SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              REPORT ON FORM 10-KSB

     [X]  Annual Report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

     For the fiscal year ended April 30, 2005
                               --------------

               Transition Report pursuant to Section 13 or 15(d) of
               The Securities Exchange Act of 1934

   For the transition period from ___________________ to ___________________.

Commission File No. 0-27028

                         EMBRYO DEVELOPMENT CORPORATION
                         ------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                           13-3832099
-------------------------------                               ----------
(State of or other jurisdiction                             (IRS Employer
of incorporation or organization)                         Identification No.)

305 Madison Avenue Suite 4510
New York, New York                                              10165
------------------                                              -----
 (Address of Principal                                        (Zip Code)
   Executive Officers)

Registrant's telephone number, including area code:   (212) 808-0607

Securities registered pursuant to Section 12(b) of the Act:  None.
                                                             ----
Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $.0001 per share
                    ----------------------------------------
                                (Title of Class)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
                                              -    -
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of the Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

     Issuer's revenues for its most recent fiscal year were $-0-.

     The aggregate market value of the voting stock held by non-affiliates of
the Registrant, computed by reference to the closing price of such stock as of
August 9, 2005, was approximately $609,500.

 Number of shares outstanding of the issuers common stock, as of August 9, 2005,
                                 was 7,995,000.

                   DOCUMENTS INCORPORATED BY REFERENCE: None.
                                                        ----
<PAGE>


FORWARD-LOOKING STATEMENTS

This Annual  Report on Form  10-KSB of Embryo  Development  Corporation  for the
fiscal  year  ended  April  30,  2005,   contains   statements  that  constitute
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation   Reform  Act  of  1995.   These  statements  can  be  identified  by
introductory words such as "expects,"  "plans,"  "intends,"  "believes," "will,"
"estimates,"  "forecasts,"  "projects" or words of similar  meaning,  and by the
fact  that  they  do  not  relate  strictly  to  historical  or  current  facts.
Forward-looking statements frequently convey our current expectations regarding,
among other things,

     o    success of management;
     o    transition in business focus;
     o    achievement of operational goals;
     o    current and new products and services;
     o    dependence on a small number of customers;
     o    ability to secure financing;
     o    merger and acquisition prospects;
     o    formation of strategic relationships;
     o    current and potential claims, actions and proceedings;
     o    research and development activities;
     o    regulatory submissions and approvals;
     o    financial condition, results of operations and cash flows; and
     o    similar operating matters.

Any or all of our  forward-looking  statements  may turn out to be  wrong.  Many
factors  may cause  actual  results to differ from  forward-looking  statements,
including inaccurate assumptions and a broad variety of risks and uncertainties,
some of  which  are  known  and  others  of  which  are  not.  Known  risks  and
uncertainties  include those  identified  from time to time in our reports filed
with the Securities and Exchange Commission ("SEC"),  which should be considered
together with any forward-looking  statement. No forward-looking  statement is a
guarantee  of future  results or  events,  and one should  avoid  placing  undue
reliance on such statements. We expressly disclaim any obligation or undertaking
to update or revise  forward-looking  statements  made in this  report or in our
other reports filed with the SEC. As used in this annual report, the terms "we",
"us", "Embryo", and "the Company" mean Embryo Development Corporation.

                                       2
<PAGE>

PART I
------

Item 1.  BUSINESS.
         --------

Initial Organization and Business Purpose:

     Embryo Development  Corporation is a Delaware corporation (the "Company" or
"Embryo"),  which was organized in March 1995 to develop,  acquire,  manufacture
and market  various  bio-  medical  devices.  The  Company  has not  derived any
significant revenues since its inception.

     The Company was a licensee to seven (7) license  agreements  (the  "License
Agreements")  and two (2)  royalty  sharing  agreements  (the  "Royalty  Sharing
Agreements")  with Dr. Lloyd Marks which  provided for the exclusive  license of
seven medical  devices and the sharing of royalties of two (2) medical  devices,
all of which had been developed by Dr. Marks ("Marks  Medical  Devices").  As of
January 2001, all of these licenses had been terminated.

     The termination of the above license agreements followed a determination by
management  to  conserve  capital  and  that the  products  licensed  could  not
profitably be developed and commercially marketed by the Company at this time.

     The Company  holds  patents to five (5) other  medical  devices and was the
exclusive  licensee of one (1) medical device in the areas of emergency  medical
equipment and peritoneal  dialysis warming  devices.  Although the Company holds
the patents and rights to these products, management does not believe that these
products have any viable marketability at this time.

Minority Interest in Public Company:

     The Company holds the equivalent of approximately 4,837,500 shares or 4.44%
of Nesco  Industries,  Inc.  ("Nesco"),  a publicly traded company listed on the
Over The Counter  Bulletin  Board  Exchange (OTCC BB, Symbol NESK) Common Stock.
Nesco was engaged  primarily in asbestos  abatement  contracting  but had ceased
operations   in  2003.   See  Item  12   "Certain   Relationships   and  Related
Transactions."

     The Company held a 10.3% minority  voting  investment  interest in Hydrogel
Design Systems,  Inc. ("HDS"), a privately held Delaware  corporation engaged in
the manufacturing, marketing, selling and distribution of hydrogel materials.

                                       3
<PAGE>

     On May 25, 2004,  Nesco,  HDS,  certain  stockholders  of Nesco and certain
stockholders  of HDS  completed  the  transactions  contemplated  by  the  Share
Exchange  Agreement,  dated as of April  29,  2004 (the  "Exchange  Agreement"),
whereby HDS became a majority  owned  subsidiary of Nesco and the holders of HDS
common stock and debt hold a majority interest of Nesco.

     The transactions  contemplated by the Exchange Agreement are intended to be
a tax free  exchange  pursuant to Section 368 of the  Internal  Revenue  Code of
1986.

     Nesco had  intended to issue shares of its common stock in exchange for the
equity  securities  of HDS in certain  ratios as  provided  for in the  Exchange
Agreement. However, because Nesco did not have the required number of authorized
shares of common  stock to complete  the  exchange  on this basis,  it agreed to
issue  shares of its  newly  designated  Series B  Preferred  Stock  ("Preferred
Stock") for,  among others,  equity and debt of HDS as described in the Exchange
Agreement.  Upon filing of the  Certificate  of Amendment to the  Certificate of
Incorporation  to increase  the number of shares of common  stock which Nesco is
authorized  to issue,  each share of the Preferred  Stock will be  automatically
converted into shares of Nesco Common Stock. The shares described as being owned
by Company reflect this conversion.

     The major  focus of HDS is the  manufacture  of hydrogel  materials,  on an
original  equipment  manufacturer  ("OEM") basis, for the manufacture of medical
devices, drug delivery products, wound care and cosmetics products.  Hydrogel is
manufactured by introducing a polymer  (solid) into water,  creating a feed mix.
The feed mix is used to coat a web material (or scrim) and two outer linings are
applied creating sheets of hydrogel.  These sheets are then introduced to a high
energy field,  which is accomplished by using an electron beam accelerator.  The
introduction  of a high energy field causes the release of hydrogen  atoms which
in turn causes carbon molecule covalent bonding. This is commonly referred to as
crosslinking.  This  creates  longer  chains  of the  polymer  in the gel  which
increases its molecular integrity,  giving the gel unique  characteristics which
make it useful in a variety of products. By varying the percent of solids in the
feed mix,  the  amount of  crosslinking  (which is  determined  by the amount of
energy introduced),  the type of polymer,  scrim and lining used, a wide variety
of gels with distinctly different characteristics may be produced.

Yellow Brick Road Transaction:

     Pursuant to a Share Exchange Agreement,  as amended,  initially dated as of
the 10th day of April,  2004 (the "YBR  Agreement"),  by and among the  Company,
Yellow Brick Road Ventures LLC, a New Jersey limited liability company ( "YBR"),
and Music Asset Corp.,  a Delaware  corporation  ("MAC") that was at the time of

                                       4
<PAGE>

execution of the Agreement a wholly owned  subsidiary of YBR, the Company agreed
to acquire from YBR,  100% of the  outstanding  stock of MAC in exchange for the
issuance by the Company of  22,473,214.29  shares of the Company's common stock,
subject to YBR providing certain financing to the Company in connection with the
exploitation  of the assets of MAC, which,  subsequent to the transaction  would
have become a wholly owned subsidiary of the Company.

     The assets of MAC  included  the  non-exclusive  rights to  distribute  and
exploit a music  library of  approximately  9,000  recordings  pursuant  to that
certain Asset Purchase  Agreement (the "Startek  Agreement") made the 7th day of
April 2004 by and between Startek  Entertainment Corp., a New Jersey Corporation
("Startek"),  Joe Venneri who is also President of Startek  ("Venneri") and MAC.
The Startek Agreement  provides that a sale of all of the shares of stock of MAC
to a third party shall not affect the  enforceability  of this agreement subject
to satisfying certain obligations, which the Company met, including the issuance
of 1,000,000 shares of common stock of the Company to Startek.  The value of the
common  shares  granted  ($30,000)  was charged to  operations in the year ended
April 30, 2004. These shares were subsequently issued in December 2004.

     The Asset Purchase  Agreement  provided that the acquisition price was Four
Million Dollars ($4,000,000) (the "Purchase Price"), payable One Million Dollars
($1,000,000)  on the date of the  closing,  and the  balance  of  Three  Million
Dollars  ($3,000,000)  in the form of a Senior  Secured  Obligation  payable  as
twenty five percent (25%) of Distributable  Net Income as specifically  defined.
As a condition to the sale,  Mr.  Venneri  agreed to work for MAC and receive an
employment agreement, in connection therewith.  The Company was also required to
make a non-refundable  deposit of $25,000 to Startek, which was funded by a loan
from an unrelated third party.

     On September 21, 2004, this  transaction was unwound as YBR did not satisfy
its obligation to deliver the required  financing to the Company.  In connection
with this termination,  the Company  redelivered to YBR all shares of the common
stock of MAC and issued  57,500  shares of its Series B Preferred  Stock  which,
upon  conversion  to common  shares,will  aggregate  5,750,000  shares of common
stock;  4,250,000  shares  will be issued to YBR and  1,500,000  shares  will be
issued to advisors as part of the YBR Agreement.  The value of the common shares
to be issued  ($172,500)upon  conversion  of the  Series B  preferred  shares to
common was  charged to  operations  in the year ended  April 30,  2004.  The non
refundable  deposit in the amount of $25,000  was charged to  operations  in the
year  ended  April 30,  2004.See  Item 12  "Certain  Relationships  and  Related
Transactions."

September 2004 Acquisition Transaction:

     On September 9, 2004, we entered into an investment  banking  agreement for
an initial term of 180 days with a third party to obtain bridge  financing of up
to $950,000 in connection  with an  acquisition  transaction.  We received gross

                                       5
<PAGE>

proceeds  of $750,000  in  connection  with this  agreement.  The  Company  made
advances in the aggregate of $300,000 to a possible  merger  candidate under the
terms of a secured  promissory note dated September 28, 2004. On March 30, 2005,
the Company  terminated  its efforts to complete a definitive  transaction  with
this party due to the  inability of the candidate to cure defaults on certain of
its outstanding indebtedness owing to a third party.

April 2005 Asset Purchase Transaction:

     On April 22, 2005, we entered into an investment  banking  agreement for an
initial  term of 180 days  with a third  party to  obtain  bridge  financing  of
$42,000,000 in connection  with an asset purchase  transaction  whereby we would
acquire the assets of a  nutriceutical  company  and  negotiated  agreements  to
complete that transaction which was to close no later than May 25, 2005.

     On June 6, 2005,  we deposited  $100,000  into an escrow  account as a good
faith deposit in order to extend the closing date for the transaction until June
10, 2005. A principal of the investment  banking firm has personally  guaranteed
repayment to us of the payment into the escrow deposit.  The transaction did not
close by that date and the $100,000  deposit was  delivered  to the  prospective
seller.  Management is still in discussions regarding such transaction,  however
at this time no binding letter of intent or definitive agreement is in force. If
such  agreements  are  formalized,  we will  disclose  this  information  in the
appropriate filings. At this time, we have not made a demand, under the personal
guarantee, for reimbursement of the $100,000.

     The Company is continuing to pursue the asset  purchase as described  above
and  exploring   other  business   opportunities,   inclusive  of  the  possible
acquisition  of a new line of  business,  which may or may not be related to the
development of medical devices.

Investment Company Status:

     On December  12,  2003,  we  received a letter  from the SEC's  Division of
Investment  Management  inquiring as to the possible status of the Company as an
unregistered  "investment  company" within the meaning of the Investment Company
Act of 1940 ("40  Act").  We  responded  to this  letter  on  January  28,  2004
explaining that the Company may have  inadvertently and temporarily  fallen into
the SEC's  definition  of an investment  company  because of the lack of success
with  a  licensing  agreements  program  that  resulted  in  a  disproportionate
percentage  of assets being  represented  by ownership in another  company.  Our
response  continued that by August 31, 2004, it intended to enter into some form

                                       6
<PAGE>

of  reorganization  with a private company or re-configure  its assets to remove
itself from the definition of an investment  company under the 40 Act. The share
exchange  agreement with Yellow Brick Road LLC described in the Company's 10-KSB
filed on August  13,  2004,  was  intended  to  satisfy  this  commitment.  That
transaction  was not successful and was terminated in September 2004. We advised
the SEC on  September  1, 2004 that the  Company  will  continue  its efforts to
achieve  a  reconfiguration  of its  assets  or  enter  into  some  from  of re-
organization  by December 31, 2004.  The Company had entered into an  investment
banking  agreement and was in  discussions  with a merger  candidate in order to
resolve this issue. This effort was terminated on March 30, 2005. The Company is
presently in discussions  with a party in connection with the asset  acquisition
described  above and entered into an investment  banking  agreement on April 22,
2005 in connection with this transaction.  The Company cannot give any assurance
that it will be  successful  in its  pursuit  of any  business  opportunity  but
believes it will not be deemed an investment  company.  However, a determination
by the SEC that the Company is in fact an unregistered  investment company could
have a material adverse effect on the Company's business.

Sales and Marketing

     Management  will  determine  the  appropriate  marketing  strategy  for any
products which are developed in the future as these products come to market.

Manufacturing

     Management  will determine the appropriate  manufacturing  strategy for any
products which are developed in the future.

Competition

     Competition  in the medical  device  industry  is  intense.  There are many
companies and academic  institutions that are capable of developing  products of
similar design,  and that have developed and are capable of developing  products
based on other  technologies,  that are or may be competitive with the Company's
future medical  devices.  Many of those companies and academic  institutions are
well-established,  have substantially greater financial and other resources than
the Company,  and have  established  reputations for success in the development,
sale and service of products.  These  companies  and academic  institutions  may
succeed in developing  competing  products that are more effective than those of
the  Company or that  receive  FDA  approval  more  quickly  than the  Company's
products. The Company's ability to compete will be dependent upon its ability to
get any new products  approved by regulatory  authorities  and introduced to the
market,  including the  arrangement  of a distribution  network,  and to provide
products with advanced performance features, none of which can be assured.

                                       7
<PAGE>

     The Company is  presently  pursuing the asset  purchase of a  nutriceutical
company as described above and exploring other business opportunities, inclusive
of the possible  acquisition  of a new line of business.  In any such  business,
there may be  companies  that are  capable  of  developing  products  of similar
design, and that have developed and are capable of developing  products based on
other  technologies,  that are or may be competitive  with the Company's  future
products.  Such companies may be  well-established,  have substantially  greater
financial and other resources than the Company, and have established reputations
for  success  in the  development,  sale and  service  of such  products.  These
companies may succeed in developing  competing  products that are more effective
than those of the Company.

Patents, Proprietary Rights and Trademarks

     The Company's policy is to file patent  applications to protect technology,
inventions  and  improvements  that  are  important  to the  development  of its
business.   The  Company  also  relies  on  trade  secret   protection  for  its
confidential and proprietary information.

     The Company owns the patent for the Hot Sack which  expires in 2008 and the
exclusive license to the Res-Q-Air, which has been issued a United States patent
which  expires in 2006.  The Company did not renew the license to the  Res-Q-Air
which expired in 2000. The Company is not presently  manufacturing  any of these
products.  The Company  also relies on trade  secrets and  proprietary  know-how
which it seeks to protect,  in part,  through  confidentiality  agreements  with
employees,  consultants and other parties.  There can be no assurance that these
agreements will not be breached,  that the Company would have adequate  remedies
for any breach,  or that the Company's  trade secrets will not otherwise  become
known to or independently developed by competitors.

     The Company also holds a registered trademark on Hot-Sack and on SmartMedTM
which was used on products in the past and may be used on future products.

     All other license agreements for the development of medical devices, in
which the Company held proprietary rights, have been terminated.

                                       8
<PAGE>

Employees

     As of July  29th,  2005,  the  Company  employed  one (1) person in general
administration  and finance.  The Company has never had a work  stoppage and its
employees are not represented by a labor organization. The Company considers its
employee relations to be good.




                                       9
<PAGE>

Item 2.  PROPERTIES.

     The Company's corporate headquarters are in New York City.

     On September  1, 2001,  the Company  entered  into a sublease  with HDS for
office space on a month to month basis.  In May, 2004, the lease expired and the
Company  ceased  paying rent.  The Company has been able to remain in the office
space as the space is shared  with HDS and other  tenants and  Company's  use is
minimal.  The Company  believes that these  facilities  are adequate to meet its
current  needs  and  that  suitable  additional  or  alternative  space  will be
available as needed in the future on commercially reasonable terms. See "Certain
Transactions."

