<PAGE>

                      SYNTHETIC BLOOD INTERNATIONAL, INC.


                                   FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.

               For the quarterly period ended  October 31, 1999
                                              ------------------

                     Commission File Number        2-31909
                                            --------------------

                      SYNTHETIC BLOOD INTERNATIONAL, INC.
               --------------------------------------------------
             (Exact name of registrant as specified in its charter)

            New Jersey                             22-3067701
       ----------------------                ----------------------
      (State of Incorporation)              (IRS Employer ID Number)

                 2685 Culver Avenue     Kettering, Ohio 45429
                ----------------------------------------------

                                 937-298-6070
                                 ------------
              (Registrant's telephone number, including area code)

Indicate by the check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports).

                            YES [X]     NO [_]

and (2) has been subject to such filing requirements for the past 90 days.

                            YES [X]     NO [_]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of October 31, 1999.

               69,509,788 shares of common stock par value $0.01
           ---------------------------------------------------------
<PAGE>

                      SYNTHETIC BLOOD INTERNATIONAL, INC.
                         (A Development Stage Company)
                                 BALANCE SHEETS

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                    October 31,      April 30,
                                                       1999            1999
                                                   -------------   ------------
                                                    (Unaudited)
<S>                                                <C>             <C>
Current Assets:
  Cash and cash equivalents                        $    206,920    $    193,013
  Prepaid expenses                                        7,507          60,874
                                                   ------------    ------------
           Total Current Assets                    $    214,427    $    253,887
  Property & Equipment, net                              45,209          61,602
  Other Assets, Patents and Technology                  224,480         215,417
                                                   ------------    ------------
                                                   $    484,116    $    530,906
                                                   ============    ============

                   LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                   ----------------------------------------

Current Liabilities:
    Current portion of notes payable               $     13,200    $    101,170
    Accounts payable                                    300,763         305,686
    Stockholders loans                                   88,968          76,900
    Accrued liabilities                                 139,942         118,470
                                                   ------------    ------------
Total Current Liabilities                          $    542,873    $    602,226

Notes Payable, less current                        $     40,567    $     47,327

Total Liabilities                                  $    583,440    $    649,554

Stockholders' Deficiency:
  Common Stock, par value $.01 per share;
      authorized 100,000,000 shares; issued and
      outstanding 69,509,788 and 55,314,324             695,098         553,143
  Additional paid in capital                         11,206,150       9,730,209
  Stock subscriptions receivable                     (1,200,000)              -
  Deficit accumulated during development stage      (10,800,572)    (10,401,999)
                                                   ------------    ------------
Total Stockholders' Deficiency                     $    (99,324)   $   (118,647)
                                                   ------------    ------------
                                                   $    484,116    $    530,906
                                                   ============    ============
</TABLE>

                 See accompanying notes to financial statements

                                       2
<PAGE>

                      SYNTHETIC BLOOD INTERNATIONAL, INC.
                         (A Development Stage Company)

                           STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                      Accumulated
                                       During the       Three Months Ended           Six Months Ended
                                      Development           October 31,                 October 31,
                                         Stage          1999         1998           1999          1998
                                     -------------   ------------------------    ------------------------
                                      (Unaudited)           (Unaudited)                 (Unaudited)
<S>                                  <C>             <C>           <C>           <C>           <C>
Expenses:
     Research and development        $  3,234,167    $   26,545    $   47,873    $   70,243    $   72,855

     General and administrative         7,510,607       174,252       189,335       346,760       392,723

     Interest                             157,263         2,779         3,986         7,671         9,906
                                     ------------    ----------    ----------    ----------    ----------

Total Expense                          10,902,037       203,576       241,194       424,674       475,623

Other Income                             (101,465)      (25,360)       (3,233)      (26,101)       (9,861)
                                     ------------    ----------    ----------    ----------    ----------
NET LOSS                             $(10,800,572)   $ (178,216)   $ (237,961)   $ (398,573)   $ (465,623)
                                     ============    ==========    ==========    ==========    ==========
NET LOSS PER SHARE, BASIC
    AND DILUTED                                      $   (0.003)   $   (0.005)   $   (0.007)   $   (0.009)
                                                     ==========    ==========    ==========    ==========
WEIGHTED AVERAGE NUMBER OF
    SHARES OUTSTANDING,
    BASIC AND DILUTED                                60,167,165    50,974,411    58,014,051    50,891,259
                                                     ==========    ==========    ==========    ==========
</TABLE>

