendered in any such
action; if such other Party fails or neglects to so defend in said action, the
Party sued may defend the same and any expenses, including reasonable attorneys'
fees, which it may pay or incur in defending said action and the amount of any
judgment which it may be required to pay shall be promptly reimbursed upon
demand. Nothing herein is intended to nor shall it relieve either Party from
liability for its own act, omission or negligence.

                                       12


<PAGE>

7. INDEPENDENT AND SEPARATE ENTITIES. Thane and Biozhem enter into this
Agreement as separate and independent corporations, businesses and companies.
Thane and Biozhem will be responsible for the payment of all compensation,
wages, taxes, dues, employment benefits and operating expenses in connection
with the separate operations of their respective businesses, corporations and
companies. This Agreement does not create a partnership, agency or joint venture
relationship between Thane and Biozhem. Thane and Biozhem agree that neither
will, nor permit any person or entity acting for or on its behalf to, bind or
obligate the other Party, or represent to have such authority, without the
express prior written approval of the other Party.

8. ENTIRE AGREEMENT/AMENDMENTS. This Agreement contains the entire understanding
of the Parties with respect to the management services for the Product, and
supercedes all prior agreements and understandings with respect thereto. No
amendment to this Agreement shall be effective unless set forth in a written
instrument executed by the Parties.

9. CONTROLLING LAW/ENFORCEMENT. The laws of the State of California will govern
the interpretation of this Agreement, and the rights and obligations of the
Parties to it, without regard to the State's conflict of laws principles. If any
party to this Agreement retains the services of an attorney, requests an
arbitration, or files a lawsuit to enforce the arbitration award, for the
purpose of enforcing the terms and conditions of this Agreement, an arbitrator
or court may award the prevailing party costs and expenses, including reasonable
attorney's fees.

10. ARBITRATION. Any dispute between the Parties hereto shall be resolved by
binding arbitration in Riverside County, California pursuant to the
then-existing arbitration rules of the American Arbitration Association. The
Parties agree that the courts of Riverside County, California shall have
jurisdiction to enforce the arbitrator's award, and the parties agree to submit
to the jurisdiction of such courts for the purposes of any such enforcement
action or any action in aid of the arbitrator's authority. The Parties hereby
stipulate that they shall have a right to discovery on reasonable terms and
conditions (as determined by the arbitrator in the event the parties cannot
decide), as provided in Section 1283.05 of the California Code of Civil
Procedure, but such discovery shall be conducted promptly and without
unreasonably delaying the hearing of the dispute. In any event, the date of
arbitration shall be set no later than sixty (60) days after service of the
notice of arbitration. In any arbitration or enforcement action, the prevailing
party shall be entitled to its reasonable attorneys' and accountants' fees and
costs. Service of any claim, arbitration or litigation hereunder may be made
against a Party hereto by service according to the same procedure set forth
herein for service of notice to such Party.

11. NO ASSIGNMENT. Except as provided in Section 3.3 on subcontracting, Thane
shall not have the right to assign this Agreement without Biozhem's prior
written approval and any assignment not approved by Biozhem shall be null and
void, and of no force or effect; provided, however, that Thane shall have the
right to assign this Agreement to any person or entity acquiring substantially

                                       13


<PAGE>

all of Thane's assets or into which or with which Thane might merge or
consolidate, provided that the purchaser of assets assumes in writing all
obligations under this Agreement. Biozhem shall have the right to terminate this
Agreement if Thane attempts to assign this Agreement in violation of this
Section 11.