                                       10
<PAGE>

Item 3.  LEGAL PROCEEDINGS.

     The Company had been named as a defendant  in a  consolidated  class action
pending before the U.S.  District Court for the Eastern District of New York. In
a consolidated  complaint,  plaintiffs  asserted  claims against the Company and
others under the Securities Act of 1933, the Securities Exchange Act of 1934 and
New York  common and  statutory  law arising out of the  November  1995  initial
public offering of 1 million shares of the Company's common stock.  According to
the  complaint,  the  underwriter of the offering,  Sterling  Foster & Co., Inc.
("Sterling Foster"),  which was also a defendant,  manipulated  secondary market
trading in shares of the  Company's  common  stock  following  the  offering and
covered  certain  short  positions  it  created  through  such  manipulation  by
purchasing  shares of Company  stock from  persons who owned such stock prior to
the offering pursuant to an arrangement with such persons that was not disclosed
in the registration  statement and prospectus distributed in connection with the
offering. The complaint sought unspecified damages.

     In November  1998, it was  announced  that Michael  Lulkin,  a director and
Chairman of the Board of Directors  of the Company at the time of the  Company's
initial public offering, had plead guilty to, among other things,  conspiracy to
commit  securities fraud. The charges to which Mr. Lulkin plead were premised on
allegations  that Mr. Lulkin,  Sterling  Foster,  and others had entered into an
undisclosed  agreement  pursuant  to which,  upon  conclusion  of the  Company's
initial public  offering,  they would (a) cause  Sterling  Foster to release Mr.
Lulkin and others who owned  Embryo  stock prior to the  offering  from  certain
"lock up" agreements restricting them from selling such stock; and (b) cause Mr.
Lulkin and such other  persons to sell their Embryo stock to Sterling  Foster at
prearranged  prices to enable Sterling Foster to use such stock to cover certain
short positions it had created.

     In August 1999,  an agreement of principle  was entered into  providing for
settlement of the consolidated class action against the Company,  Mr. Lulkin and
Steven  Wasserman,  who was also a member of the Company's Board of Directors at
the time of the  Company's  initial  public  offering.  Under the  agreement  in
principle,  all claims in the action against the Company, and against Mr. Lulkin
and Mr.  Wasserman  insofar  as they  were  members  of the  Company's  Board of
Directors,  would be dismissed  in exchange for a payment of $400,000,  of which

                                       11
<PAGE>

$100,000  would need to be paid by the Company and $300,000  would be paid by an
insurance company under a directors and officers  liability policy of insurance.
In June 2001,  definitive  settlement  documents were  executed.  The settlement
documents provide that the Company would pay the foregoing $100,000 by remitting
to the class representatives $25,000 and a note in the amount of $75,000 payable
in June 2003 with interest  thereon at 7% per year. In December  2002, the court
approved the  settlement.  The Company has remitted the funds and note described
above to the class  representatives  to be held by them in  accordance  with the
terms  of the  settlement  agreement  and  pending  final  court  review  of the
settlement.  The note was not paid when due.  Together with  interest,  there is
$95,177 due on the note. No default has been declared on the note.

                                       12
<PAGE>

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to the Company's shareholders for vote during the
last quarter of its fiscal year.





                                       13
<PAGE>

PART II

Item 5.  MARKET FOR  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS,
         AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

     The Company's securities  commenced trading in the over-the-counter  market
on the  effectiveness  of the Company's  Initial Public Offering on November 18,
1995 in the form of Common  Stock.  The Common  Stock was  regularly  quoted and
traded on the NASDAQ system through October 1998.

     The Company was advised by The Nasdaq  Stock  Market that it failed to meet
the continued  listing  requirements of The Nasdaq SmallCap Market.  The Company
submitted an application for continued listing. The Company was advised in July,
1998 that the NASD had denied the Company's  submission  for continued  listing.
The Company filed an appeal to that decision. A hearing on continued listing was
held on September 17, 1998 whereby the appeal was denied.  Effective October 21,
1998, the Company's common stock is now listed on the OTC-Bulletin Board.

     The following table indicates the high and low bid prices for the Company's
Common Stock for the period up to June 30, 2005 based upon information  supplied
by the  NASDAQ and OTC-  Bulletin  Board  system.  Prices  represent  quotations
between   dealers  without   adjustments   for  retail  markups,   markdowns  or
commissions, and may not represent actual transactions.

<TABLE>
<CAPTION>
Common Stock
                                               Quoted Bid Price
                                               ----------------
                                                High       Low
                                                ----       ---
<S>                                             <C>        <C>
          2003 Calendar Year
          First Quarter                         .01        .00
          Second Quarter                        .01        .00
          Third Quarter                         .025       .005
          Fourth Quarter                        .09        .015

          2004 Calendar Year
          First Quarter                         .06        .015
          Second Quarter                        .05        .02
          Third Quarter                         .06        .017
          Fourth Quarter                        .34        .02

          2005 Calendar Year
          First Quarter                         .23        .045
          Second Quarter                        .23        .05
</TABLE>

                                       14
<PAGE>

     On July 26, 2005,  the closing price of the Common Stock as reported on the
OTC-Bullletin Board was $.15

Holders

     On July 26, 2005, there were 670 holders of record of common stock.

Dividends

     We have never declared or paid any cash  dividends on our common stock.  We
currently  anticipate  that  future  earnings  will be  retained  to support our
business.  Accordingly, we do not anticipate paying cash dividends on our common
stock in the forseeable future.

Recent Sales and Issuance of Unregistered Securities

     In the past three fiscal years we have issued the  following  securities in
transactions not registered under the Securities Act of 1933:

     -    In April 2004, we became obligated to issue 1,000,000 shares of common
          stock to  Startek  Entertainment  Corp.  in  connection  with an Asset
          Purchase  Agreement  which was  terminated  in September  2004.  These
          shares were issued in December 2004.

     -    In September 2004, we issued an aggregate of 57,500 shares of Series B
          Preferred stock in connection  with a failed Share Exchange  Agreement
          between the Company and Yellow Brick Road Ventures LLC,  ("YBR") which
          upon  conversion to common shares will aggregate  5,750,000  shares of
          common  stock;  4,250,000  shares will be issued to YBR and  1,500,000
          shares will be issued to advisors to the agreement. Upon filing of the
          Certificate  of  Amendment  to the  Certificate  of  Incorporation  to
          increase  the number of shares of common  stock  which the  Company is
          authorized  to  issue,  each  share  of the  Preferred  Stock  will be
          automatically converted into 100 shares of common stock.

                                       15
<PAGE>

     -    In September 2004, we issued an aggregate of 62,500 shares of Series B
          Preferred stock in connection with an investment banking agreement. As
          a condition  of the  agreement,  two  creditors  of the  Company  were
          required to reduce the  obligations of the Company to them by applying
          a portion  of the  Company's  obligation  to them to the  purchase  of
          common stock of the Company.  On September 30, 2004, Matthew Harriton,
          an officer  of the  Company,  under the terms of a  security  purchase
          agreement,  exchanged  $52,500 of funds due him for loans and  accrued
          payroll for 5,250,000  shares of common stock.  On September 30, 2004,
          Santo  Petrocelli,  a note  holder  of the  Company  in the  amount of
          $30,000,  under the terms of a security purchase agreement,  exchanged
          $10,000 of the debt due him for 1,000,000  shares of common stock.  In
          lieu of the above  issuance of common  stock,  the  Company  agreed to
          issue  62,500  shares of its  newly  designated  Series B  Convertible
          Preferred  Stock.  Upon filing of the  Certificate of Amendment to the
          Certificate  of  Incorporation  to  increase  the  number of shares of
          common stock which the Company is authorized  to issue,  each share of
          the Preferred Stock will be automatically converted into 100 shares of
          common stock.

     -    In September,  2004,  pursuant to an investment banking agreement,  an
          investor,  Embryo Partners, LLC, purchased from the Company a $200,000
          one year 8% convertible  promissory  note. The note shall convert on a
          mandatory  basis into  20,000,000  shares of common  stock if any time
          prior to  maturity  the Company  consolidates  with,  or merges  into,
          another   corporation  or  entity,  or  effects  any  other  corporate
          reorganization  resulting  in a change  in  control.  The  lender  may
          exercise a discretionary conversion at any time prior to maturity.

     -    In November 2004,  pursuant to an investment  banking  agreement,  the
          Company  entered  into a  Securities  Purchase  Agreement  whereby the
          Company  offered  for sale up to  $750,000  of its one year 8%  senior
          secured  convertible  promissory  notes.  The  purchasers of the notes
          would also receive  five year  warrants to purchase an aggregate of up
          to 750,000  shares of the Company's  common stock at an exercise price
          of $.10 per share (1 warrant for each $1 of principal amount of note).
          On November 24, 2004 the offering was completed and the Company issued
          notes in the  principal  amount of $550,000 to a series of  accredited
          investors and warrants to purchase  550,000  shares of common stock in
          connection  with these notes.  The notes are  convertible  into common
          stock on a mandatory basis if the Company consolidates with, or merges
          into,  another  corporation or entity,  or effects any other corporate
          reorganization resulting in a change in control within six months from
          the date of the notes,  or if any time prior to the maturity  date the
          Company  consummates  a  private  equity  financing  or series of such
          financings in which the Company receives gross proceeds of at least $3
          million at a pre-money  valuation of at least $20  million.  The notes
          shall  convert at a per share price equal to a 25% discount to the per

                                       16
<PAGE>

          share  price  of  the  financing  shares  sold  to  investors  in  the
          financing.  The lender may exercise a discretionary  conversion during
          the  last  120  days  prior  to the  maturity  date of the  notes at a
          conversion price of $.10 per share or at any time prior to maturity if
          the Company consummates a financing but it is at a pre-money valuation
          of less than $20  million  dollars at a per share price equal to a 25%
          discount to the per share price of financing  shares  actually sold to
          investors in such financing.

     These  securities were offered and issued in private  transactions  made in
reliance  upon  exemptions  from  registration  pursuant to Section  4(2) of the
Securities Act of 1933 as transactions  not involving public  offerings.  All of
the  investors are  accredited  investors as defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933.




                                       17
<PAGE>

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR
         PLAN OF OPERATION.

Liquidity and Capital Resources

     The  Company's  ability to  continue  in the normal  course of  business is
dependent upon the success of future  operations.  The Company has had recurring
losses from operations which aggregate approximately $(11,419,000) cumulative to
April 30, 2005. At April 30, 2005, the Company has a net working capital deficit
of  approximately  $(921,000)  and  a  stockholders'  deficit  of  approximately
$(783,000)  , which raise  substantial  doubt about its ability to continue as a
going concern.  Management  has determined  that the Company is no longer in the
development  stage as it has ceased  development  of all products due to loss of
licenses and product  marketability.  In addition, the Company has not generated
any revenue during the last three fiscal years.  Management  recognizes that the
Company  must  generate  revenue to achieve  profitable  operations  and to meet
current operating costs. The Company is presently pursuing the asset purchase of
a  nutriceutical  company  as  described  below  and  exploring  other  business
opportunities,  inclusive of the possible acquisition of a new line of business,
which may or may not be related to the development of medical devices.

     Management had entered into a Share Exchange Agreement in April 2004 by and
among the  Company,  Yellow  Brick  Road  Ventures  LLC,  a New  Jersey  limited
liability  company ( "YBR"),  and Music  Asset  Corp.,  a  Delaware  corporation
("MAC")  that was at the  time of  execution  of the  Agreement  a wholly  owned
subsidiary of YBR. Pursuant to the agreement, the Company agreed to acquire from
YBR,  100% of the  outstanding  stock of MAC in exchange for the issuance by the
Company of 22,473,214.29  shares of the Company's  common stock,  subject to YBR
providing  certain  financing to the Company in connection with the exploitation
of the assets of MAC, which,  subsequent to the transaction  would have become a
wholly owned subsidiary of the Company.  On September 21, 2004,this  transaction
was  unwound  as the party  involved  in the  transaction  did not  deliver  the
financing to the Company as required by the agreement.  In connection  with this
termination,  the Company  redelivered  to YBR all shares of the common stock of
MAC and  issued  57,500  shares of its  Series B  Preferred  Stock  which,  upon
conversion to common shares,  will aggregate  5,750,000  shares of common stock;
4,250,000  shares will be issued to YBR and  1,500,000  shares will be issued to
advisors  as part of the YBR  Agreement.  The value of the  common  shares to be
issued ($172,500)upon  conversion of the Series B preferred shares to common was
charged to  operations  in the year ended  April 30,  2004.  The non  refundable
deposit in the amount of $25,000  was  charged to  operations  in the year ended
April 30, 2004.

                                       18
<PAGE>

     On  September  9, 2004,  the Company  entered  into an  investment  banking
agreement  for an  initial  term of 180 days  with a third  party  for  advisory
services and to obtain bridge  financing of up to $950,000 in connection with an
acquisition  transaction.  The Company  received  gross  proceeds of $750,000 in
connection with this agreement. This bridge financing was provided by accredited
investors,  the terms of which were agreed upon by the Company and the  entities
providing the financing.  On September 28, 2004, the Company, under the terms of
a secured  promissory note, made advances of $300,000 to a possible  acquisition
candidate. The note, as amended, bears interest at 8% and was due on the earlier
of (a) one year or (b) on April 15, 2005 if a definitive  agreement  between the
parties was not entered into by March 15, 2005.  On March 30, 2005,  the Company
terminated its efforts to complete a definitive  transaction with this party due
to the inability of the candidate to cure defaults on certain of its outstanding
indebtedness  owing to a third party.  On April 11, 2005,  the Company agreed to
extend  the  due  date of the  note to June  15,  2005  subject  to the  Company
receiving a principal  payment of $50,000,  which was  subsequently  received on
April 19,  2005.  This note is secured by the  assets of the  borrower.  Accrued
interest  approximated $13,000 at April 30, 2005. To date, the note has not been
paid. At April 30, 2005, the amount due on the note and accrued  interest in the
aggregate of $263,074 has been reserved for by the Company as  collectibility is
uncertain at this time. The Company incurred costs of  approximately  $86,000 in
connection with this failed  acquisition which have been expensed in the current
fiscal year.

     As a condition of the agreement, two creditors of the Company were required
to reduce the  obligations  of the  Company to them by applying a portion of the
Company's  obligation to them to the purchase of common stock of the Company. On
September  30, 2004,  an officer of the  Company,  under the terms of a security
purchase  agreement,  exchanged  $52,500 of funds due him for loans and  accrued
payroll for  5,250,000  shares of common  stock.  On September  30, 2004, a note
holder of the  Company in the amount of  $30,000,  under the terms of a security
purchase  agreement,  exchanged $10,000 of the debt due him for 1,000,000 shares
of common  stock.  In lieu of the above  issuance of common  stock,  the Company
agreed  to issue  62,500  shares of its newly  designated  Series B  Convertible
Preferred Stock.  Upon filing of the Certificate of Amendment to the Certificate
of  Incorporation  to  increase  the number of shares of common  stock which the
Company  is  authorized  to issue,  each  share of the  Preferred  Stock will be
automatically  converted into 100 shares of common stock. The value of the stock
issued ($250,000)was  recorded as a reduction of liabilities in the aggregate of
$62,500 and $187,500 was charged to operations  for the  extinguishment  of this
debt.

                                       19
<PAGE>

     On September  29, 2004,  the Company  received the first  tranche of bridge
financing in connection  with this  investment  banking  agreement.  The Company
received gross  proceeds of $200,000 and entered into a Note Purchase  Agreement
with an investor.  Pursuant to the  agreement,  the investor  purchased from the
Company a  $200,000  one year 8%  convertible  promissory  note.  The note shall
convert on a mandatory basis into 20,000,000  shares of common stock if any time
prior to  maturity  the  Company  consolidates  with,  or merges  into,  another
corporation or entity, or effects any other corporate  reorganization  resulting
in a change in control.  The lender may exercise a  discretionary  conversion at
any time prior to maturity.  The value of the beneficial  conversion  feature of
the  convertible  debt was in excess of the aggregate  proceeds  received  which
resulted  in  the  total  proceeds  of  $200,000  being  recorded  as an  equity
component.  For the year ended April 30, 2005, the amortization of debt discount
was approximately $117,000.  Interest expenses for the year ended April 30, 2005
was approximately $9,000. At April 30, 2005, the note had not been converted.

     On November 23,  2004,  the Company  received the second  tranche of bridge
financing in connection  with this  investment  banking  agreement.  The Company
entered into a Securities  Purchase  Agreement  whereby the Company  offered for
sale up to $750,000  of its one year 8% senior  secured  convertible  promissory
notes.  The  purchasers  of the notes would also receive  five year  warrants to
purchase an aggregate of up to 750,000  shares of the Company's  common stock at
an exercise  price of $.10 per share (1 warrant for each $1 of principal  amount
of note). On November 24, 2004 the offering was completed and the Company issued
notes in the  principal  amount of $550,000  and  warrants  to purchase  550,000
shares of common stock in connection with these notes.  Approximately $11,000 of
the proceeds were attributed to the fair value of the warrants.  This amount was
recorded as an equity component.  The remaining balance of $539,000 was recorded
as debt. For the year ended April 30, 2005 the amortization of debt discount was
approximately $5,000. The notes are convertible into common stock on a mandatory
basis if the Company  consolidates with, or merges into, another  corporation or
entity, or effects any other corporate  reorganization  resulting in a change in
control  within six months  from the date of the notes,  or if any time prior to
the maturity date the Company  consummates a private equity  financing or series
of such  financings in which the Company  receives  gross proceeds of at last $3
million  at a  pre-money  valuation  of at least $20  million.  The notes  shall
convert at a per share price  equal to a 25%  discount to the per share price of
the financing shares sold to investors in the financing. The lender may exercise
a discretionary  conversion  during the last 120 days prior to the maturity date
of the notes at a  conversion  price of $.10 per  share or at any time  prior to
maturity  if the  Company  consummates  a  financing  but  it is at a  pre-money
valuation  of less than $20 million  dollars at a per share price equal to a 25%
discount to the per share price of financing  shares  actually sold to investors
in such  financing.  Interest  expense  for the year  ended  April 30,  2005 was
approximately $19,000. At April 30, 2005, the notes had not been converted.

