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HISTORY OF THE COMPANY

Diabetex International Corporation ("Diabetex" or the "Company") was founded on September 14, 1983. The original name of the Company was Sheridan Industries Inc. Through a merger in December 1998, the Company moved from Utah to Nevada and changed its name from Sheridan Industries, Inc. to Diabetex International Corporation to reflect its new strategy. This new strategy was to focus on diabetes-related products and services.

On June 30, 1999, Diabetex acquired the rights to a treatment program called Metabolic Activation for the treatment of metabolic diseases. This treatment program was the property of Advanced Metabolic Systems, a Delaware corporation ("AMSys"). In addition to Metabolic Activation, AMSys provided and continues to provide certain other products and services, which the Company did not wish to acquire and AMSys did not wish to license. In order to provide an avenue for the Company to acquire the rights to Metabolic Activation, AMSys spun a new corporation, Advanced Metabolic Technologies, Inc. ("AMTech"). All of the assets held by AMSys associated with metabolic disorders became the assets of AMTech. Diabetex, in turn, acquired 100% of this new company. AMTech is a wholly-owned subsidiary of Diabetex International Corporation. This acquisition combined two complimentary technologies, diabetes metering systems with diabetes treatment technology. In the trade of Diabetex's shares for AMTech, no "tax free" exchange status was sought.

AMSys operates in Connecticut. Its principal line of business is to provide consulting services to physicians in the area of metabolic disorder treatments. Diabetex assumed no liabilities of AMSys other than those required by any license now an asset of AMTech, its wholly-owned subsidiary. No creditor of AMSys was adversely affected by the acquisition of the assets transferred to AMTech. The consideration for the acquisition of the AMSys diabetes related assets is 1,232,261 shares of Common Stock valued at $10.00 per share (c.f. 10 Financial Statements).

Following the acquisition of AMTech from AMSys, AMSys continued to perform billing, collections and other administrative services for Diabetex for a period of one year. AMSys has not performed any services for Diabetex since June 30, 2000. These services are now performed by Diabetex personnel.

Diabetex believes it employs sufficient and appropriate personnel to operate this new subsidiary and to promote its clinical treatment business. The Company's personnel is addressed later in this registration statement, and all material employment contracts are made an exhibit hereto by reference.

In June 1999, the Company acquired an exclusive license from Hamilton-May Corporation ("Hamilton-May") for an insulin infusion pumping system. Hamilton-May is awaiting patents for this device, which has been named the "Fluid Micrometer". Hamilton-May, a Nevada corporation, has developed prototype devices with the ability to modify the current infusion pump systems with its fluid micrometer. This new technology is intended to deliver metabolic disorder treatment as well as Continuous Subcutaneous Insulin Infusion ("CSII") for individuals with diabetes while measuring glucose levels.

PRINCIPAL PRODUCTS AND SERVICES

Diabetex Non-Invasive Glucose Measurement Device:

The Company holds an exclusive worldwide license to manufacture, develop and market a non-invasive patented device for the measurement of blood glucose, glycosolated hemoglobin A1C (average blood glucose level measurement), and other blood levels to help treat diabetes and other diseases. Prototypes have been developed and there has been clinical testing for the purpose of refinement, but no request for approval from the Food and Drug Administration ("FDA") has as of yet been requested. The Company plans to develop these devices to final production form and upon completion of production model units, submit them for clinical trials and testing in conjunction with FDA approval application. The Company continues to use original equipment manufacturer ("OEM") to produce the equipment to specification of the Company.

Metabolic Activation Treatment

Through the acquisition of AmTech, the Company has the exclusive license to market a patented metabolic treatment known as Metabolic Activation. Current medical publications also refer to this treatment as Hepatic Activation or Chronic Intermittent Intensive Insulin Therapy ("CIIIT"). This treatment is delivered via a special intravenous infusion device, or pump, with the desired pattern of infusion pre-programmed into the pump. The pump currently used is the Bionica Microdose Pump, which has received a 501(k) market clearance from the FDA. Over the ten (10) years that this treatment has been in clinical use, including its trials and development, it has proven to prevent and in some cases reverse health complications caused by diabetes.

Training of Metabolic Activation Technicians

The Company, through its acquisition of AmTech, acquired all of the Clinic Operations Manuals, Training Manuals and the services of all training personnel used to oversee the establishment of Metabolic Activation Clinics. There has been no interruption of Clinics already operating, and the Company currently supplies all services and training required for these and new clinics by providing technical assistance to hospitals, doctors and support staff.