12. NOTICES. Any and all notices and demands by any Party shall be in writing
and shall be validly given or made only if personally delivered or deposited in
the United States mail, certified or registered, postage prepaid, return receipt
requested, or if made by Federal Express or other similar delivery service, with
proof of delivery, or confirmed receipt e-mail or facsimile. Service shall be
conclusively deemed made upon: receipt if personally delivered; or two (2) days
after having been mailed; or twenty-four (24) hours after being delivered by an
overnight delivery service, whichever is sooner. Notices shall be addressed as
follows:

         Biozhem:          Biozhem Cosmeceuticals
                           11884 Tammy Way
                           Grass Valley, CA 95949
                           Attention: James Chapin, CEO
                           Tel: 530-271-1911
                           Fax: 530-271-7477
                           Jim.Chapin@Biozhem.com
                           ----------------------

         Thane:            Thane International, Inc.
                           78-140 Calle Tampico, #207
                           La Quinta, CA 92253
                           Attention: Legal Department
                           Fax:(760) 777-0214
                           Tel: (760) 777-0217
                           Kallen@thaneinc.com
                           -------------------
                           Mtaylor@thaneinc.com

13. SEVERABILITY. In the event any part of this Agreement is held by the final
order of any court, arbitration panel, tribunal or administrative agency having
jurisdiction over this Agreement or the subject matter hereof, to be invalid,
contrary to law, public policy or otherwise unenforceable, such part or parts
will be severed here from and will not affect any other part or parts of this
Agreement. The Parties will promptly negotiate substitute provisions for those
rendered or declared unlawful, retaining as much of the intent of the original
provisions as is practicable without the defects which caused them to be
unlawful.

14. WAIVERS. Delay or failure by either Party to enforce any right or remedy
available to it under this Agreement or at law or in equity, on account of the
other Party's breach or repeated failure to perform a duty or an obligation
under this Agreement will not constitute a waiver by such Party of such right or
remedy in respect to the same or any subsequent breach or failure by the other
Party. Any waiver must be in writing and signed by the Party to be charged.

                                       14


<PAGE>

15. BINDING EFFECT. The rights and obligations of the Parties under this
Agreement shall inure to the benefit of and be binding on their respective
successors and permitted assigns.

16. FURTHER ASSURANCES. The undersigned represent and warrant that they shall do
all acts and execute and deliver all documents necessary, convenient or
desirable to further the provisions and purposes of this Agreement.

17. NO PRESUMPTION. It shall be presumed that each party jointly drafted this
Agreement, and no other presumption of any kind shall inure or apply with regard
thereto or concerning the interpretation or construction of this Agreement in
the event of any ambiguities.

18. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall be
deemed to be one and the same instrument. All counterparts so executed shall
constitute one agreement binding upon all parties, notwithstanding that all
parties are signatory to the original or the same counterpart.

19. SURVIVABILITY. Sections 1, 2.3, 3.7, 3.11 and 6 shall survive the
Termination of this Agreement.

20. FACSIMILE SIGNATURES. Facsimile signatures shall be deemed original
signatures for purposes of this Agreement, with such facsimile signatures having
the same legal effect as original signatures.

21. TITLES, HEADINGS AND CAPTIONS. All titles, headings, and captions used in
this Agreement have been included for administrative convenience only and do not
constitute matters to be construed in interpreting this Agreement.

                                       15


<PAGE>

         IN WITNESS HEREOF, the parties hereto have executed this Agreement as
of the Effective Date herein.

BIOZHEM COSMECEUTICALS                      THANE INTERNATIONAL, INC.

/s/ James Chapin                            /s/ Mark Taylor
---------------------------                 ------------------------------
By: James Chapin, CEO                       Mark Taylor, President and COO
EIN: _____________________

                                       16

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>11
<FILENAME>biozhem_ex23-2.txt
<TEXT>
<PAGE>

EXHIBIT 23.2


                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS



We hereby consent to use in this Registration Statement on Amendment No. 1 to
Form SB-2 of our report dated December 14, 2001 relating to the September 30,
2001 and 2000 financial statements of Biozhem Cosmeceuticals Inc., appearing in
the Prospectus that is part of this Registration Statement and to the reference
to us under the heading "Experts" in such Prospectus.


                                                              /s/ CORBIN & WERTZ

Irvine, California
July 25, 2002





</TEXT>
</DOCUMENT>
</SUBMISSION>