                                       20
<PAGE>

     The Company paid  approximately  $113,000 in financing fees associated with
these transactions which are being amortized over the life of the loans. For the
year ended April 30 2005, amortization approximated $53,000.

     On April 22, 2005, the Company entered into an investment banking agreement
for an initial term of 180 days with a third party to obtain bridge financing of
$42,000,000 in connection with an asset purchase transaction whereby the Company
would acquire the assets of a nutriceutical company and negotiated agreements to
complete that transaction which was to close no later than May 25, 2005. On June
6, 2005, the Company  deposited  $100,000 into an escrow account as a good faith
deposit in order to extend the closing date for the  transaction  until June 10,
2005.  A principal of the  investment  banking  firm has  personally  guaranteed
repayment to us of the payment into the escrow deposit.  The transaction did not
close by that date and the $100,000  deposit was  delivered  to the  prospective
seller.  Management is still in discussions regarding such transaction,  however
at this time no binding letter of intent or definitive agreement is in force. If
such  agreements are formalized,  the Company will disclose this  information in
the appropriate  filings.  At this time, the Company has not made a demand under
the personal guarantee for reimbursement of the $100,000.

     The Company was  effectively  able to complete  certain  transactions  as a
result of improved  liquidity which  management  believes will enable it to move
forward with a possible acquisition.  These transactions included the settlement
of a royalty due to a licensor  for a  previously  terminated  agreement  in the
amount of $379,000  which was  settled in full on October 21, 2004 for  $25,000.
The remaining  $354,000 has been recorded as  forgiveness of debt in the current
fiscal  year.  In  addition,  the  Company  was  able to  repurchase  all of its
outstanding  Series A Preferred stock from the sole shareholder in the aggregate
of 6,000,000 shares for $20,000. This stock has been retired.

     The  Company's  statement  of cash flows for the year ended  April 30, 2005
reflects an increase in cash of approximately $136,000 from the prior year. Cash
used in operating activities of approximately $208,000 is primarily attributable
to general and administrative expenses consisting of professional fees and other
general expenses and the royalty  settlement of $25,000.  Cash used in investing
activities of approximately  $273,000 is primarily  attributable to the net loan
made to a possible merger candidate in the amount of $250,000 and the payment of
deferred  asset  acquisition  costs  of  approximately  $38,000  offset  by  the
repayment  of the HDS credit line of  approximately  $15,000.  Cash  provided by

                                       21
<PAGE>

financing  activities  of  $617,000  represents  the net  proceeds  from the two
tranches  of  the  investment  banking  agreement  of  $637,000  offset  by  the
repurchase of the Series A Preferred stock in the amount of $20,000.

     The  Company has cash on hand of  approximately  $136,000 at April 30, 2005
and expects to incur  additional  expenditures  over the next twelve (12) months
for general and administrative  expenses consisting  primarily of maintaining an
office  for the  Company,  to handle  administrative  and  accounting  functions
inclusive of required SEC  reporting and for legal  expenses in connection  with
the  settlement  of  obligations  so that the  Company  may  pursue  a  possible
acquisition.  The Company  has been able to  effectively  eliminate  most of its
ongoing expenses,  inclusive of rent. The Company's management believes that the
Company's cash on hand will be sufficient to fund the Company's operations until
such  time  that a  definitive  agreement  is  entered  into for an  acquisition
transaction.

     In the event the Company is unable to satisfy  its capital  needs or settle
its current obligations to pursue an acquisition, management may pursue the sale
of some or all of the Company's  assets or seek  additional  financing.  At this
time, the primary asset is the Company's  equity  position in Nesco. As of April
30, 2005,  the Company held the  equivalent of 4,837,500  shares of Nesco common
stock representing 4.44% of the outstanding equity securities of Nesco. Although
these shares may be sold one year from the exchange  date (after May 25,  2005),
the Company  does not have actual  common  shares at this time;  as noted above,
Nesco issued Series B Preferred shares which will be automatically  converted to
common shares at such time that authorization is received to issue these shares.
In addition, these shares are not registered and the trading volume of the Nesco
stock is minimal. Due to these factors, both the number of shares which could be
sold  and the  amount  which  could  be  realized  from a sale  are not  readily
determinable at this time.

     On December 12, 2003, the Company received a letter from the SEC's Division
of Investment  Management  inquiring as to the possible status of the Company as
an  unregistered  "investment  company"  within the  meaning  of the  Investment
Company Act of 1940 ("40 Act"). The Company  responded to this letter on January
28, 2004  explaining  that the Company may have  inadvertently  and  temporarily
fallen into the SEC's definition of an investment company because of the lack of
success with a licensing  agreements program that resulted in a disproportionate
percentage  of assets being  represented  by ownership in another  company.  The
Company's  response continued that by August 31, 2004, it intended to enter into
some form of reorganization with a private company or re-configure its assets to
remove itself from the definition of an investment company under the 40 Act. The
share  exchange  agreement with Yellow Brick Road LLC described in the Company's

                                       22
<PAGE>

10-KSB filed on August 13, 2004, was intended to satisfy this  commitment.  That
transaction was not successful and was terminated in September 2004. The Company
advised  the SEC on  September  1, 2004 that it will  continue  its  efforts  to
achieve  a   reconfiguration   of  its   assets  or  enter  into  some  from  of
re-organization by December 31, 2004. The Company had entered into an investment
banking  agreement and was in  discussions  with a merger  candidate in order to
resolve this issue. This effort was terminated on March 30, 2005. The Company is
presently in discussions  with a party in connection with the asset  acquisition
described  above and entered into an investment  banking  agreement on April 22,
2005 in connection with this transaction.  The Company cannot give any assurance
that it will be  successful  in its  pursuit  of any  business  opportunity  but
believes it will not be deemed an investment  company.  However, a determination
by the SEC that the Company is in fact an unregistered  investment company could
have a material adverse effect on the Company's business.

Results of Operations

     Since its inception,  the Company's  primary  activities  have consisted of
obtaining the exclusive  license to seven (7) medical  devices  developed by Dr.
Lloyd Marks,  developing a marketing  strategy for its other medical devices and
the start-up of HDS, a manufacturer of gel related products.  HDS was a majority
subsidiary in which the Company previously held a 10.3% voting share as of April
30, 2004.

     At April 30, 2005, the Company no longer holds any of these (7) licenses it
had purchased from Dr. Lloyd Marks. The final license for the development of the
self-shielding  needle  terminated  on January 22, 2001 as the Company could not
obtain  the  necessary   government   approval  since  the  Company  had  halted
development of the device due to capital constraints. The Company also could not
pay the  licensor  the  required  additional  $250,000,  under  the terms of the
amended agreement, to extend the regulatory approval requirement.

     In October 1999, the Company ceased sales on its other medical  devices due
to the relatively low level of sales, capital constraints and price increases by
the  manufacturer.  The Company has evaluated the  marketability of the licensed
technology  relating to these  products and has  determined  that these products
have no viable  marketability  at this time. At April 30, 2000, the  unamortized
amount of this technology approximated $155,000, of which the Company has set-up
a 100% reserve based upon anticipated marketability of these products.

     The Company holds the equivalent of approximately 4,837,500 shares or 4.44%
of Nesco  Industries,  Inc.  ("Nesco"),  a publicly traded company listed on the
Over The Counter  Bulletin  Board  Exchange (OTCC BB, Symbol NESK) Common Stock.
Nesco was engaged  primarily in asbestos  abatement  contracting  but had ceased
operations   in  2003.   See  Item  12   "Certain   Relationships   and  Related
Transactions."

                                       23
<PAGE>

     The Company held a 10.3% minority  voting  investment  interest in Hydrogel
Design Systems,  Inc. ("HDS"), a privately held Delaware  corporation engaged in
the manufacturing, marketing, selling and distribution of hydrogel materials.

     On May 25, 2004,  Nesco,  HDS,  certain  stockholders  of Nesco and certain
stockholders  of HDS  completed  the  transactions  contemplated  by  the  Share
Exchange  Agreement,  dated as of April  29,  2004 (the  "Exchange  Agreement"),
whereby HDS became a majority  owned  subsidiary of Nesco and the holders of HDS
common stock and debt hold a majority interest of Nesco.

     The transactions  contemplated by the Exchange Agreement are intended to be
a tax free  exchange  pursuant to Section 368 of the  Internal  Revenue  Code of
1986.

     Nesco had  intended to issue shares of its common stock in exchange for the
equity  securities  of HDS in certain  ratios as  provided  for in the  Exchange
Agreement. However, because Nesco did not have the required number of authorized
shares of common  stock to complete  the  exchange  on this basis,  it agreed to
issue  shares of its  newly  designated  Series B  Preferred  Stock  ("Preferred
Stock") for,  among others,  equity and debt of HDS as described in the Exchange
Agreement.  Upon filing of the  Certificate  of Amendment to the  Certificate of
Incorporation  to increase  the number of shares of common  stock which Nesco is
authorized  to issue,  each share of the Preferred  Stock will be  automatically
converted into shares of Nesco Common Stock. The shares described as being owned
by Company reflect this conversion.

     The Company has not derived  significant  revenues  since its  inception in
March 1995. As a result of the Company's  start-up  expenses and  acquisition of
licenses and royalty  rights for the  products  that were being  developed,  the
Company has accumulated a deficit of approximately $11,419,000 through April 30,
2005.

     The net loss for the year ended April 30, 2005 was approximately ($504,000)
as compared to a net loss of  approximately  ($629,000) for the year ended April
30, 2004.  There were no revenues in either of the two  periods.  In the current
year,  the loss of  approximately  $504,000  is  primarily  attributable  to the
recognition of income due to the  forgiveness of debt of royalties in the amount
of $354,000 offset by a loss on debt  extinguishment  of approximately  $188,000

                                       24
<PAGE>

for stock  issued in  settlement  of debt,  amortization  of debt  discount  and
financing costs of approximately  $175,000,  general and administrative costs of
approximately $125,000, costs associated with a failed merger of $86,000 and the
establishment  of a  reserve  for  collectibility  for a loan  made to a  merger
candidate  of   approximately   $263,000.   In  the  prior  year,  the  loss  of
approximately  $629,000 was primarily  attributable  to the  establishment  of a
reserve of  approximately  $296,000  which has been set-up by management for the
collectibility  of promissory notes and interest which were due on July 1, 2003,
for  the  purchase  of  securities  and  general  and  administrative  costs  of
approximately $146,000.  Although the notes have been extended for an additional
three (3) year term,  management believes that their collectibility is uncertain
at this time.  In addition,  the Company was  obligated to issue stock valued at
approximately  $202,000 to various  parties in  connection  with a certain Asset
Purchase  Agreement and made a  non-refundable  deposit of $25,000 to a party in
connection  with this  agreement.  These costs were charged to operations in the
prior year. See Item 12 "Certain Relationships and Related Transactions".

Plan of Operation

     The Company has effectively  terminated all of its license agreements as of
January 22, 2001.  The Company  halted plans to complete the  development of the
Self-Shielding  Needle, the last remaining license,  due to capital constraints.
On January 22, 2001, the license agreement effectively terminated as the Company
could not obtain the necessary government approval with the two (2) year term as
required in the agreement. The Company also determined that it could not pay the
licensor an additional $250,000 to extend the regulatory approval requirement.

     The Company has a 4.44% investment, in its nonconsolidated affiliate Nesco,
which holds a majority  interest in HDS,  which is accounted  for under the cost
method. The manufacturing facility of HDS became fully operational in late 1997.

     On April 22, 2005, the Company entered into an investment banking agreement
for an initial term of 180 days with a third party to obtain bridge financing of
$42,000,000 in connection with an asset purchase transaction whereby the Company
would acquire the assets of a nutriceutical company and negotiated agreements to
complete that transaction which was to close no later than May 25, 2005. On June
6, 2005, the Company  deposited  $100,000 into an escrow account as a good faith
deposit in order to extend the closing date for the  transaction  until June 10,
2005.  A principal of the  investment  banking  firm has  personally  guaranteed
repayment to us of the payment into the escrow deposit.  The transaction did not
close by that date and the $100,000  deposit was  delivered  to the  prospective
seller.  Management is still in discussions regarding such transaction,  however
at this time no binding letter of intent or definitive agreement is in force. If
such  agreements are formalized,  the Company will disclose this  information in
the appropriate  filings.  At this time, the Company has not made a demand under
the personal guarantee for reimbursement of the $100,000.

                                       25
<PAGE>

     No assurance  can be made with  respect to the  viability of the Company in
the long term.  The Company no longer  holds any  development  licenses  and has
determined that its current medical products have no viable  marketability.  The
Company is continuing to pursue the asset purchase of a nutriceutical company as
described  above and exploring  other business  opportunities,  inclusive of the
possible acquisition of a new line of business,  which may or may not be related
to the development of medical devices.

     In the event the Company is unable to satisfy  its capital  needs or settle
its current obligations to pursue an acquisition, management may pursue the sale
of some or all of the Company's  assets or seek  additional  financing.  At this
time, the primary asset is the Company's  equity  position in Nesco. As of April
30, 2005,  the Company held the  equivalent of 4,837,500  shares of Nesco common
stock representing 4.44% of the outstanding equity securities of Nesco. Although
these shares may be sold one year from the exchange  date (after May 25,  2005),
the Company  does not have actual  common  shares at this time;  as noted above,
Nesco issued Series B Preferred shares which will be automatically  converted to
common shares at such time that authorization is received to issue these shares.
In addition, these shares are not registered and the trading volume of the Nesco
stock is minimal. Due to these factors, both the number of shares which could be
sold  and the  amount  which  could  be  realized  from a sale  are not  readily
determinable at this time.

     Off-Balance Sheet Arrangements

     At  April  30,  2005,  the  Company  did not have  any  relationships  with
unconsolidated  entities  or  financial  partnerships,  such as  entities  often
referred to as structured finance or special purpose entities,  which would have
been established for the purpose of facilitating  off-balance sheet arrangements
or other contractually narrow or limited purposes. In addition, the Company does
not engage in trading activities  involving  non-exchange  traded contracts.  As
such, the Company is not exposed to any financing,  liquidity, market, or credit
risk that could arise if the Company had engaged in such activities.

     Basis of Presentation - Going Concern

     The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America,  which

                                       26
<PAGE>

contemplate  continuation  of the  Company as a going  concern.  The Company has
incurred cumulative losses of approximately  $11,419,000,  has a working capital
deficit of approximately  $921,000,  and utilized cash of approximately $208,000
for operating  activities  for the year ended April 30, 2005, all of which raise
substantial doubt about its ability to continue as a going concern. In addition,
the Company  has not  generated  any revenue in the last two fiscal  years ended
April 30, 2005 and April 30, 2004.  Management  recognizes that the Company must
generate revenue to achieve profitable  operations and to meet current operating
costs. The Company is presently  exploring  several  alternatives,  as described
above,  inclusive of the possible  acquisition of a new line of business,  which
may or may not be related to the development of medical devices.

     No assurance can be made as to the success of an acquisition transaction or
as to the  success  of the  Company's  future  course  of  operations  which are
undetermined at this time. The accompanying  financial statements do not include
any adjustments  that might be necessary if the Company is unable to continue as
a going concern.

     Critical Accounting Policies

     Our critical and significant accounting policies, including the assumptions
and  judgments  underlying  them,  are  disclosed in the Notes to the  Financial
Statements.  These  policies  have been  consistently  applied  in all  material
respects  and  address  such  matters as revenue  recognition  and  depreciation
methods.  The  preparation  of  the  financial  statements  in  conformity  with
generally  accepted   accounting   principles  in  the  United  States  requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the date of the financial  statements  and the reported  amounts of revenues and
expenses  during the reported  period.  Actual  results  could differ from those
estimates.

     New Accounting Pronouncements

     In December  2004,  the FASB issued SFAS No. 123R,  "Share-Based  Payment."
SFAS No.  123R is a  revision  of SFAS No.  123,  "Accounting  for  Stock  Based
Compensation,"  and  supersedes  APB Opinion No. 25 ("APB No. 25").  Among other
items,  SFAS No. 123R  eliminates the use of APB No. 25 and the intrinsic  value
method of accounting,  and requires  companies to recognize the cost of employee
services  received in exchange  for awards of equity  instruments,  based on the
grant  date  fair  value of  those  awards,  in the  financial  statements.  The
effective  date of SFAS No. 123R for the  Company is the first  quarter of 2006.

                                       27
<PAGE>

SFAS No.  123R  permits  companies  to adopt  its  requirements  using  either a
"modified  prospective" method, or a "modified  retrospective" method. Under the
"modified prospective" method,  compensation cost is recognized in the financial
statements  beginning with the effective date, based on the requirements of SFAS
No. 123R for all share-based  payments granted after that date, and based on the
requirements  of SFAS  No.  123 for all  unvested  awards  granted  prior to the
effective date of SFAS No. 123R. Under the "modified  retrospective" method, the
requirements are the same as under the "modified  prospective"  method, but also
permits entities to restate financial statements of previous periods, either for
all prior periods  presented or to the beginning of the fiscal year in which the
statement is adopted, based on previous pro forma disclosures made in accordance
with SFAS No. 123.  The Company has not yet  determined  which of the methods it
will use upon adoption.