SALES AND MARKETING

As of December 31, 1999, the Company has not realized any significant income from any of its products. There have been no sales of its Biologic Monitoring Devices, or of its Infusion Devices. Metabolic Activation accounted for $ 40,605.00 in revenues.

The Company plans to develop a marketing plan using traditional channels of distribution. Management intends to fund its subsidiary's activities according to its business plan and is confident that it will be profitable in the future.

COMPETITION

The Company is competing within the medical research and development market. It believes it is well ahead of the competition in a "ready for market accurate" non-invasive glucose measuring device.

To the best of management's knowledge it is the only company developing a complete treatment system ranging from the monitoring of blood components to infusion of insulin and the treatment of metabolic illness using Metabolic Activation.

Metabolic Activation complements the traditional treatment of diabetes. Currently, Metabolic Activation is offered at clinics only. Insurance reimbursement has usually occurred upon appeal. The Company believes that as the procedure becomes more prevalent in the market, insurance and Medicare reimbursement may become more readily available.

RESEARCH AND DEVELOPMENT

The Company continues to develop an infusion pump to replace the Bionica Microdose and to miniaturize its monitoring devices for home use.

The Company does not pay any R&D expenses directly; however, during 1999 it paid $249,703 in prepaid royalties to Solid State Farms, Inc., all of which went to R&D of the non-invasive blood glucose monitor.

EMPLOYEES:

As of December 31, 1999 the Company had 5 employees of whom 5 are full- time. The Company has no collective bargaining agreements and believes that relations with its employees are good.

GOVERNMENT REGULATION

Medical products of the type currently being marketed by the Company are subject to regulation under the Food and Drug Administration and Cosmetic Act of (the "FDA Act"), as amended in the Medical Device Amendments of 1976 (the "1976 Amendments"), the 1990 Safe Medical Devices Act, and most recently the new Quality System Regulation (QSR) which replaces the regulations formerly called Good Manufacturing Practice (GMP's).

In addition, depending on the product type, the Company must also comply with those regulations governing the Conduct of Human Investigations, Pre- Market Approval Regulations and other requirements, as promulgated by the Food and Drug Administration (FDA). The FDA is authorized to inspect a device, its labeling and advertising, and the facilities in which it is manufactured in order to ensure that the device is not manufactured or labeled in such a way as it could cause harm or be injurious to health.

Under the 1976 Amendment and the Safe Medical Device Act, the FDA adopted regulations which classify medical devices based upon the degree of regulation the FDA believes necessary to assure safety and efficacy. A device is classified as Class I, II or III device. Class I devices are subject only to general controls. Class II devices are or will be subject to "performance standards". Most devices are also subject to the 501(k) pre-market notification provision. In addition, Class III devices require FDA pre-market approval before they may be marketed commercially because their safety and effectiveness cannot be assured by the general controls and performance standards of Class I or II devices. The Company's products are Class II and Class III devices and as such several may require FDA notification under Section 501(k) of the FDA Act.

The FDA has authority, to among other things, deny marketing approval until all regulatory protocols are deemed acceptable, halt the shipment of defective products, and seize defective products sold to customers. Adverse publicity from the FDA, if any, could have a negative impact on sales. To date, the Company has had no FDA oversight problems, and none are pending to its knowledge.

MANUFACTURING AND QUALITY ASSURANCE

The Company currently does no manufacturing and relies on Hamilton-Clarke to provide protypes and other working models of its prospective products. Meatablic Activation requires no manufacturing.

The Company plans to use Original Equipment Manufaturers (OEM) for the manufacture of its products upon completion of their development. Quality control procedures are to be performed by the Company pursuant to standards set forth in the FDA's "Quality Systems Regulation". These procedures will include the inspection of components and full testing of finished goods.

TRADEMARKS, PATENTS AND COPYRIGHTS

The Company does not have any registered trademarks for its products, nor does it hold any patents. The Company does have a license agreement with Solid State Farms for the exclusive worldwide right to market, develop, exploit, manufacture and sell a blood glucose monitoring device. Solid State Farms holds 8 international patents on this technology.

The Company has a license agreement with Hamilton-May Corporation for the exclusive right to market, develop, exploit, manufacture and sell infusion pumps, including the "Fluid Micrometer Pump"

The Company, through its wholly-owned subsidiary Advanced Metabolic Technologies, Inc. (AMTech), has a license from Thomas T. Aoki, MD and his Research Institute to use and market a patented treatment for diabetes patients known as Metabolic Activation. All drugs used in Metabolic Activation therapy have met all FDA requirements for use on human patients, and the delivery device currently in use has received market-clearance pursuant to section 510(k) of the Food and Drug Act. The market-clearance number is K875316.