                See accompanying notes to financial statements

                                       3
<PAGE>

                      SYNTHETIC BLOOD INTERNATIONAL, INC.
                         (A Development Stage Company)
                            STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                  Accumulated During        Six Months Ended
                                                     Development               October 31,
                                                        Stage              1999          1998
                                                  ------------------    ----------    ----------
CASH FLOWS FROM OPERATING ACTIVITIES:                 (Unaudited)             (Unaudited)
<S>                                               <C>                   <C>           <C>
Net loss                                             $(10,800,572)      $(398,573)    $(465,623)
Adjustments to reconcile net loss to cash used
  in operating activities:
      Depreciation and amortization                       387,673          26,114        28,408
      Write-down other assets                             129,210               -             -
      Compensatory stock options/warrants issued          250,466               -             -
      Issuance of stock for services                    1,046,440               -        29,300
      Issuance of stock below market value                695,248               -             -
Contribution of capital by stockholders through
  services rendered                                       216,851               -             -
Changes in operating assets and liabilities:
  Prepaid expenses and other assets                        (7,507)         53,367         2,535
  Accounts payable and accrued expense                    615,766          28,617       (30,762)
                                                     ------------       ---------     ---------
     Net cash used in operating activities             (7,466,425)       (290,475)     (436,142)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of other assets                                 (463,556)        (17,846)      (17,395)
Proceeds from the sale of equipment                        15,457               -             -
Purchase of property and equipment                       (286,135)           (938)       (7,046)
                                                     ------------       ---------     ---------
     Net cash used in investing activities               (734,234)        (18,784)      (24,441)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock                      6,861,267         417,896             -
Repayments of amounts due stockholders                   (121,517)              -             -
Proceeds from stockholder notes payable                   977,692               -             -
Contribution of capital by stockholders                    40,700               -             -
Proceeds from notes and debentures                        951,249               -             -
Payments on notes and lease obligations                  (301,812)        (94,730)      (30,483)
                                                     ------------       ---------     ---------
     Net cash provided by (used in) financing
       activities                                       8,407,579         323,166       (30,483)
Net change in cash and cash equivalents                   206,920          13,907      (491,066)
Cash and cash equivalents, beginning of period                  -         193,013       740,215
                                                     ------------       ---------     ---------
Cash and cash equivalents, ending of period               206,920         206,920       249,149
                                                     ============       =========     =========
 Cash paid for:  Interest                            $    122,641       $   7,671     $   9,590
                 Taxes                                      9,216           1,250           800
</TABLE>
                See accompanying notes to financial statements

                                       4
<PAGE>

                      SYNTHETIC BLOOD INTERNATIONAL, INC.
                         (A Development Stage Company)
                         NOTES TO FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The accompanying unaudited financial statements contain all adjustments
     (consisting only of normal recurring adjustments) which in the opinion of
     management, are necessary to present fairly the financial position of the
     Company at October 31, 1999, and the results of its operations for the
     three month and six month periods ended October 31, 1999 and 1998 and its
     cash flows for the six month periods ended October 31, 1999 and 1998.
     Certain information and footnote disclosures normally included in financial
     statements have been condensed or omitted pursuant to rules and regulations
     of the Securities and Exchange Commission although the Company believes
     that the disclosures in the financial statements are adequate to make the
     information presented not misleading.

     The financial statements included herein should be read in conjunction with
     the financial statements of the Company, included in the Company's Annual
     Report on Form 10-K for the year ended April 30, 1999 filed with the
     Securities and Exchange Commission on September 1, 1999.