     The Company currently  utilizes the  Black-Scholes  option pricing model to
measure the fair value of stock  options  granted to  employees.  While SFAS No.
123R permits  entities to continue to use such a model,  it also permits the use
of a "lattice"  model.  The Company expects to continue using the  Black-Scholes
option pricing model upon adoption of SFAS No. 123R to measure the fair value of
stock options.

     The adoption of this  statement will have the effect of reducing net income
and income per share as  compared  to what would be  reported  under the current
requirements.  These future amounts cannot be precisely  estimated  because they
depend on, among other things,  the number of options issued in the future,  and
accordingly,  the  Company  has not  determined  the impact of  adoption of this
statement on its results of operations.

                                       28
<PAGE>

Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     See financial  statements  following  Item 14 of this Annual Report on Form
10-KSB.

Item 8. CHANGES IN AND  DISAGREEMENT  WITH  ACCOUNTANTS  ON ACCOUNTING  AND
        FINANCIAL DISCLOSURE.

     None

ITEM 8A.  CONTROLS AND PROCEDURES

     The Securities and Exchange Commission defines the term disclosure controls
and procedures to be a company's controls and other procedures that are designed
to ensure that information required to be disclosed in the reports that it files
or submits  under the  Securities  Exchange Act of 1934 is recorded,  processed,
summarized and reported, within the time periods specified in the Securities and
Exchange  Commissions'  rules and forms. The Company  maintains such a system of
controls and procedures in an effort to ensure that all information  which it is
required to disclose in the reports it files under the  Securities  Exchange Act
of 1934 is recorded, processed,  summarized and reported within the time periods
specified under the SEC's rules and forms.

     Based on an evaluation performed, the Company's principal executive officer
and principal financial officer,  who is the same person, has concluded that the
disclosure  controls and  procedures  were  effective  as of April 30, 2005,  to
provide reasonable assurance of the achievement of these objectives.

                                       29
<PAGE>

     There  was no change  in the  Company's  internal  control  over  financial
reporting  during the fiscal year April 30, 2005, that has materially  affected,
or is  reasonably  likely to  materially  affect,  the  Company's  control  over
financial reporting.

                                    PART III

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT OF THE REGISTRANT.

Directors and Executive Officers

     The names and ages of the  directors,  executive  officers and  significant
employees,  and  promoters  of the  Company  are  set  forth  below.  All of the
directors  will  serve  until  their  successors  have  been  duly  elected  and
qualified.

           Name              Age                  Position Held
           ----              ---                  -------------

     Matthew L. Harriton      41          President, Chief Executive Officer,
                                          Chief Financial Officer  and Director

     Dr. Daniel Durchslag     60          Director


     Background of Executive Officers and Directors

     Matthew  L.  Harriton  has  served as the Chief  Financial  Officer  of the
Company  since  January  1996.  In April  1997,  Mr.  Harriton  became the Chief
Executive  Officer and a Director of the  Company,  and assumed the  position of
President.  Mr. Harriton also serves as President and Chief executive Officer of
Hydrogel Design Systems,  Inc., and Nesco Industries,  Inc. in which the Company

                                       30

<PAGE>

has a 4.44% minority  voting  interest,  since May 2004. HDS is a majority owned
subsidiary  of Nesco.  Prior to  joining  Embryo  Development  Corporation,  Mr.
Harriton's  professional  experience  included  positions  at  CIBC  Wood  Gundy
Securities  Corporation  from June 1994 until December  1995,  Coopers & Lybrand
from September 1990 until May 1994, and The First Boston  Corporation  from June
1986 until May 1988.  He is a graduate of Lehigh  University  and  received  his
M.B.A. from Duke University's Fuqua School of Business.

     Dr. Daniel  Durchslag,  DDS,,  has been  practicing  General,  Cosmetic and
Sports  Dentistry in Beverly Hills, CA, since 1980. From 1973 until 1979, he was
an Associate  Professor  and Director of Clinics at the  University  of Southern
California School of Dentistry.  He is a graduate of the University of Wisconsin
and Loyola University/Chicago College of Dental Surgery.

     Each  director of the Company is  entitled to receive  reasonable  expenses
incurred in attending  meetings of the Board of  Directors  of the  Company.  In
June,  1998 Messr.  Durchslag  was  granted  options,  (which were  subsequently
exercised),  to purchase  250,000 shares of the Company's  common stock, and Mr.
Harriton,  the President and Chief Executive  Officer of the Company was granted
options,  (which were subsequently  exercised) to purchase 750,000 shares of the
Company's  common stock,  all at an exercise  price equal to the market price on
the date of the grant  ($0.0938)  exercisable  for a period of [four (4)] years.
The  Directors  receive  no  other  compensation  for  serving  on the  Board of
Directors.  The  members  of the  Board  of  Directors  intend  to meet at least
quarterly during the Company's fiscal year, and at such other times duly called.

     The directors will serve until their  successors have been duly elected and
qualified.

                                       31
<PAGE>

Item 10.  EXECUTIVE COMPENSATION

                                                  SUMMARY COMPENSATION TABLE
                                                  --------------------------
<TABLE>
<CAPTION>
                                                                                            Long Term Compensation
                                                                                            ----------------------
                                   Annual Compensation                                 Awards                  Payouts
                          ---------------------------------                           -------                  -------
   (a)                        (b)      (c)           (d)           (e)                  (f)             (g)      (h)(i)
                                                                                    Restricted                 All
                                                                Other                 Stock                    LTIP      Other
                                                                Annual                Awards      Options/   Payouts   Compensation
Name and Principal Position   Year    Salary($)    Bonus($)  Compensation($)           ($)         SARs(#)     ($)         ($)
---------------------------   ----    ---------    --------  ---------------       ------------   ---------  --------  ------------
<S>                           <C>     <C>         <C>  <C>        <C>                                 <C>        <C>       <C>
Matthew L. Harriton, CEO      2005    $30,000     $   -0-         0                    ---            0          0         0
(1)                           2004    $30,000     $   -0-         0                    ---            0          0         0
                              2003    $60,000     $   -0-         0                    ---            0          0         0
--------------------
<FN>
(1)  Matthew Harriton,  had ceased receiving a salary in October 2003. Beginning
     in February  2005,  a salary of $10,000 per month has been  accrued for Mr.
     Harriton but has not been paid. In September  2004, Mr. Harriton was issued
     an aggregate of 5,250,000 shares of common stock in exchange for $52,500 of
     funds due him. Of this amount, $47,500 was related to prior accrued payroll
     that had not been paid in prior  years and $5,000 was  related to a loan he
     had made to the Company. In lieu of the above issuance of common stock, the
     Company  agreed to issue  52,500  shares of its newly  designated  Series B
     Convertible Preferred Stock. Upon filing of the Certificate of Amendment to
     the Certificate of Incorporation to increase the number of shares of common
     stock which the Company is authorized to issue, each share of the Preferred
     Stock will be automatically  converted into 100 shares of common stock. The
     value  of  the  stock  issued  ($210,000)was  recorded  as a  reduction  of
     liabilities  in the  aggregate  of  $52,500  and  $157,500  was  charged to
     operations for the extinguishment of this debt.
</FN>
</TABLE>

<TABLE>
<CAPTION>
                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                      -------------------------------------
   (a)                  (b)                        (c)                   (d)                 (e)
                                           % of Total Options
                   Number of Securities    Options/SARs Granted                          Exercise or
                   Underlying Option/      to Employees in          Base Price           Expiration
Name               SARs Granted (#)        Fiscal Year              (# Share)              Date
----               ---------------------   ---------------------    -----------        --------------
<S>                         <C>                    <C>
Matthew Harriton            0                      0                  N/A                    N/A
</TABLE>

<TABLE>
<CAPTION>
                       AGGREGATED OPTION/SARs EXERCISES IN
                           LAST FISCAL YEAR AND FY-END
                               OPTIONS/SAR VALUES
                       ------------------------------------
   (a)                  (b)                        (c)                   (d)                    (e)
                                                                      Number of              Value of
                                                                 Securities Underlying      Unexercised
                                                                  Unexercised Options/      In-the-Money
                                                                     SARs at FY-End (#)    Options/SARs at
                           Shares Acquired       Value               Exercisable/        FY-End Exercisable
Name                       on Exercise (#)       Realized ($)        Unexercisable          Unexercisable
----                      -----------------      ------------   -----------------------  --------------------
<S>                              <C>                 <C>                  <C>                    <C> <C>
Matthew Harriton                 0                   $ 0                 -0-0-                  -0-/-0-
</TABLE>

                                       32
<PAGE>

Employment Agreements

     None

Stock Option Plans and Agreements

     Incentive Option and Stock  Appreciation  Rights Plan -- As of March, 1995,
the  Directors  of the  Company  adopted  and the  stockholders  of the  Company
approved the adoption of the  Company's  1995  Incentive  Stock Option and Stock
Appreciation Rights Plan ("Incentive Option Plan"). The purpose of the Incentive
Option Plan is to enable the Company to encourage key employees and Directors to
contribute  to the  success  of the  Company  by  granting  such  employees  and
Directors incentive stock options ("ISOs") as well as non-qualified  options and
stock appreciation rights ("SARs").

     The Incentive  Option Plan is  administered  by the Board of Directors or a
committee  appointed  by the Board of  Directors  (the  "Committee")  which will
determine,  in its  discretion,  among other things,  the  recipients of grants,
whether  a grant  will  consist  of  ISOs,  non-qualified  options  or SARs or a
combination  thereof, and the number of shares to be subject to such options and
SARs.

     The  Incentive  Option Plan  provides  for the granting of ISOs to purchase
Common Stock at an exercise  price to be determined by the Board of Directors or
the  Committee  not less than the fair market  value of the Common  Stock on the
date the option is granted.  Non-qualified  options and freestanding SARs may be
granted with any exercise price.  SARs granted in tandem with an option have the
same exercise price as the related option.

     The total  number of shares with  respect to which  options and SARs may be
granted under the Incentive Option Plan is 2,000,000. ISOs may not be granted to
an  individual  to the extent that in the calendar year in which such ISOs first
become  exercisable  the shares subject to such ISOs have a fair market value on
the date of grant in excess of $100,000.  No option or SAR may be granted  under
the  Incentive  Option  Plan  after  March 15,  2005 and no option or SAR may be
outstanding for more than ten years after its grant. Additionally,  no option or
SAR can be granted for more than five (5) years to a  shareholder  owning 10% or
more of the Company's outstanding Common Stock.

     Upon the  exercise of an option,  the holder must make  payment of the full
exercise  price.  Such  payment may be made in cash or in shares of Common Stock
(based  on the fair  market  value  of the  Common  Stock  on the date  prior to
exercise), or in a combination of both. The Company may lend to the holder of an
option  funds  sufficient  to  pay  the  exercise  price,   subject  to  certain
limitations,  or in its discretion,  accept payment by  non-recourse  promissory
note.  SARs may be  settled,  in the Board of  Directors'  discretion,  in cash,
Common Stock, or in a combination of cash and Common Stock. The exercise of SARs

                                       33
<PAGE>

cancels the  corresponding  number of shares subject to the related  option,  if
any,  and the  exercise of an option  cancels any  associated  SARs.  Subject to
certain  exceptions,  options  and  SARs may be  exercised  any time up to three
months after termination of the holder's employment.

     The  Incentive  Option Plan may be terminated or amended at any time by the
Board of Directors,  except that, without  stockholder  approval,  the Incentive
Option Plan may not be amended to increase  the number of shares  subject to the
Incentive  Option Plan,  change the class of persons eligible to receive options
or SARs under the Incentive  Option Plan or materially  increase the benefits of
participants.

     As of July, 2005 options to purchase  1,650,000 shares of common stock, and
no SARs have been  granted and  exercised  under the  Incentive  Option Plan and
otherwise.  No  determinations  have been made  regarding  the  persons  to whom
options or SARs will be granted in the future,  the number of shares  which will
be  subject  to such  options  or SARs or the  exercise  prices to be fixed with
respect to any option or SAR.

     Non-Qualified   Option  Plan  --  As  of  March  1995,  the  Directors  and
stockholders  of the Company  adopted the 1995  Non-Qualified  Stock Option Plan
(the "Non-Qualified  Option Plan"). The purpose of the Non-Qualified Option Plan
is to enable the Company to encourage  key  employees,  Directors,  consultants,
distributors,  professionals  and  independent  contractors to contribute to the
success of the  Company by  granting  such  employees,  Directors,  consultants,
distributors,  professionals and independent contractors  non-qualified options.
The Non-Qualified  Option Plan will be administered by the Board of Directors or
the Committee in the same manner as the Incentive Option Plan.

     The  Non-Qualified  Option Plan provides for the granting of  non-qualified
options at such  exercise  price as may be determined by the Board of Directors,
in its discretion.  The total number of shares with respect to which options may
be granted under the Non-Qualified Option Plan is 2,000,000.

     Upon the  exercise of an option,  the holder must make  payment of the full
exercise  price.  Such  payment may be made in cash or in shares of Common Stock
(based  on the fair  market  value  of the  Common  Stock  on the date  prior to
exercise), or in a combination of both. The Company may lend to the holder of an
option  funds  sufficient  to  pay  the  exercise  price,   subject  to  certain
limitations. Subject to certain exceptions, options may be exercised any time up
to three months after  termination  of the holder's  employment or  relationship
with the Company.

                                       34
<PAGE>

     The Non-Qualified Option Plan may be terminated or amended at any time by
the Board of Directors, except that, without stockholder approval, the
Non-Qualified Option Plan may not be amended to increase the number of shares
subject to the Non-Qualified Option Plan, change the class of persons eligible
to receive options under the Non-Qualified Option Plan or materially increase
the benefits of participants.


                                       35
<PAGE>

Item 11. SECURITY OWNERSHIP OF CERTAIN
         BENEFICIAL OWNERS AND MANAGEMENT.

     The  following  table sets forth certain  information,  as of July 28, 2005
with respect to the beneficial  ownership of the outstanding Common Stock by (i)
any holder of more than five (5%) percent;  (ii) each of the Company's  officers
and  directors;  and (iii) the directors and officers of the Company as a group.
For this purpose,  each outstanding share of automatically  convertible Series B
Preferred  Stock has been  treated as having been  converted  into100  shares of
common stock. These shares will automatically convert to common at such time the
Company  increases the amount of common stock it is authorized to issue.  Unless
otherwise  indicated,  all shares are beneficially owned and sole investment and
voting power is held by the beneficial owners indicated.

<TABLE>
<CAPTION>
                                                    Percentage                              Percentage
                                  Shares of         (%) of                                  (%) of Total
  Name and Address                 Common            Common            Shares of             Combined\
of Beneficial Owner              Stock Owned         Stock          Preferred Stock(1)        Vote(1)
-------------------              -----------        ------------    ------------------     ---------------

<S>                                <C>                 <C>                                        <C>
Daniel Durchslag                   250,000             1.3               ----                     1.3
9400 Brighton Way
Suite 402
Beverly Hills, CA 90210

Karen Nazzareno (5)                400,000             2.0                                        2.0
305 Madison Avenue
New York, NY 10165

Matthew L. Harriton              6,500,000            32.5                                       32.5
305 Madison Avenue
New York, NY  10165

Santo Petrocell i(2)             1,000,000             5.0               ----                     5.0
12-12 43rd Avenue
Long Island City, NY 11101

Startek Entertainment Corp.(3)   1,000,000             5.0               ----                     5.0
336 East Pleasant Grove Road
Jackson, NJ 08527

Advisor Shares(4)                1,500,000             7.5               ----                     7.5
Various

YBR (4)                          4,250,000            21.3               ----                    21.3
305 Madison Avenue
New York, NY  10165

All directors and officers       7,150,000            35.8               ----                    35.8
as a group (3 persons)

                                       36
<PAGE>

<FN>
(1)  Holders  of  preferred  stock are  entitled  to vote on all  matters of the
     Company  submitted  to a vote of  stockholders  with one share of preferred
     stock equalling the same voting rights as one share of common stock. Series
     A  Preferred  stock was retired  during the  current  year and the Series B
     Preferred Stock is treated as being converted to common

(2)  Santo  Petrocelli  is a  debtholder  of the Company  who was issued  10,000
     shares of Series B Preferred  stock,  which will be  converted to 1,000,000
     shares of common  stock,  in exchange  for $10,000 of debt due him from the
     Company.  This  exchange  was  required  under the  terms of an  investment
     banking  agreement  entered into in September  2004. The value of the stock
     issued  ($40,000)  was  recorded  as a  reduction  of debt in the amount of
     $10,000 and $30,000 was charged to  operations  for the  extinguishment  of
     this debt. See Item 12 "Certain Relationships and Transactions".

(3)  Startek Entertainment is a corporation that was granted 1,000,000 shares in
     April 2004 of Common Stock in connection  with an asset purchase  agreement
     with MAC. MAC was a party to a certain Share Exchange Agreement between the
     Company and YBR. See Item 12 "Certain Relationships and Transactions".  The
     value of the common shares  granted  ($30,000) was charged to operations in
     the prior year;  the shares were issued in December  2004. In January 2005,
     600,000 of these shares were  transferred  to  individual  shareholders  of
     Startek.

(4)  YBR and certain  advisors  were granted  4,250,000  and  1,500,000  shares,
     respectively, of Common Stock in connection with a Share Exchange Agreement
     with the Company. See Item 12 "Certain Relationships and Transactions". The
     value  of  the  common  shares  to be  issued  ($172,500)  was  charged  to
     operations in the prior year. In September 2004,  57,500 Series B Preferred
     shares were issued,  which will be converted to 5,750,000  shares of common
     stock to these parties.

(5)  Ms. Nazzareno, a former employee of the Company, was appointed Secretary in
     November 2004.
</FN>
</TABLE>

                                       37
<PAGE>

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     In June, 1998 the Company granted options to purchase 750,000 shares of the
Company's common stock to Matthew Harriton, President of the Company, options to
purchase  250,000  shares of common  stock to each of Andrew  Fabrikant  and Dr.
Daniel  Durchslag,  Directors  of the Company,  and options to purchase  400,000
shares of common stock to Karen Nazzareno,  an employee of the Company. All such
options were granted under the Company's  Incentive Stock Option Plan and at the
then market price of $.0938 per share.  Also, options to purchase 500,000 shares
which were previously granted to Matthew Harriton,  under the terms of his prior
employment agreement with the Company, were amended to change the exercise price
thereof to $.0938 per share and to allow for payment upon exercise,  in the same
manner as under the Incentive Stock Option Plan.

     The  above  options  were  exercised  in  June,  1998 and an  aggregate  of
2,150,000  shares of common  stock of the Company  were  issued.  Payment to the
Company of an  aggregate  amount of  $201,670  was made by  delivery by all such
persons to the Company of non-recourse  promissory notes, which were due on July
1, 2003,  with  interest  at 8% per annum and are  secured  by the common  stock
purchased.  On July 1, 2003, the notes were extended for an additional three (3)
year period under the same terms and conditions as the original notes.

     On September  1, 2001,  the Company  entered  into a sublease  with HDS for
office space on a month to month basis.  In May, 2004, the lease expired and the
Company  ceased  paying rent.  The Company has been able to remain in the office
space as the space is shared  with HDS and other  tenants and  Company's  use is
minimal.  The Company  believes that these  facilities  are adequate to meet its
current  needs  and  that  suitable  additional  or  alternative  space  will be
available as needed in the future on commercially reasonable terms.

     The Company holds the equivalent of approximately 4,837,500 shares or 4.44%
of Nesco  Industries,  Inc.  ("Nesco"),  a publicly traded company listed on the
Over The Counter  Bulletin  Board  Exchange (OTCC BB, Symbol NESK) Common Stock.
Nesco was engaged  primarily in asbestos  abatement  contracting  but had ceased
operations in 2003.

     The Company held a 10.3% minority  voting  investment  interest in Hydrogel
Design Systems,  Inc. ("HDS"), a privately held Delaware  corporation engaged in
the manufacturing, marketing, selling and distribution of hydrogel materials.

     On May 25, 2004,  Nesco,  HDS,  certain  stockholders  of Nesco and certain
stockholders  of HDS  completed  the  transactions  contemplated  by  the  Share
Exchange  Agreement,  dated as of April  29,  2004 (the  "Exchange  Agreement"),
whereby HDS became a majority  owned  subsidiary of Nesco and the holders of HDS
common stock and debt hold a majority interest of Nesco.

                                       38
<PAGE>

     The transactions contemplated by the Exchange Agreement are intended to be
a tax free exchange pursuant to Section 368 of the Internal Revenue Code of
1986.

     Nesco had  intended to issue shares of its common stock in exchange for the
equity  securities  of HDS in certain  ratios as  provided  for in the  Exchange
Agreement. However, because Nesco did not have the required number of authorized
shares of common  stock to complete  the  exchange  on this basis,  it agreed to
issue  shares of its  newly  designated  Series B  Preferred  Stock  ("Preferred
Stock") for,  among others,  equity and debt of HDS as described in the Exchange
Agreement.  Upon filing of the  Certificate  of Amendment to the  Certificate of
Incorporation  to increase  the number of shares of common  stock which Nesco is
authorized  to issue,  each share of the Preferred  Stock will be  automatically
converted into shares of Nesco Common Stock. The shares described as being owned
by Company reflect this conversion.

     The HDS  Shareholders  who  participated in the exchange  included  Matthew
Harriton,  the Chief Executive  Officer and a director of HDS, and the President
and a Director of Embryo.  Mr.  Harriton was the owner of 225,000  shares of HDS
Common Stock.

     As part of the  Exchange  Agreement,  Mr.  Harriton has joined the board of
directors of Nesco and has entered into an Employment  Agreement for a term of 3
years.

     Mr. Harriton was further granted an option to purchase  5,000,000 shares of
Nesco  Common at the  Applicable  Trading  Price (a defined term in the Exchange
Agreement) per share (the "Harriton Option"). The Harriton Option is exercisable
for a period of five (5) years  commencing  on the Closing  Date (the  "Exercise
Period") and is immediately  exercisable for the purchase of 2,000,000 shares of
Nesco  Common and  exercisable  as to an  additional  1,000,000  shares of Nesco
Common  commencing on each of the first,  second and third  anniversaries of the
Closing Date,  respectively,  provided that Harriton  remains a consultant to or
employee of Nesco or any subsidiary of Nesco,  but if Nesco  exercises its right
to terminate the  Employment  Agreement  with Harriton after the initial term of
that  agreement,  without  specifying  reasons for  termination  that constitute
grounds for termination for "cause" as defined in the Employment Agreement,  the
Harriton Option shall become immediately exercisable as to all 5,000,000 shares.
Following  termination of the Employment  Agreement for any reason, the Harriton
Option shall  thereafter  remain  exercisable  for the  balance,  if any, of the
Exercise  Period  for the same  number of shares of Nesco  Common  for which the
Harriton Option was exercisable  upon  termination of the Employment  Agreement,
subject to the provisions of the immediately preceding sentence.

                                       39
<PAGE>

     Pursuant to a Share Exchange Agreement,  as amended,  initially dated as of
the 10th day of April,  2004 (the "YBR  Agreement"),  by and among the  Company,
Yellow Brick Road Ventures LLC, a New Jersey limited liability company ( "YBR"),
and Music Asset Corp.,  a Delaware  corporation  ("MAC") that was at the time of
execution of the Agreement a wholly owned  subsidiary of YBR, the Company agreed
to acquire from YBR,  100% of the  outstanding  stock of MAC in exchange for the
issuance by the Company of  22,473,214.29  shares of the Company's common stock,
subject to YBR providing certain financing to the Company in connection with the
exploitation  of the assets of MAC, which,  subsequent to the transaction  would
have  become  a  wholly  owned  subsidiary  of  the  Company.  The  transactions
contemplated  by the  YBR  Agreement  are  intended  to be a  tax-free  exchange
pursuant to 368 of the Internal Revenue Code of 1986.

     The assets of MAC  included  the  non-exclusive  rights to  distribute  and
exploit a music  library of  approximately  9,000  recordings  pursuant  to that
certain Asset Purchase  Agreement (the "Startek  Agreement") made the 7th day of
April 2004 by and between Startek  Entertainment Corp., a New Jersey Corporation
("Startek"),  Joe Venneri who is also President of Startek  ("Venneri") and MAC.
The Startek Agreement  provides that a sale of all of the shares of stock of MAC
to a third party shall not affect the  enforceability  of this agreement subject
to satisfying certain obligations, which the Company met, including the issuance
of 1,000,000 shares of common stock of the Company to Startek.  The value of the
common  shares  granted  ($30,000)  was charged to  operations in the year ended
April 30, 2004. These shares were subsequently issued in December 2004.

     The Asset Purchase  Agreement  provided that the acquisition price was Four
Million Dollars ($4,000,000) (the "Purchase Price"), payable One Million Dollars
($1,000,000)  on the date of the  closing,  and the  balance  of  Three  Million
Dollars  ($3,000,000)  in the form of a Senior  Secured  Obligation  payable  as
twenty five percent (25%) of Distributable  Net Income as specifically  defined.
As a condition to the sale,  Mr.  Venneri  agreed to work for MAC and receive an
employment agreement, in connection therewith.  The Company was also required to
make a non-refundable  deposit of $25,000 to Startek, which was funded by a loan
from an unrelated third party.

     MAC also controlled rights in letter of intent being negotiated with Castle
Hill Films,  Dream LLC and certain other parties for the acquisition of a Motion
Picture Film Library. MAC represented in the YBR Agreement that it had disclosed
this Share Exchange  Agreement and that those parties have agreed to continue to
negotiate in good faith with the intention of proceeding  with the  acquisition.
At the time of execution of the Share  Exchange  Agreement,  the purchase  price
being  discussed  was at a multiple of seven times the  average  yearly  pre-tax
profits  from the library for the past 2 years.  The parties had  estimated  the
final purchase price would be between nine and ten million dollars.

     On September 21, 2004, this  transaction was unwound as YBR did not satisfy
its obligation to deliver the required  financing to the Company.  In connection
with this termination,  the Company  redelivered to YBR all shares of the common
stock of MAC and issued  57,500  shares of its Series B Preferred  Stock  which,
upon  conversion  to common  shares,will  aggregate  5,750,000  shares of common

                                       40
<PAGE>

stock;  4,250,000  shares  will be issued to YBR and  1,500,000  shares  will be
issued to advisors as part of the YBR Agreement.  The value of the common shares
to be issued  ($172,500)upon  conversion  of the  Series B  preferred  shares to
common was  charged to  operations  in the year ended  April 30,  2004.  The non
refundable  deposit in the amount of $25,000  was charged to  operations  in the
year ended April 30, 2004.

     On  September  9, 2004,  the Company  entered  into an  investment  banking
agreement  with  Sloan  Securities  Corp.  for an  initial  term of 180 days for
advisory services and to obtain bridge financing of up to $950,000 in connection
with an acquisition transaction. The Company received gross proceeds of $750,000
in  connection  with this  agreement.  This  bridge  financing  was  provided by
accredited investors, the terms of which were agreed upon by the Company and the
entities providing the financing.  On September 28, 2004, the Company, under the
terms of a secured  promissory  note,  made  advances  of $300,000 to a possible
acquisition  candidate,  AES Management Buyout Company, Inc. ("AMBO"). The note,
as amended,  bears  interest at 8% and was due on the earlier of (a) one year or
(b) on April 15,  2005 if a  definitive  agreement  between  the parties was not
entered into by March 15, 2005. On March 30, 2005,  the Company  terminated  its
efforts to complete a definitive  transaction  with AMBO due to the inability to
cure defaults on certain of its outstanding indebtedness owing to a third party.
On April 11, 2005, the Company agreed to extend the due date of the note to June
15, 2005 subject to the Company receiving a principal payment of $50,000,  which
was subsequently  received on April 19, 2005. This note is secured by the assets
of the borrower.  Accrued  interest  approximated  $13,000 at April 30, 2005. To
date,  the note has not been paid. At April 30, 2005, the amount due on the note
and accrued  interest in the  aggregate of $263,074 has been reserved for by the
Company as  collectibility is uncertain at this time. The Company incurred costs
of approximately  $86,000 in connection with this failed  acquisition which have
been expensed in the current fiscal year.

     As a condition of the investment  banking  agreement,  two creditors of the
Company  were  required  to reduce  the  obligations  of the  Company to them by
applying a portion of the Company's obligation to them to the purchase of common
stock of the Company. On September 30, 2004, an officer of the Company,  Matthew
Harriton,  President  and  Director,  under  the  terms of a  security  purchase
agreement,  exchanged $52,500 of funds due him for loans and accrued payroll for
5,250,000  shares of common stock. On September 30, 2004,  Santo  Petrocelli,  a
note  holder  of the  Company  in the  amount of  $30,000,  under the terms of a
security purchase agreement, exchanged $10,000 of the debt due him for 1,000,000
shares of common  stock.  In lieu of the above  issuance  of common  stock,  the
Company  agreed  to  issue  62,500  shares  of its  newly  designated  Series  B
Convertible  Preferred Stock. Upon filing of the Certificate of Amendment to the
Certificate  of  Incorporation  to increase the number of shares of common stock
which the Company is authorized to issue, each share of the Preferred Stock will
be  automatically  converted  into 100 shares of common stock.  The value of the
stock  issued  ($250,000)was  recorded  as a  reduction  of  liabilities  in the
aggregate  of  $62,500  and  $187,500   was  charged  to   operations   for  the
extinguishment  of this debt.

                                       41
<PAGE>

     On September  29, 2004,  the Company  received the first  tranche of bridge
financing in connection  with this  investment  banking  agreement.  The Company
received gross proceeds of $200,000 from Embryo Partners, LLC and entered into a
Note Purchase  Agreement  with this  investor.  Pursuant to the  agreement,  the
investor  purchased  from  the  Company  a  $200,000  one  year  8%  convertible
promissory  note.  The note shall convert on a mandatory  basis into  20,000,000
shares of common  stock if any time prior to maturity  the Company  consolidates
with,  or merges  into,  another  corporation  or entity,  or effects  any other
corporate  reorganization  resulting  in a change in  control.  The  lender  may
exercise a discretionary  conversion at any time prior to maturity. The value of
the beneficial  conversion  feature of the convertible debt was in excess of the
aggregate  proceeds  received  which  resulted in the total proceeds of $200,000
being  recorded as an equity  component.  For the year ended April 30, 2005, the
amortization of debt discount was approximately  $117,000. To date, the note has
not been converted.

     On November 23,  2004,  the Company  received the second  tranche of bridge
financing in connection  with this  investment  banking  agreement.  The Company
entered into a Securities  Purchase  Agreement  whereby the Company  offered for
sale up to $750,000  of its one year 8% senior  secured  convertible  promissory
notes.  The  purchasers  of the notes would also receive  five year  warrants to
purchase an aggregate of up to 750,000  shares of the Company's  common stock at
an exercise  price of $.10 per share (1 warrant for each $1 of principal  amount
of note). On November 24, 2004 the offering was completed and the Company issued
notes in the principal  amount of $550,000 to a series of  accredited  investors
and warrants to purchase 550,000 shares of common stock in connection with these
notes.  Approximately  $11,000 of the proceeds were attributed to the fair value
of the warrants. This amount was recorded as an equity component.  The remaining
balance of $539,000 was recorded as debt. For the year ended April 30,
2005 the amortization of debt discount was approximately  $5,000.  The notes are
convertible  into common stock on a mandatory basis if the Company  consolidates
with,  or merges  into,  another  corporation  or entity,  or effects  any other
corporate reorganization resulting in a change in control within six months from
the date of the notes,  or if any time prior to the  maturity  date the  Company
consummates a private equity financing or series of such financings in which the
Company  receives gross proceeds of at last $3 million at a pre-money  valuation
of at least $20 million. The notes shall convert at a per share price equal to a
25% discount to the per share price of the financing shares sold to investors in
the financing.  The lender may exercise a  discretionary  conversion  during the
last 120 days prior to the maturity  date of the notes at a conversion  price of
$.10 per share or at any time prior to  maturity if the  Company  consummates  a
financing but it is at a pre-money valuation of less than $20 million dollars at
a per share  price equal to a 25%  discount to the per share price of  financing
shares actually sold to investors in such financing. To date, the notes have not
been converted.

     On October 18, 2004, the Company  purchased all the  outstanding  shares of
Series A Preferred  Stock  (6,000,000  shares)  from the sole  shareholder  M.D.
Funding for an aggregate of $20,000. This stock has been retired.

                                       42
<PAGE>

     On April 22, 2005, the Company entered into an investment banking agreement
with Sloan  Securities  Corp.  for an initial term of 180 days to obtain  bridge
financing  of  $42,000,000  in  connection  with an asset  purchase  transaction
whereby the Company  would  acquire  the assets of a  nutriceutical  company and
negotiated  agreements to complete that transaction  which was to close no later
than May 25,  2005.  On June 6, 2005,  the Company  deposited  $100,000  into an
escrow  account as a good faith  deposit in order to extend the closing date for
the transaction  until June 10, 2005. A principal of Sloan  Securities Corp. has
personally  guaranteed  repayment to us of the payment into the escrow  deposit.
The  transaction  did not  close  by that  date  and the  $100,000  deposit  was
delivered  to  the  prospective  seller.  Management  is  still  in  discussions
regarding such transaction,  however at this time no binding letter of intent or
definitive agreement is in force. If such agreements are formalized, the Company
will disclose this  information in the  appropriate  filings.  At this time, the
Company has not made a demand under the personal  guarantee for reimbursement of
$100,000.


                                       42

<PAGE>

Item 13. EXHIBITS

3.01(A)    Certificate of Incorporation of the Company.

3.02(A)    By-Laws of the Company.

3.03(D)    Certificate of Designations of Series B Convertible Preferred Stock

3.04(D)    Amendment to Certificate of Designations of Series B Convertible
           Preferred Stock

4.1(E)     8% Senior Secured Convertible Promissory Notes - by
           and among the Company and accredited investors dated
           November 23, 2004.

4.2(E)     Warrant issued in conjunction with 8% Senior Secured Convertible
           Promissory Notes - by and among the Company and accredited investors
           dated November 23, 2004.

4.3       Stock Purchase Agreement by and between the Company and Matthew
          Harriton dated September 21, 2004.

4.4       Stock  Purchase  Agreement  by  and  between  the  Company  and  Santo
          Petrocelli dated September 21, 2004.

4.5       8% Convertible Promissory Notes - by and among the Company and Embryo
          Partners, LLC dated September 29, 2004.