     Going Concern - The accompanying financial statements 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. As shown in
     the financial statements, the Company is in the development stage and, at
     October 31, 1999 has accumulated losses from operations amounting to
     $10,800,572 and a working capital deficit of $328,446. The Company is in
     the pre-clinical trial stage of its products. These products must undergo
     further development and testing prior to submission to the FDA for approval
     to market the products. The Company's continuation as a going concern is
     dependent on its ability to generate sufficient cash flow, to meet its
     obligations on a timely basis, to obtain additional financing as may be
     required, and ultimately to attain successful operations. However, no
     assurance can be given at this time as to whether the Company will achieve
     any of these conditions or that the FDA approval will be granted, once
     applied for. These factors, among others, raise substantial doubt about the
     Company's ability to continue as a going concern. The financial statements
     do not include any adjustments relating to the recoverability and
     classification of recorded asset amounts or the amounts and classification
     of liabilities that might be necessary should the Company be unable to
     continue as a going concern for a reasonable period of time. Additional
     funding will be necessary which will require future private placements
     and/or joint ventures to enable the Company to continue the required
     testing through Phase I, II and III human testing.

                                       5
<PAGE>

2.   STOCKHOLDERS' DEFICIENCY

     During the three month period ended July 31, 1999, the Company issued
     412,135 shares of the Company's common stock to third party investors for
     $.11 per share, plus options to purchase 412,135 shares of the common stock
     at $.11 per share.

     Also during the three month period ended July 31, 1999, the Company issued
     1,132,619 shares of the Company's common stock to third party investors for
     $.08 per share, 200,000 shares for $.06, plus options to purchase 1,812,190
     shares of the common stock at $.14 per share.

     During the three month period ended October 31, 1999, the Company issued
     950,710 shares of the Company's common stock to third party investors for
     $.08 per share.

     Also during the three month period ended October 31, 1999, the Company
     issued 2,500,000 shares of the Company's common stock to a third party
     investor for $.08 per share.  In addition, the Company sold an additional
     9,000,000 shares of common stock to this investor at $.13 a share in
     exchange for a promissory note of $1,200,000, payable in 12 equal monthly
     installments of $100,000.  The note has been recorded as a stock
     subscription receivable and has been presented as a reduction of
     Stockholders' Deficiency in the accompanying Balance Sheet.

                                       6
<PAGE>

                       SYNTHETIC BLOOD INTERNATIONAL, INC
                         (A Development Stage Company)

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.  The
Company's actual results could differ materially from those projected in the
forward-looking statements.  Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this section and
those discussed in the Company's Annual Report on Form 10K.

Potential risks and uncertainties include, but are not limited to, an inability
to enter into or maintain the strategic collaborative relationships the Company
believes are essential to further develop and commercialize the Company's
products; uncertainties associated with the lengthy and complicated testing and
regulatory approval process, in particular the risk that the Company's products,
assuming pre-clinical tests are successful, may be found ineffective during
clinical trials, if any, or the Company is unable to obtain the necessary
regulatory approvals to commercialize these products; uncertainties associated
with obtaining and enforcing patents for the Company's products and technology;
the risks of infringing patents held by other parties; uncertainties associated
with changing or new technology; difficulties in scaling up manufacturing
operations to commercial scale and in obtaining raw materials in quantity at
prices necessary to produce profitable products; an inability to have the
Company's products manufactured by future strategic partners or contract
manufacturing companies; and failure to obtain market acceptance, significant
market share, or third party reimbursement at profitable price levels.

Significant risks and uncertainties are associated with the Company's ability
to obtain the required financing to develop its products. The Company's
projected capital requirements are based on the expectation that strategic
partners will assume further development and regulatory costs for each product
during Phase II clinical trials. If that does not happen, the amount of
financing the Company will be required to raise could increase substantially. If
the Company is unable to raise adequate financing, it may be required to delay,
scale-back, or eliminate one or more product development programs, or sell the
rights to certain technologies or products.


RESULTS OF OPERATIONS

Three months ended October 31, 1999 and 1998:

The Research and Development expenses for the three month period ended October
31, 1999 were $26,545, compared to $47,873 for the same period in the prior
year.  This decrease was primarily due to a reduction in contract wages of
$9,100, a reduction in laboratory rent of $7,250 and a reduction in equipment
rental of $3,200.

General and Administrative expenses for the three month period ended October 31,
1999 were $174,252, compared to $189,335 for the same period in the prior year.
During the current period professional fees increased $24,000. This increase was
partially offset by decreases in insurance expense of $13,000 and wages,
consulting and contract labor of $16,000.