10.01(A)  Asset Purchase Agreement by and between C.F. Electronics and the
          Company dated September 14, 1995.

10.02(B)  Equipment Financing Agreement by Becton Dickinson and Hydrogel Design
          Systems, Inc. dated January 24, 1997.

10.03(C)  Promissory Note between Sterling Foster Securities Litigation Fund
          and the Company dated June 26, 2001.

10.04     Secured Promissory Note between AES Management Buyout Company
          and the Company dated September 28, 2004.

                                       44

<PAGE>

10.05     Amendment #1 dated January 25, 2005 to the Secured Promissory Note
          between AES Management Buyout Company and the Company dated
          September 28, 2004.

10.06     Amendment #2 dated April 11, 2005 to the Secured Promissory Note
          between AES Management Buyout Company and the Company dated
          September 28, 2004.

31        Certification of Principal Executive and Financial Officer pursuant to
          Section 302 of the Sarbanes-Oxley Act of 2002

32        Certification of Principal Executive Officer and Financial Officer
          pursuant to to Section 906 of the Sarbanes-Oxley Act of 2002.

(A)       Incorporated by reference to the Company's Registration Statement on
          Form SB-2 No. 33-92366.

(B)       Incorporated by reference to the Company's Form 10QSB dated January
          31, 1997.

(C)       Incorporated by reference to the Company's Form 10KSB dated April
          30, 2001.

(D)       Incorporated by reference to the Company's Form 10QSB dated October
          31, 2004.

(E)       Incorporated by reference to the Company's Form 8-K filed on
          November 23, 2004.

                                       45

<PAGE>

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The  following  is a  summary  of the fees  billed  to the  Company  by its
independent accountants, Rothstein Kass & Company, P.C. applicable to the fiscal
years ended April 30, 2005 and April 30, 2004:

<TABLE>
<CAPTION>
  Fee Category                                   2005                 2004
  ------------                                   ----                 ----
<S>                                            <C>                  <C>
Audit fees                                     $30,200              $24,200

Audit-related fees                                -                     -

Tax fees                                          -                   2,500

All other fees                                    -                     -
                                              ---------             ---------
Total fees                                     $30,200              $26,700
                                              =========             =========
</TABLE>

Audit fees: Consists of fees for professional services rendered by our principal
accountants for the annual audit of the Company's  financial  statements and the
review of quarterly financial  statements or services that are normally provided
by our principal accountants in connection with statutory and regulatory filings
or engagements.

Audit-related  fees:  Consists of fees for assurance and related services by our
principal  accountants  that are  reasonably  related to the  performance of the
audit or review of the Company's financial statements and are not reported under
"Audit fees."

Tax fees:  Consists of fees for professional  services rendered by our principal
accountants for tax advice.

All other  fees:  Consists of fees for  products  and  services  provided by our
principal  accountants,  other than the services  reported  under "Audit  fees,"
"Audit-related fees" and "Tax fees" above.


                                       46
<PAGE>

                                    SIGNATURE

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.

Dated:  New York, New York
        August 13, 2005
                                 EMBRYO DEVELOPMENT CORPORATION

                                 By:   /s/ Matthew L. Harriton
                                      Matthew L. Harriton
                                     Chief Executive Officer, Chief Financial
                                     Officer Principal Accounting Officer and
                                     Director

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  or  Amendments  thereto  has been  signed  below by the
following persons in the capacities and on the dates indicated.

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


/s/ Matthew L. Harriton       Chief Executive Officer,      August 13, 2005
Matthew L. Harriton           Chief Financial Officer,
                              Principal Accounting
                              Officer and Director

 /s/ Daniel Durchslag         Director                      August 13, 2005
Daniel Durchslag

                                       47
<PAGE>


                         EMBRYO DEVELOPMENT CORPORATION
                              FINANCIAL STATEMENTS





Report of Independent Registered Public Accounting Firm                   F-1

Balance sheet                                                             F-2

Statements of operations                                                  F-3

Statements of stockholders' deficit                                       F-4

Statements of cash flows                                              F-5-F-6

Notes to financial statements                                        F-7-F-17



                                       48

                                       1
<PAGE>



             Report of Independent Registered Public Accounting Firm


To the Board of Directors and Stockholders of
   Embryo Development Corporation
   New York, New York


     We have  audited  the  accompanying  balance  sheet of  Embryo  Development
Corporation  as of April 30, 2005,  and the related  statements  of  operations,
stockholders'  deficit,  and cash  flows for each of the  years in the  two-year
period ended April 30, 2005. These financial  statements are the  responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these financial statements based on our audits.

     We  conducted  our audit in  accordance  with the  standards  of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  The  Company is not
required  to have,  nor were we engaged  to  perform,  an audit of its  internal
control over financial reporting.  Our audit included  consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the  circumstances,  but not for the purpose of expressing an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  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  Embryo  Development
Corporation as of April 30, 2005, and the results of its operations and its cash
flows for each of the years in the  two-year  period  ended April 30,  2005,  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  discussed  in  Note 1 to the
financial statements,  the Company's ability to continue in the normal course of
business is  dependent  upon the success of future  operations.  The Company has
significant  cumulative  losses  and a  working  capital  deficit  and  has  not
generated  any  revenue in the last two fiscal  years  ended  April 30, 2005 and
April 30, 2004.  These conditions  raise  substantial  doubt about the Company's
ability to continue  as a going  concern.  Management's  plans  regarding  those
matters are also described in Note 1. These financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

                                   /s/ Rothstein, Kass & Company, P.C.


Roseland, New Jersey
July 15, 2005

                                      F-1

<PAGE>

                         EMBRYO DEVELOPMENT CORPORATION

                       BALANCE SHEET AS OF APRIL 30, 2005


<TABLE>
<CAPTION>
Assets:
Current Assets:
<S>                                                                       <C>

  Cash                                                                    $     135,647
                                                                          -------------
   Total Current Assets                                                         135,647
                                                                          -------------
Property and Equipment -  Net of Accumulated Depreciation of $40,149              1,223
                                                                          -------------
Investment in Unconsolidated Investee - At Cost                                  39,026
                                                                          -------------
Other Assets
  Deferred Financing Costs                                                       59,831
   Deferred Asset Acquisition Costs                                              37,545
                                                                          -------------
      Total Other Assets                                                         97,376
                                                                          -------------
  Total Assets                                                            $     273,272
                                                                          =============
Liabilities and Stockholders' Deficit:
Current Liabilities:
  Accounts Payable and Accrued Expenses                                   $     251,601
   Notes and Interest Payable                                                   115,177
   Convertible Bridge Loans and Interest Payable, net of Debt
     Discount of $89,298                                                        689,480
                                                                          -------------
  Total Current Liabilities                                                   1,056,258
                                                                          -------------
Commitments and Contingencies

Stockholders' Deficit:
  Preferred Stock, $.0001 Par Value; Total Authorized 15,000,000
   Shares, 6,000,000 Series A,  3,000,000 Series B;
     120,000 Series B issued and outstanding, Liquidation Preference $4,800         12
  Common Stock, $.0001 Par Value, Authorized 30,000,000
   Shares; 7,995,000 Issued and  Outstanding                                       800
  Additional Paid-in-Capital                                                10,634,773
  Accumulated Deficit                                                      (11,418,571)
                                                                          -------------
  Total Stockholders' Deficit                                                 (782,986)
                                                                          -------------
  Total Liabilities and Stockholders' Deficit                             $    273,272
                                                                          =============
</TABLE>


                                 F-2

                See Accompanying Notes to Finiancial Statements
<PAGE>

                         EMBRYO DEVELOPMENT CORPORATION

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                           Years ended
                                                            April 30,
                                                  2 0 0 5               2 0 0 4
                                                  -------               -------


General, Selling and Administrative              $ 124,559             $146,232
                                                ----------            ----------
<S>                                              <C>                    <C>
(Income) expenses:
  Interest Income - Related Party                     -                 (11,256)
  Interest and Other                                21,747                5,584
  Amortization of Debt Discount                    121,220                -
  Amortization of Financing Costs                   53,452                -
  Loss on Extinguishment of Debt                   187,500                -
  Gain on Forgiveness of Debt - Royalty           (354,000)               -
  Reserve for Collectibility of
      Promissory Notes and Interest                   -                 295,819
  Reserve for Collectibility of Loan Receivable
      from Failed Merger Candidate                 263,074                -
  Adjustment for Collectibility of Amount Due
   from Unconsolidated Investee                       -                 (34,633)
   Costs of Failed Merger                           86,482              227,500
                                                ----------            ----------

 Total (income) expenses                          379,475              483,014
                                                ----------            ----------
    Net Loss                                    $ (504,034)           $(629,246)
                                                ==========            ==========

  Basic and Diluted Net Loss Per Common
     Share                                      $     (.03)          $     (.09)
                                                ==========            ==========
  Weighted Average Number of Common
       Shares Used in Computing Basic and
       Diluted Loss Per Common Share            14,636,096            7,058,014
                                                ==========            ==========
</TABLE>

                                 F-3
         See Accompanying Notes to Financial Statements.

<PAGE>

                                              EMBRYO DEVELOPMENT CORPORATION

                                           STATEMENTS OF STOCKHOLDERS' DEFICIT


<TABLE>
<CAPTION>
                                                  Series A         Series B     Additional                 Notes and      Total
                                Common Stock   Preferred Stock  Preferred Stock  Paid-in     Accumulated   Interest    Stockholders'
                              Shares  Amount   Shares   Amount  Shares   Amount  Capital     Deficit       Receivable     Deficit
                              ------  ------   ------   ------- ------   ------ -----------  ------------  ----------  ------------

<S>                          <C>       <C>     <C>        <C>    <C>       <C>  <C>        <C>              <C>          <C>
Balance-April 30, 2003       6,995,000 $700    6,000,000  $600     --       --  $9,991,267 $(10,285,291)    $(279,685)   $(572,409)

Interest on Notes Receivable                                                                                  (16,134)     (16,134)

Reserve for Notes Receivable                                                                                  295,819      295,819

Net Loss                                                                                                     (629,246)    (629,246)
-----------------------------------------------------------------------------------------------------------------------------------
Balance - April 30, 2004     6,995,000  700    6,000,000   600     --       --   9,991,267  (10,914,537)         --       (921,970)

Repurchase and Retirement
 of Series A Preferred                        (6,000,000) (600)                    (19,400)                               ( 20,000)

Shares issued in connection
 with Share Exchange
 Agreement and Termination
 of Agreement                1,000,000  100                      57,500    $ 6     202,394                                 202,500

Exchange of Debt for Equity                                      62,500      6     249,994                                 250,000

Beneficial Conversion Feature
 of Convertible Bridge Loan                                                        200,000                                 200,000

Issuance of Warrants in
 connection with Convertible
 Bridge Loan                                                                        10,518                                  10,518

Net Loss                                                                                       (504,034)                  (504,034)
-----------------------------------------------------------------------------------------------------------------------------------
Balance - April 30, 2005     7,995,000   $ 800     --    $--   120,000     $12 $10,634,773 $(11,418,571)      $   --      $(782,986)
                             =========   =====    ===    ===   =======     === =========== =============      =======     =========

</TABLE>

                                                                         F-4
                                See Accompanying Notes to Financial Statements.

<PAGE>


                         EMBRYO DEVELOPMENT CORPORATION

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                Years ended
                                                                 April 30,
                                                       2 0 0 5               2 0 0 4
                                                       -------               -------
<S>                                                   <C>                   <C>
Operating Activities:
   Net Loss                                           $(504,034)            $(629,246)
  Adjustments to Reconcile Net Loss to Net
   Cash Used in Operating Activities:
   Depreciation                                           1,311                 1,634
      Amortization of Debt Discount                     121,220                  --
      Amortization of Financing Costs                    53,452                  --
      Loss on Extinguishment of Debt                    187,500                  --
      Gain on Forgiveness of Debt - Royalty            (354,000)                 --
      Costs of Failed Merger                                                  227,500
   Adjustment for Collectibility of Amount Due from
      Unconsolidated Investee                                                 (34,633)
   Reserve for Collectibility of Promissory Notes
      and Interest                                                            295,819
   Reserve for Collectibility of Loan Receivable,
     (including Accrued Interest)
     from Failed Merger Candidate                       263,074                  --
 Changes in Assets and Liabilities:
   [Increase] Decrease:
   Interest Receivable                                  (13,074)              (16,134)
   Prepaid Expenses and Other Current Assets               --                  11,361
 Increase [Decrease]:
   Accounts Payable and Accrued Expenses                 61,056                79,286
   Royalty Payable                                      (25,000)                 --
                                                      ---------              ---------
      Net Cash used in Operating Activities            (208,495)              (64,413)
                                                      ---------              ---------
Investing Activities:
   Loan Receivable - Merger candidate                  (300,000)                 --
   Repayment of Loan - Merger candidate                  50,000                  --
   Repayment of Loans from Unconsolidated Investee       14,876                54,391
   Deferred Asset Acquisition Costs                     (37,545)                 --
   Payment of Acquisition Deposit                          --                 (25,000)
                                                      ---------              ---------
     Net Cash provided by (used in)
     Investing Activities                              (272,669)               29,391
                                                      ---------              ---------
Financing Activities:
   Net proceeds from convertible bridge loans           636,717                  --
   Purchase and Retirement of Series A
     Preferred Stock                                    (20,000)                 --
  Proceeds from Loan from Officer                                               5,000
   Proceeds from Note Payable - Acquisition                --                  30,000
                                                      ---------              ---------
     Net Cash provided by Financing Activities          616,717                35,000
                                                      ---------              ---------
Net Increase [Decrease] in Cash and Cash
   Equivalents                                          135,553                   (22)

Cash and Cash Equivalents - Beginning of Period              94                   116
                                                      ---------              ---------
Cash and Cash Equivalents - End of Period             $ 135,647               $    94
                                                      =========              =========

                                       F-5

                See Accompanying Notes to Financial Statements.


<PAGE>

                         EMBRYO DEVELOPMENT CORPORATION

                      STATEMENTS OF CASH FLOWS (Continued)


                                                                Years ended
                                                                 April 30,
                                                       2 0 0 5               2 0 0 4
                                                       -------               -------


Supplemental disclosure of non-cash investing
     and financing activities:
   Stock issued in connection with Share Exchange
     Agreement and Termination of Agreement          $  202,500            $
                                                      =========              =========
   Stock issued in exchange for debt and payroll     $   62,500            $    --
                                                      =========              =========
   Warrants issued and embedded conversion
     feature associated with convertible bridge
     loans                                           $  210,518            $    --
                                                      =========              =========
Cash paid for Interest - Net of Capitalized Interest $                     $     1,872
                                                      =========              =========
</TABLE>


                                       F-6
                See Accompanying Notes to Financial Statements.


<PAGE>

                         EMBRYO DEVELOPMENT CORPORATION
                         NOTES TO FINANCIAL STATEMENTS


[1] Organization and Nature of Operations

Embryo Development  Corporation [the "Company"] is a Delaware  Corporation which
was  formed  in  1995  to  develop,  acquire,  manufacture  and  market  various
bio-medical devices throughout the United States.

To date,  the  Company  has  generated  minimal  sales and  devoted  its efforts
primarily to various organizational activities, including negotiating of license
agreements  inclusive  of the  Self-Shielding  Needle,  developing  its business
strategy, hiring management personnel, raising capital through an initial public
offering  which was  completed in November  1995,  and  undertaking  preliminary
activities for the commencement of operations. All of the license agreements for
the  development of various  medical  devices,  inclusive of the  Self-Sheilding
Needle, have effectively been terminated and the Company has determined that the
remaining  assets it had purchased  relating to medical  products have no viable
marketability.  As a result,  management has  determined  that the Company is no
longer in the development stage.

In January 1997,  the Company  acquired a majority  interest in Hydrogel  Design
Systems,  Inc. ["HDS"] which was a consolidated  subsidiary of the Company until
January 21, 1998. On that date, the Company's ownership of HDS dropped to 45.6%,
and the investment  was accounted for under the equity method.  In January 1999,
the Company's  share of HDS dropped to 14.4% and was presented on the cost basis
from  then  on.  HDS is  engaged  in the  manufacture,  marketing,  selling  and
distribution   of  hydrogel,   an  aqueous   polymer-based   radiation   ionized
medical/consumer  product.  At April 30,  2004,  the  Company  held 11.4% of the
common  stock of HDS and 10.3% of total  voting  shares of HDS. On May 25, 2004,
Nesco Industries,  Inc. ("Nesco"),  a publicly traded company listed on the Over
The Counter  Bulletin  Board  Exchange  (OTCC BB,  Symbol  NESK),  HDS,  certain
stockholders of Nesco and certain stockholders of HDS completed the transactions
contemplated  by the Share Exchange  Agreement,  dated as of April 29, 2004 (the
"Exchange  Agreement"),  whereby HDS became a majority owned subsidiary of Nesco
and the holders of HDS common stock and debt hold a majority interest of Nesco.

In  addition to the  exchange  of HDS common  stock and debt for shares of Nesco
common stock ("Nesco Common Stock"),  Nesco disposed of all of its subsidiaries,
converted all of its  currently  outstanding  preferred  stock and warrants into
common stock and exchanged certain of its indebtedness into common stock.

Nesco had  intended  to issue  shares of its common  stock in  exchange  for the
equity  securities  of HDS in certain  ratios as  provided  for in the  Exchange
Agreement. However, because Nesco did not have the required number of authorized
shares of common  stock to complete  the  exchange  on this basis,  it agreed to
issue  shares of its  newly  designated  Series B  Preferred  Stock  ("Preferred
Stock") for,  among others,  equity and debt of HDS as described in the Exchange
Agreement.  Upon filing of the  Certificate  of Amendment to the  Certificate of
Incorporation  to increase  the number of shares of common  stock which Nesco is
authorized  to issue,  each share of the Preferred  Stock will be  automatically
converted into shares of Nesco Common Stock.

As a result of the Company  exchanging the HDS shares it owned for Nesco shares,
the Company now holds the equivalent of approximately  4,837,500 shares or 4.44%
of Nesco  Common  Stock as of April 30,  2005.  Nesco was engaged  primarily  in
asbestos abatement contracting but had ceased operations in 2003.

                                      F-7


<PAGE>

                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #2

[1] Organization and Nature of Operations [Continued]

Management had entered into a Share Exchange Agreement in April 2004 with Yellow
Brick Road Ventures,  LLC (see Note 6). On September 21, 2004, this  transaction
was  terminated  as the party  involved in the  transaction  did not deliver the
financing to the Company as required by that agreement. The Company is presently
exploring several  alternatives,  inclusive of the possible acquisition of a new
line of business,  which may or may not be related to the development of medical
devices.

On September 9, 2004, the Company entered into an investment  banking  agreement
for an initial term of 180 days with a third party to obtain bridge financing of
up to $950,000 in connection  with an acquisition  transaction  (see Notes 5 and
8). The Company  received gross proceeds of $750,000  ($636,717 net of financing
costs) in  connection  with this  agreement.  The Company  made  advances in the
aggregate  of  $300,000  to a  possible  merger  candidate  under the terms of a
secured  promissory  note dated  September  28,  2004 (see Note 3). On March 30,
2005, the Company  terminated  its efforts to complete a definitive  transaction
with this  party due to the  inability  of the  candidate  to cure  defaults  on
certain of its outstanding indebtedness owing to a third party.

On April 22, 2005, the Company entered into an investment  banking agreement for
an initial  term of 180 days with a third party to obtain  bridge  financing  of
$42,000,000 in connection with an asset purchase transaction whereby the Company
would acquire the assets of a nutriceutical company and negotiated agreements to
complete that  transaction (see Note 5) which was to close no later than May 25,
2005. On June 6, 2005, the Company deposited  $100,000 into an escrow account as
a good faith  deposit in order to extend the  closing  date for the  transaction
until June 10, 2005. A principal of the  investment  banking firm has personally
guaranteed  repayment to us of the escrow deposit. The transaction did not close
by that date and the $100,000  deposit was delivered to the prospective  seller.
Management is still in discussions  regarding such transaction,  however at this
time no binding letter of intent or definitive  agreement has been made. If such
agreements  are  formalized,  the Company will disclose this  information in the
appropriate  filings.  The  Company  has not made a demand  under  the  personal
guarantee at this time for reimbursement of the escrow deposit.

The  accompanying  financial  statements  have been prepared in conformity  with
accounting principles generally accepted in the United States of America,  which
contemplate  continuation  of the  Company as a going  concern.  The Company has
incurred cumulative losses of approximately  $11,419,000,  has a working capital
deficit of approximately  $921,000,  and utilized cash of approximately $208,000
for operating  activities  for the year ended April 30, 2005, all of which raise
substantial doubt about its ability to continue as a going concern. In addition,
the Company  has not  generated  any revenue in the last two fiscal  years ended
April 30, 2005 and April 30, 2004.  Management  recognizes that the Company must
generate revenue to achieve profitable  operations and to meet current operating
costs.  Management  anticipates  that to meet these needs will  require  raising
additional  funds  from  either  the debt or  equity  markets.  The  Company  is
presently exploring several alternatives,  as described above,  inclusive of the
possible acquisition of a new line of business,  which may or may not be related
to the development of medical devices.

                                F-8
<PAGE>


                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #3

[1] Organization and Nature of Operations [Continued]

On December 12, 2003,  the Company  received a letter from the SEC's Division of
Investment  Management  inquiring as to the possible status of the Company as an
unregistered  "investment  company" within the meaning of the Investment Company
Act of 1940 ("40 Act"). The Company responded to this letter on January 28, 2004
explaining that the Company may have  inadvertently and temporarily  fallen into
the SEC's  definition  of an investment  company  because of the lack of success
with  a  licensing  agreements  program  that  resulted  in  a  disproportionate
percentage  of assets being  represented  by ownership in another  company.  The
Company's  response continued that by August 31, 2004, it intended to enter into
some form of  reorganization  with a private company or re- configure its assets
to remove itself from the definition of an investment company under the '40 Act.
The share  exchange  agreement  with  Yellow  Brick  Road LLC  described  in the
Company's  10-KSB  filed on August  13,  2004,  was  intended  to  satisfy  this
commitment.  That transaction was not successful and was terminated in September
2004. The Company advised the SEC on September 1, 2004 that it will continue its
efforts  to achieve a  reconfiguration  of its assets or enter into some from of
re-organization by December 31, 2004. The Company had entered into an investment
banking  agreement (see Note 5) and was in discussions  with a merger  candidate
(see Note 3) in order to resolve this issue. This effort was terminated on March
30, 2005.  The Company is presently in  discussions  with a party in  connection
with an asset  acquisition and entered into an investment  banking  agreement on
April 22, 2005 in connection with this transaction.  The Company cannot give any
assurance  that it will be successful  but believes it will resolve the issue in
the near future. However, a determination by the SEC that the Company is in fact
an unregistered  investment  company could have a material adverse effect on the
Company's business.

In the event the Company is unable to satisfy  its  capital  needs or settle its
current obligations to pursue an acquisition,  management may pursue the sale of
some or all of the Company's assets or seek additional financing.  At this time,
the primary asset is the  Company's  equity  position in Nesco.  As of April 30,
2005, the Company held the equivalent of 4,837,500  shares of Nesco common stock
representing 4.44% of the outstanding equity securities of Nesco. Although these
shares may be sold one year from the  exchange  date (after May 25,  2005),  the
Company does not have actual common  shares at this time; as noted above,  Nesco
issued Series B Preferred shares which will be automatically converted to common
shares at such time that  authorization  is received to issue these  shares.  In
addition,  these shares are not  registered  and the trading volume of the Nesco
stock is minimal. Due to these factors, both the number of shares which could be
sold  and the  amount  which  could  be  realized  from a sale  are not  readily
determinable at this time.

No assurance can be made as to the success of an  acquisition  transaction or as
to  the  success  of  the  Company's  future  course  of  operations  which  are
undetermined at this time. The accompanying  financial statements do not include
any adjustments  that might be necessary if the Company is unable to continue as
a going concern.

[2] Summary of Significant Accounting Policies

Depreciation  and  Amortization  - Depreciation  is computed  principally by the
straight-line  method over the  estimated  useful  lives of the related  assets.
Amortization of licensed  technology is computed using the straight-line  method
over the estimated useful life of the related technology [7 years].

The Company provides for depreciation for office equipment and fixtures over 3-7
years, the estimated useful lives.

Depreciation  expense for the years  ended  April 30, 2005 and 2004  amounted to
$1,311 and $1,634, respectively.

                                F-9
<PAGE>
                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #4

[2] Summary of Significant Accounting Policies [Continued]

Concentrations of Credit Risk - Financial  instruments which potentially subject
the  Company to  concentrations  of credit  risk are cash and  receivables  from
related parties.  The Company routinely  assesses the financial  strength of any
potential  customers and third party payors.  The Company  maintains its cash in
bank deposit  accounts which at times may exceed federally  insured limits.  The
Company  does not require  collateral  or other  security  to support  financial
instruments subject to credit risk.

Income  Taxes - Deferred  tax assets and  liabilities  are  determined  based on
differences  between  the  financial  reporting  and tax  bases  of  assets  and
liabilities,  and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Valuation allowances are
established,  when  necessary,  to reduce the deferred  income tax assets to the
amount expected to be realized.

Research and Development  Costs - Research and development costs are expensed as
incurred.

Use of Estimates - The  preparation of financial  statements in conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

Impairment  - Certain  long-term  assets of the  Company  are  reviewed at least
quarterly to determine  whether  there are  indications  the carrying  value has
become  impaired,  pursuant to guidance  established  in  Statement of Financial
Accounting  Standards  ["SFAS"]  No.  144,  "Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets."  Management  considers assets to be impaired if
the  carrying  value  exceeds  the future  projected  cash  flows  from  related
operations  [undiscounted and without interest charges]. If impairment is deemed
to exist,  the  assets  will be  written  down to fair  value.  Management  also
reevaluates the periods of amortization to determine  whether  subsequent events
and circumstances warrant revised estimates of useful lives.

Earnings  Per  Share - The  Financial  Accounting  Standards  Board  has  issued
Statement of Financial  Accounting  Standards  ["SFAS"] No. 128,  "Earnings  per
Share," which  requires a dual  presentation  of basic and diluted  earnings per
share on the face of the statement of operations  for all companies with complex
capital  structures.  Diluted earnings per share reflects the amount of earnings
for the period  available to each share of common stock  outstanding  during the
reporting  period,  while giving effect to all dilutive  potential common shares
that were outstanding during the period, such as common shares that could result
from the potential exercise or conversion of securities into common stock.

The  computation  of diluted  earnings  per share  does not  assume  conversion,
exercise,  or contingent  issuance of securities that would have an antidilutive
effect on earnings  per share (i.e.,  increasing  earnings per share or reducing
loss per share).  The dilutive  effect of  outstanding  options and warrants and
their   equivalents  are  reflected  in  dilutive  earnings  per  share  by  the
application  of the treasury  stock method which  recognizes the use of proceeds
that could be  obtained  upon  exercise of options  and  warrants  in  computing
diluted  earnings  per share.  It  assumes  that any  proceeds  would be used to
purchase  common stock at the average  market  price during the period.  Diluted
loss per common share is the same as basic loss per common share for all periods
presented.  Options  and  warrants  will have a  dilutive  effect  only when the
average  market price of the common stock during the period exceeds the exercise
price of the options or warrants. At April 30, 2005, the weighted average number
of common  shares  outstanding  gives effect to the current  outstanding  common
shares in the  aggregate  of  7,995,000  shares and  120,000  shares of Series B
Preferred which will be automatically converted into 12,000,000 common shares at
such  time  that the  Company  increases  the  number  of  common  shares  it is
authorized to issue.  At April 30, 2004,  the weighted  average number of common
shares  outstanding  gives effect to the 1,000,000  shares of common stock to be
issued in connection with a Share Exchange Agreement but does not give effect to
the  5,750,000  shares  to be issued  upon  termination  of the  Share  Exchange
Agreement (see Notes 5 and 6).

                                F-10
<PAGE>
                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #5

[2] Summary of Significant Accounting Policies [Continued]

Fair Value of Financial  Instruments The fair value of the Company's  assets and
liabilities which qualify as financial  instruments under Statement of Financial
Accounting  Standards  ("SFAS")  No.  107  approximate  their  carrying  amounts
presented in the balance sheet at April 30, 2005.

Stock-Based  Compensation  - In  December  2002,  the FASB  issued SFAS No. 148,
"Accounting for  Stock-Based  Compensation - Transition and  Disclosure,"  which
amended SFAS No. 123, "Accounting for Stock-Based  Compensation." This Statement
provides  alternative  methods of transition for a voluntary  change to the fair
value based method of accounting for  stock-based  compensation.  It also amends
the disclosure  provision to require more prominent disclosure about the effects
on reported net income (loss) of an entity's  accounting  policy  decisions with
respect to stock-based employee compensation. As permitted by the Statement, the
Company does not plan to adopt the fair value recognition provisions of SFAS No.
123 at this time. However, the Company has adopted the disclosure  provisions of
the Statement as of December 31, 2002.

The Company  accounts  for its  stock-based  employee  compensation  plans under
Accounting Principles Board Opinion No. 25, under which no compensation cost has
been recognized in the accompanying statements of operations, as no options were
granted in the respective  periods. As of April 30, 2005 and 2004, there were no
stock options or warrants outstanding under stock-based compensation plans.

New Accounting Pronouncements - In December 2004, the FASB issued SFAS No. 123R,
"Share- Based Payment." SFAS No. 123R is a revision of SFAS No. 123, "Accounting
for Stock Based Compensation," and supersedes APB Opinion No. 25 ("APB No. 25").
Among other items, SFAS No. 123R eliminates the use of APB No. 25 and the
intrinsic value method of accounting, and requires companies to recognize the
cost of employee services received in exchange for awards of equity instruments,
based on the grant date fair value of those awards, in the financial statements.
The effective date of SFAS No. 123R for the Company is the first quarter of
2006. SFAS No. 123R permits companies to adopt its requirements using either a
"modified prospective" method, or a "modified retrospective" method. Under the
"modified prospective" method, compensation cost is recognized in the financial
statements beginning with the effective date, based on the requirements of SFAS
No. 123R for all share-based payments granted after that date, and based on the
requirements of SFAS No. 123 for all unvested awards granted prior to the
effective date of SFAS No. 123R. Under the "modified retrospective" method, the
requirements are the same as under the "modified prospective" method, but also
permits entities to restate financial statements of previous periods, either for
all prior periods presented or to the beginning of the fiscal year in which the
statement is adopted, based on previous pro forma disclosures made in accordance
with SFAS No. 123. The Company has not yet determined which of the methods it
will use upon adoption.

The Company currently utilizes the Black-Scholes option pricing model to measure
the fair value of stock  options  granted  to  employees.  While  SFAS No.  123R
permits  entities to continue to use such a model,  it also permits the use of a
"lattice" model. The Company expects to continue using the Black- Scholes option
pricing  model upon adoption of SFAS No. 123R to measure the fair value of stock
options.

The adoption of this statement will have the effect of reducing net income and
income per share as compared to what would be reported under the current
requirements. These future amounts cannot be precisely estimated because they
depend on, among other things, the number of options issued in the future, and
accordingly, the Company has not determined the impact of adoption of this
statement on its results of operations.

                               F-11
<PAGE>
                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #6


[3] Loan Receivable - Failed Merger Candidate

On September  28, 2004,  the  Company,  under the terms of a secured  promissory
note, made advances of $300,000 to a possible acquisition  candidate.  The note,
as amended,  bears  interest at 8% and was due on the earlier of (a) one year or
(b) on April 15,  2005 if a  definitive  agreement  between  the parties was not
entered into by March 15, 2005. On March 30, 2005,  the Company  terminated  its
efforts  to  complete  a  definitive  transaction  with  this  party  due to the
inability  of the  candidate  to cure  defaults  on certain  of its  outstanding
indebtedness  owing to a third party.  On April 11, 2005,  the Company agreed to
extend  the  due  date of the  note to June  15,  2005  subject  to the  Company
receiving a principal  payment of $50,000,  which was  subsequently  received on
April 19,  2005.  This note is secured by the  assets of the  borrower.  Accrued
interest  approximated $13,000 at April 30, 2005. To date, the note has not been
paid. At April 30, 2005, the amount due on the note and accrued  interest in the
aggregate of $263,074 has been reserved for by the Company as  collectibility is
uncertain at this time.

[4] Investment in HDS and Nesco

As of April 30, 2004, the Company held  approximately  11.4% of the common stock
of HDS and 10.3% of total voting shares. This investment was accounted for using
the cost method.  Pursuant to the share exchange agreement  described in Note 1,
the Company now holds the equivalent of approximately  4,837,500 shares or 4.44%
of  Nesco  Common  Stock.   This  investment  has  been  valued  at  cost  which
approximated  $39,000  as there is no  readily  determinable  fair value for the
shares at this time.

[5] Investment Banking Agreements

On September 9, 2004, the Company entered into an investment  banking  agreement
for an initial term of 180 days for advisory  services  and  assistance  with an
acquisition  transaction.  Under the terms of the agreement,  as amended, bridge
financing  would be provided to the Company of up to $950,000,  in two tranches.
This bridge financing was provided by accredited  investors,  the terms of which
were agreed upon by the Company and the entities  providing the  financing  (see
Note 8). On March 30,  2005,  the Company  terminated  its efforts to complete a
definitive  acquisition  transaction  due  to  the  inability  of  the  targeted
candidate to cure defaults on certain of its outstanding indebtedness owing to a
third party. The Company  incurred costs of approximately  $86,000 in connection
with this failed  acquisition  which have been  expensed  in the current  fiscal
year.

As a condition of the  agreement,  two creditors of the Company were required to
reduce  the  obligations  of the  Company  to them by  applying a portion of the
Company's  obligation to them to the purchase of common stock of the Company. On
September  30, 2004,  an officer of the  Company,  under the terms of a security
purchase  agreement,  exchanged  $52,500 of funds due him for loans and  accrued
payroll for  5,250,000  shares of common  stock.  On September  30, 2004, a note
holder of the  Company in the amount of  $30,000,  under the terms of a security
purchase  agreement,  exchanged $10,000 of the debt due him for 1,000,000 shares
of common  stock.  In lieu of the above  issuance of common  stock,  the Company
agreed  to issue  62,500  shares of its newly  designated  Series B  Convertible
Preferred Stock.  Upon filing of the Certificate of Amendment to the Certificate
of  Incorporation  to  increase  the number of shares of common  stock which the
Company  is  authorized  to issue,  each  share of the  Preferred  Stock will be
automatically  converted into 100 shares of common stock. The value of the stock
issued ($250,000)was  recorded as a reduction of liabilities in the aggregate of
$62,500 and $187,500 was charged to expense for the extinguishment of this debt.