The net loss for the three months ended October 31, 1999 was $178,216, compared
to $237,961 for the same period in the prior year.  Total expenses were down
$38,000 for the current period and the Company realized an increase in other
income of $25,000 due to a vendor settlement.

Six months ended October 31, 1999 and 1998:

The Research and Development expenses for the six month period ended October 31,
1999 were $70,243, compared to $72,855 for the same period in the prior year.
Increased expenses in the second quarter were offset in the first quarter by a
reduction in R & D expenses compared to 1998.

General and Administrative expenses for the six month period ended October 31,
1999 were $346,760, compared to $392,723 for the same period in the prior year.
During the current period wages, consulting and contract labor decreased by
$73,000 over the prior year. This increase was offset by moving expenses of
$18,000 in 1999 related to the set up of a California laboratory incurred during
the first quarter.

The net loss for the six months ended October 31, 1999 was $398,573, compared to
$465,623 for the same period in the prior year.  Total expenses were down
$51,000 for the current period and the Company realized an increase in other
income of $25,000 due to a vendor settlement.

                                       7
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations since September 1990, when the current
management became involved, through the issuance of debt and equity securities
and loans from stockholders. As of October 31, 1999 the Company had $214,427 in
total current assets and a working capital deficit of $328,446.

The Company is in the pre-clinical trial stage in the development of its
products. These products must undergo further development and testing prior to
submission to the FDA for approval to market its products. This additional
development and testing and, if approved, the FDA required clinical testing will
require significant additional financing. Management is actively pursuing
strategic alliance and joint venture agreements to enable the Company to develop
its products.

There can be no assurance that FDA approval will be granted, once applied for,
or that necessary funding will be obtained. Except for the stock subscription
described in Note 2, the Company does not have any firm commitments for
additional capital as of October 31, 1999.

Year 2000 Compliance

The "Year 2000 Issue" arises because most computer systems and programs were
designed to handle only a two-digit, not a four-digit year.  When the year 2000
begins, these computers may interpret "00" as the year 1900 and could either
stop processing date-related computations or could process them incorrectly.

In the opinion of Management, because of simplicity of the Company's internal
systems, the Company will not suffer any adverse effects resulting from Year
2000 issues.

Year 2000 issues faced by prospective supplies, vendors and financial service
organizations with which the Company interacts could adversely impact the
Company and there can be no guarantee that the systems of these companies will
achieve Year 2000 compliance in a timely manner.

Recent SEC guidance for Year 2000 disclosure also calls on companies to describe
their most likely worst case Year 2000 scenario.  The Company believes that the
most likely worst case scenario is that the Company could experience clinical
trial and research and development delays because of infrastructure failures or
delays from suppliers.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company has no derivative financial instruments and no exposure to foreign
currency exchange rates or interest rate risk.

                                       8
<PAGE>

                      SYNTHETIC BLOOD INTERNATIONAL, INC.
                         (A Development Stage Company)

                           Part II-Other Information

Item 1.  Legal Proceedings.

            None

Item 2.  Changes in Securities.

            In May, 1999 the Company issued 412,135 shares of common stock at
            $.11 per share and granted options to acquire a total of 412,135
            shares of common stock with and exercise price of $.11 per share to
            two individuals.

            In October, 1999 the Company issued 3,450,710 shares of common stock
            at $.08 per share to 15 individuals.

            Also in October, 1999 the Company issued 9,000,000 shares of common
            stock to one investor at $.133 per share in exchange for a
            promissory note for $1,200,000, payable in 12 equal monthly
            installments beginning April, 2000.

            The registrant relied upon the exemptions provided by Section 4(2)
            and Regulation S of the Securities Act of 1933 to issue the common
            stock and grant the options.

Item 3.  Defaults Upon Senior Securities.

            None

Item 4.  Submission of Matter to a Vote of Security Holders.

            None

Item 5.  Other Information

            None

Item 6.  Exhibits and Reports on Form 8-K.

            The Company filed Form 8-K on July 9, 1999 informing the Commission
            of a change in corporate auditors.

                                       9
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                     SYNTHETIC BLOOD INTERNATIONAL, INC.
                                     -----------------------------------
                                                (Registrant)

12/14/99                             /s/ David H. Johnson
-----------------------              -----------------------------------------
(Date)                               David H. Johnson, Chief Financial Officer


                                       10