On April 22, 2005, the Company entered into an investment  banking agreement for
an initial  term of 180 days with a third party to obtain  bridge  financing  of
$42,000,000 in connection with an asset purchase transaction whereby the Company

                                      F-12
<PAGE>

                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #7


[5] Investment Banking Agreements [Continued]

would acquire the assets of a nutriceutical company and negotiated agreements to
complete that  transaction (see Note 5) which was to close no later than May 25,
2005. On June 6, 2005, the Company deposited  $100,000 into an escrow account as
a good faith  deposit in order to extend the  closing  date for the  transaction
until June 10, 2005. A principal of the  investment  banking firm has personally
guaranteed  repayment to us of the escrow deposit. The transaction did not close
by that date and the $100,000  deposit was delivered to the prospective  seller.
Management is still in discussions  regarding such transaction,  however at this
time no binding letter of intent or definitive  agreement has been made. If such
agreements  are  formalized,  the Company will disclose this  information in the
appropriate  filings.  The  Company  has not made a demand  under  the  personal
guarantee at this time for reimbursement of the escrow deposit.

[6] Share Exchange Agreement

Pursuant to a Share Exchange  Agreement,  as amended,  initially dated as of the
10th day of April, 2004 (the "YBR Agreement"),  by and among the Company, Yellow
Brick Road Ventures LLC, a New Jersey limited  liability  company ( "YBR"),  and
Music  Asset  Corp.,  a  Delaware  corporation  ("MAC")  that was at the time of
execution of the Agreement a wholly owned  subsidiary of YBR, the Company agreed
to acquire from YBR,  100% of the  outstanding  stock of MAC in exchange for the
issuance by the Company of  22,473,214.29  shares of the Company's common stock,
subject to YBR providing certain financing to the Company in connection with the
exploitation  of the assets of MAC, which,  subsequent to the transaction  would
have become a wholly owned subsidiary of the Company.

The assets of MAC included the non-exclusive  rights to distribute and exploit a
music library of approximately  9,000 recordings  pursuant to that certain Asset
Purchase  Agreement (the "Startek  Agreement") made the 7th day of April 2004 by
and between Startek  Entertainment Corp., a New Jersey Corporation  ("Startek"),
Joe Venneri who is also  President of Startek  ("Venneri")  and MAC. The Startek
Agreement  provides  that a sale of all of the shares of stock of MAC to a third
party  shall  not  affect  the  enforceability  of  this  agreement  subject  to
satisfying certain obligations, which the Company met, including the issuance of
1,000,000  shares of common  stock of the Company to  Startek.  The value of the
common  shares  granted  ($30,000)  was charged to  operations in the year ended
April 30, 2004. These shares were subsequently issued in December 2004.

The Startek  Agreement  provided  that the  acquisition  price was Four  Million
Dollars  ($4,000,000)  (the  "Purchase  Price"),  payable  One  Million  Dollars
($1,000,000)  on the date of the  closing,  and the  balance  of  Three  Million
Dollars  ($3,000,000)  in the form of a Senior  Secured  Obligation  payable  as
twenty five percent (25%) of Distributable  Net Income as specifically  defined.
As a condition to the sale,  Mr.  Venneri  agreed to work for MAC and receive an
employment agreement, in connection therewith.  The Company was also required to
make a non-refundable  deposit of $25,000 to Startek, which was funded by a loan
from an unrelated third party. In addition, an officer of the Company loaned the
Company $5,000 in connection with  additional fees related to this  transaction.
These loans are  payable on demand and are  non-interest  bearing.  At April 30,
2005,  $10,000  of this  debt  was  converted  to  equity  (See  Note 5) and the
remaining  $20,000  is  included  on the  balance  sheet in notes  and  interest
payable.

On September 21, 2004,  this  transaction  was terminated as YBR did not satisfy
its obligation to deliver the required  financing to the Company.  In connection
with this termination,  the Company  redelivered to YBR all shares of the common
stock of MAC and issued  57,500  shares of its Series B Preferred  Stock  which,
upon  conversion  to common  shares,will  aggregate  5,750,000  shares of common
stock;  4,250,000  shares  will be issued to YBR and  1,500,000  shares  will be
issued to advisors as part of the YBR Agreement.  The value of the common shares
to be issued  ($172,500)upon  conversion  of the  Series B  preferred  shares to
common was  charged to  operations  in the year ended  April 30,  2004.  The non
refundable  deposit in the amount of $25,000  was charged to  operations  in the
year ended April 30, 2004.

                               F-13

<PAGE>
                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #8


[7] License Agreement

Under the terms of an amended  licensing  agreement  entered into on January 22,
1999,  pertaining  to the  manufacture  and marketing of a medical  device,  the
self-shielding  needle, the Company agreed to pay the licensor a maximum royalty
of $450,000  which was to be paid at a rate of $2,500 per month.  The  aggregate
royalty was charged to  operations  in the year ended April 30, 1999. On January
22, 2001, this license agreement effectively terminated as the Company could not
obtain the necessary government approval within the required timeframe since the
Company  had  halted  development  of the  device  due to  capital  constraints.
Additionally,  the Company  could not pay the licensor  the required  additional
$250,000 to extend the regulatory approval requirement. The Company had not been
able to make the royalty payment due to cash flow  deficiencies.  On October 21,
2004, the remaining  unpaid  balance of $379,000,  which was included in current
liabilities,  was settled in full with the licensor for an aggregate  payment of
$25,000.  The remaining $354,000 has been recorded as forgiveness of debt in the
year ended April 30, 2005.

[8] Convertible Bridge Loans

On  September  29,  2004,  the  Company  received  the first  tranche  of bridge
financing in connection with an investment  banking  agreement (see Note 5). The
Company  received  gross  proceeds of $200,000 and entered into a Note  Purchase
Agreement with an investor.  Pursuant to the agreement,  the investor  purchased
from the Company a $200,000 one year 8%  convertible  promissory  note. The note
shall convert on a mandatory basis into 20,000,000 shares of common stock if any
time prior to maturity the Company  consolidates  with, or merges into,  another
corporation or entity, or effects any other corporate  reorganization  resulting
in a change in control.  The lender may exercise a  discretionary  conversion at
any time prior to maturity.  The value of the beneficial  conversion  feature of
the  convertible  debt was in excess of the aggregate  proceeds  received  which
resulted  in  the  total  proceeds  of  $200,000  being  recorded  as an  equity
component.  For the year ended April 30, 2005, the amortization of debt discount
was approximately $117,000.  Interest expenses for the year ended April 30, 2005
was approximately $9,000. At April 30, 2005, the note had not been converted.

On  November  23,  2004,  the  Company  received  the  second  tranche of bridge
financing in connection with the investment  banking agreement (see Note 5). The
Company entered into a Securities Purchase Agreement whereby the Company offered
for sale up to $750,000 of its one year 8% senior secured convertible promissory
notes.  The  purchasers  of the notes would also receive  five year  warrants to
purchase an aggregate of up to 750,000  shares of the Company's  common stock at
an exercise  price of $.10 per share (1 warrant for each $1 of principal  amount
of note). On November 24, 2004 the offering was completed and the Company issued
notes in the  principal  amount of $550,000  and  warrants  to purchase  550,000
shares of common stock in connection with these notes.  Approximately $11,000 of
the proceeds were attributed to the fair value of the warrants.  This amount was
recorded as an equity component.  The remaining balance of $539,000 was recorded
as debt. For the year ended April 30, 2005 the amortization of debt discount was
approximately $5,000. The notes are convertible into common stock on a mandatory
basis if the Company  consolidates with, or merges into, another  corporation or
entity, or effects any other corporate  reorganization  resulting in a change in
control  within six months  from the date of the notes,  or if any time prior to
the maturity date the Company  consummates a private equity  financing or series
of such  financings in which the Company  receives  gross proceeds of at last $3
million  at a  pre-money  valuation  of at least $20  million.  The notes  shall
convert at a per share price  equal to a 25%  discount to the per share price of
the financing shares sold to investors in the financing. The lender may exercise
a discretionary  conversion  during the last 120 days prior to the maturity date
of the notes at a  conversion  price of $.10 per  share or at any time  prior to
maturity  if the  Company  consummates  a  financing  but  it is at a  pre-money
valuation  of less than $20 million  dollars at a per share price equal to a 25%
discount to the per share price of financing  shares  actually sold to investors
in such  financing.  Interest  expense  for the year  ended  April 30,  2005 was
approximately $19,000. At April 30, 2005, the notes had not been converted.

The Company paid approximately  $113,000 in financing fees associated with these
transactions  which are being amortized over the life of the loans. For the year
ended April 30 2005, amortization approximated $53,000.

                                      F-14
<PAGE>
                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #9

[9] Note Payable

In conjunction  with a June 2001 litigation  settlement,  the Company recorded a
long-term  note payable in the amount of $75,000  which was due on June 26, 2003
and bears  interest at 7% per year.  The note was not paid when due. The balance
due on the note  with  accrued  interest  of  $95,177  is  included  in  current
liabilities. No default has been declared on the note.

[10] Stockholders' Deficit

[A]  Capitalization  -  The  Company's  authorized  capitalization  consists  of
30,000,000  shares of common stock and 15,000,000 shares of preferred stock. All
stock has a $.0001 par value. Each share of common and preferred has one vote in
all matters.

In March, 1995, the Company designated 6,000,000 shares of Preferred Stock to be
Series A Preferred Stock. In the event of any liquidation, holders of the issued
and outstanding  shares of Preferred Series A Stock will be entitled to receive,
prior to any  distribution  to the holders of common stock,  the sum of $.10 per
share.

On April 7, 2004, the Company designated  3,000,000 shares of Preferred Stock to
be Series B  Convertible  stock.  The  shares are  convertible  at 100 shares of
common for each  share of  Preferred  B stock.  The  shares  have a  liquidation
preference of $.04 and are  automatically  convertible to common upon the filing
of a Certificate of Amendment to the  Certificate of  Incorporation  to increase
the number of shares of common stock which the Company is  authorized  to issue.
The Company issued 120,000 shares of Series B stock in the quarter ended October
31, 2004,  which are  convertible  into  12,000,000  shares of common stock (see
Notes 5 and 6).

[B] Issuance of Securities - On June 17, 1998,  the Company issued  options,  to
three  (3)  directors  and an  employee,  to  purchase  1,650,000  shares of the
Company's  common  stock at an exercise  price equal to the market  price on the
date of the  grant  ($.0938)  under the  Incentive  Stock  Option  Plan (See [E]
below).  In addition,  an aggregate of 500,000  options which were granted to an
officer under the terms of a prior employment  agreement were amended to have an
exercise price of ($.0938), the market price on the date of the amendment. These
options were exercised in June 1998 for an aggregate of 2,150,000 shares.

The  Company  received  promissory  notes  dated  July 1,  1998  from  three (3)
directors  and an  employee  in the  aggregate  of  $201,670  for payment of the
shares.  The  notes  were to  mature  in five (5)  years on July 1,  2003,  with
interest  at 8%, and were  secured by the related  securities.  On July 1, 2003,
these promissory notes were extended for an additional three (3) year term under
the same terms as the  original  notes.  The Company has set up a reserve in the
aggregate of approximately  $312,000 for the principal and interest due on these
notes as their collectibility is uncertain at this time.

In April  2004,  the Company was  required to issue  1,000,000  shares of common
stock in connection  with a Share Exchange  Agreement (See Note 6). The value of
the common stock  granted  ($30,000) was charged to operations in the year ended
April 30, 2004. These shares were issued in December 2004.

[C] Repurchase and Retirement of Series Preferred A Stock - On October 18, 2004,
the Company  purchased all the  outstanding  shares of Series A Preferred  Stock
(6,000,000  shares) from the sole  shareholder  M.D. Funding for an aggregate of
$20,000. This stock has been retired.

                               F-15
<PAGE>
                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #10


[10] Stockholders' Deficit - [Continued]

[D] Stock  Option  Plans - The Company has adopted a  Non-Qualified  Option Plan
[the "Plan"] covering  2,000,000 shares of common stock of the Company.  Options
under the Plan are granted at terms set by the Board of Directors at the time of
issuance.

The Company has also adopted an Incentive Option and Stock  Appreciation  Rights
Plan [the "Incentive  Option Plan"] covering  2,000,000  shares of the Company's
common  stock.  Incentive  stock  options  under the  Incentive  Option Plan are
granted at an exercise  price [not less than the fair market  value] at the date
of grant.  Non-qualified  options and freestanding stock appreciation rights may
also be granted  with any  exercise  price.  As of April 30,  2005 and April 30,
2004, there are no outstanding options under this plan.

[E]  Net  Loss  Per  Share - Basic  loss  per  share  excludes  dilution  and is
calculated by dividing the net loss  attributable to common  shareholders by the
weighted  average number of common shares  outstanding  for the period.  Diluted
loss per share reflects the potential dilution that could occur if securities or
other  contracts to issue common stock were  exercised or converted  into common
stock and resulted in the issuance of common stock. Because the Company incurred
a net loss,  diluted net loss per share was the same as basic net loss per share
for the years ended April 30, 2005 and 2004, since the effect of any potentially
dilutive securities would be antidilutive.

At April 30, 2005,  the weighted  average  number of common  shares  outstanding
gives  effect to the  current  outstanding  common  shares in the  aggregate  of
7,995,000  shares  and  120,000  shares  of  Series B  Preferred  which  will be
automatically  converted  into  12,000,000  common  shares at such time that the
Company  increases the number of common  shares it is  authorized  to issue.  At
April 30, 2004, the weighted average number of common shares  outstanding  gives
effect to the 1,000,000 shares of common stock to be issued in connection with a
Share Exchange  Agreement but does not give effect to the 5,750,000 shares to be
issued upon termination of the Share Exchange Agreement (see Notes 5 and 6).


[F] Reserved Shares - Common shares reserved at April 30, 2005 are as follows:

<TABLE>
<S>                                            <C>
Incentive Stock Option Plan                      350,000
Non-Qualified Stock Option Plan                2,000,000
                                               ---------
 Total                                         2,350,000
 -----                                         =========
</TABLE>
[11] Commitments and Contingencies

[A] Litigation - In June 2001,  definitive settlement documents were executed in
connection  with  a  consolidated  class  action  in  which  the  Company  was a
defendant. The settlement documents provided that the Company would pay $100,000
by  remitting to the class  representatives  $25,000 and a note in the amount of
$75,000  payable in June 2003 with interest  thereon at 7% per year. The Company
had remitted the funds and note described above to the class  representatives to
be held by them in  accordance  with the terms of the  settlement  agreement and
pending  final  court  review of the  settlement.  In December  2002,  the court
approved  the  settlement.  The note was not paid when due.  No default has been
declared on the note (See Note 9).

B] Operating  Leases - On September 1, 2001, the Company entered into a sublease
with  HDS for  office  space on a month to month  basis,  which  provides  for a
monthly lease payment of $2,000. In November, 2003, the monthly rent was reduced
to $300 per month.  In May 2004,  the lease  expired  and the Company has ceased
payment of rent.

Aggregate  rent  expense was $-0- and $13,800 for the years ended April 30, 2005
and 2004, respectively.

                                      F-16
<PAGE>
                         EMBRYO DEVELOPMENT CORPORATION
                    NOTES TO FINANCIAL STATEMENTS, Sheet #11



[12] Income Taxes

Income  taxes have been  recorded  under SFAS No.  109,  "Accounting  for Income
Taxes."  Deferred  income  taxes  reflect the net tax  effects of (a)  temporary
differences between the carrying amounts of assets and liabilities for financial
reporting  purposes  and the  amounts  used for  income  tax  purposes,  and (b)
operating loss  carryforwards.  The tax effects of significant  items comprising
the Company's net deferred tax asset as of April 30, 2005 are as follows:


Deferred Tax Assets:
  Net Operating Loss Carryforward                             $3,064,000
   Tax Basis of Intangible Assets in Excess of Book Basis         83,000
  Additional Reserves                                            125,000
                                                              ----------
  Total                                                       $3,272,000
                                                              ==========
Deferred Tax Asset                                             3,272,000
Valuation Allowance                                           (3,272,000)
                                                              ----------
  Net Deferred Tax Asset                                      $        -
  ----------------------                                      ==========

The valuation  allowance of  $3,272,000  represents an increase of $220,000 over
the preceding year. Net operating loss carryforwards of approximately $7,781,000
expire beginning in 2011.


A reconciliation between the statutory federal income tax rate and the effective
rate of income tax expense for the years ended April 30, 2005 and 2004 follows:
<TABLE>
<CAPTION>
                                                    2 0 0 5         2 0 0 4
                                                    -------         -------
<S>                                                 <C>             <C>
Statutory Federal Income Tax Rate                   (34) %          (34) %
State Income Taxes, net of Federal Effect            (6) %          ( 6) %
Valuation Allowance and Other                        40  %           40  %
                                                    ------          ------
Effective Income Tax Rate                            --             --
-------------------------                           ======          ======
</TABLE>


[13] Stock Warrants
For the year ended April 30, 2005, warrant activity is as follows:
<TABLE>
<CAPTION>
Exercise Price      Type of    Warrants    Balance           Warrants        Balance
 Per Share            Stock    Expiring    May 1, 2004       Granted    April 30, 2005

   <S>              <C>        <C>             <C>           <C>              <C>
   .10              Common     11/23/09        -0-           550,000          550,000
                                         --------------------------------------------
                                               -0-           550,000          550,000
                                         ============================================
</TABLE>
All warrants outstanding at April 30, 2005 are exercisable.

                                      F-17