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, 2003

               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 July 16, 2003, was approximately $25,475.

     Number of shares outstanding of the issuers common stock, as of July 16,
2003, was 6,995,000.

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

                            PART I
                           --------
Item 1.  BUSINESS.
         ---------
     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").  The Marks Medical Devices included  a self-shielding needle,
adjustable blood pressure cuff, a multi-function fluid communication control
system and  stereoscopic fluoroscopy apparatus.  On August 21, 1998 the
Company  notified Dr. Marks that it was terminating the License  agreements
with respect to six (6) of the devices as it could not make the minimum
payments  required under the agreements; these devices included the
adjustable blood pressure cuff, a multi-function fluid communication control
system and  stereoscopic fluoroscopy apparatus.    The minimum payment
obligations with respect to the self-shielding needle were made in accordance
with the terms of the original agreement and that License Agreement was
retained and later amended as to the minimum payment obligations on January
22, 1999.   In January, 2001, the license agreement for the seventh
device, the self-shielding needle, effectively terminated as the Company
could not obtain the necessary government approval within the required
twenty-four (24) month timeframe in the amended license agreement 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.

     The termination of  the above  license agreements follows a determination
by management to conserve capital and that the seven 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.  Two (2) of the devices,
the Hot-Sack IITM and Hot-Sack II+TM, are used in connection with the warming of
                                     2
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peritoneal dialysis solution.  Four (4) of the devices, Hot-Sack(R),
Res-Q-Air(R), Therm-O-Drug(TM) and an electronic stethoscope, are devices used
for emergency rescue operations and by other emergency medical technicians.
Three of the devices (Hot-Sack(R), Res-Q-Air(R) and Therm-O-Drug(TM) have
received all necessary regulatory approval under the "510(k) review" process
of the U.S. Food and Drug Administration (" FDA")  and the Company believes
that the additional two (2) products (Hot-Sack II(R) and Hot-Sack II+(TM) are
covered by the FDA's approval of Hot-Sack(R) or would independently qualify
for 510(k) approval.  The Company has received minimal sales revenues from
such product sales. In October, 1999, the Company ceased sales on these
medical products due to the relatively low level of sales, capital constraints
and price increases by the manufacturer.  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.

     The Company also holds a 10.3% minority voting investment interest in
Hydrogel Design Systems, Inc. ("HDS"), a privately held company engaged in the
manufacturing, marketing, selling and distribution of hydrogel materials.
HDS was partially financed through a long-term note and security agreement
between HDS and Becton Dickinson Transdermal Systems, a division of Becton
Dickinson and Company, a customer of HDS and a manufacturer and distributor
of medical devices and diagnostic systems.  See "Certain Transactions."

     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.

     The Company believes that HDS's proprietary mixing and beam operation
technology allow it to make superior quality products at competitive prices. HDS
currently provides product to several Fortune 500 companies, as well as
other, smaller companies. These customers are using  the HDS hydrogel for
wound dressings, transdermal drug delivery systems and electrodes.

      HDS  operates in leased space  in Langhorne, PA. The facility became
operational in the fourth quarter of calendar year 1997.

                                  3
<Page>

     Hydrogel and other electron beam accelerator processed products are being
marketed both through internal contacts with a few world-wide health
distributors and through its own internal sales force.

          The Company is presently exploring several 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.

Sales and Marketing
-------------------
     The Company had marketed its medical devices  through independent
distributors worldwide.  In October, 1999, the Company ceased sales on these
medical products due to the relatively low level of sales, capital
constraints and price increases by the manufacturer.

     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.

     Management also believes, although there can be no assurance, that the
Company will be able to obtain satisfactory sources of manufacturing supply
for its products should manufacturing operations be restarted on any of its
existing products.

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.

                                    4
<Page>

Government Regulation
---------------------
     The majority of the Company's medical  products, which are presently not
being manufactured,  are subject to regulation by, among other governmental
entities, the United States Food and Drug Administration ("FDA") and, to a
lesser extent, correspondent state agencies.  If a device is subject to FDA
regulation, compliance with its requirements usually constitutes compliance
with state regulation. In order to ensure that medical products distributed for
human use in the United States are safe and effective, the FDA regulates the
introduction, manufacture, advertising, labeling, packaging, marketing and
distribution of and record-keeping for such products.

     Development of medical products in the future may require the Company to
comply with FDA regulations and be subject to various other FDA record-keeping
requirements and  inspections by the FDA.  The Company believes that the
manufacturing and quality control procedures it will follow  will meet the
requirements of these regulations.  The FDA would have the authority, in
addition to less drastic remedies, to order the Company to cease production
of its products and to request that the Company recall products already sold
by the Company.  The FDA may conduct periodic inspections of the Company's
facilities in order to confirm regulatory compliance by the Company.  If the
FDA believes that its regulations and other guidelines have not been followed,
it may seek to implement extensive enforcement powers, which were
strengthened by the enactment of the Safe Medical Devices Act of 1990.  The
FDA's powers include the ability to ban products from the market, prohibit
the operation of manufacturing facilities and effect recalls of products from
customer locations and impose monetary civil penalties.

      Three (3) of the Company's  medical devices that have been approved by the
FDA for commercial sale  under a review process known as "510(k) review" and
the Company believes that an additional two (2) products (Hot-Sack II(TM) and
Hot-Sack II+(TM) are covered by the FDA's approval of Hot Sack(R) or would
qualify independently for 510(k) approval.  In the 510(k) review process, a
manufacturer is mandated to demonstrate that a proposed product is
"substantially equivalent" to another product that was in commercial
distribution in the United States before May 26, 1976, in which event the
review process can take anywhere from three months to more than one year
before FDA grants clearance of the 510(k) pre-market notification.  In cases
where there is no existing FDA-approved product "substantially equivalent" to
the new proposed product, the product is considered a "new" product.  The new
product requires a Pre-Market Application ("PMA") which is a lengthier and
more burdensome process and a process which will require FDA approval prior
to the product entering commercial distribution. On May 26, 1998 the Company
completed its 510(k) notification for its Self-Shielding Needle and submitted it
to the FDA. On June 22,1998 the Company received a request for additional
information from the FDA regarding the 510(k) submission.  On July 13, 1998
the Company responded to the FDA's request.  Subsequently, the Company was

                                    5
<Page>

notified by the FDA that its application was rejected due primarily to
deficiencies in clinical studies and bench test data.  The Company made design
changes to the Self-Shielding Needle and performed a new clinical study.  A new
510(k) submission was completed on October 16, 1998.  On October 26, 1998,
the Company was notified by the FDA that the device is considered a class III
and requires a premarket approval application (PMA).  The Company   halted plans
to complete the development of the Self-Shielding Needle due to capital
constraints.  In January, 2001, the license agreement for the  self-shielding
needle, effectively terminated, as the Company could not obtain the necessary
government approval within the required twenty-four (24) month timeframe in
the  license agreement.  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.

     After clearance is given, the FDA has the power to withdraw the clearance
or require the Company to change the device or its manufacturing process or
labeling, to supply additional proof of its safety and effectiveness or to
recall, repair, replace or refund the cost of the medical device if it is
shown to be hazardous or defective.  The process of obtaining clearance to
market products is costly and time consuming and can delay the marketing and
sale of any of  the Company's products which may be developed in the future.

     There is no required government regulation on hydrogel related products at
this time. While hydrogels fall under the jurisdiction of the FDA, the
hydrogels HDS manufactures are exempt from the FDA approval and/or pre-market
notification requirements (this would include 510K, NDA and PMA submission).
With respect to registering the manufacturing facility with the FDA under the
Code of Federal Regulations, 21CFR820.1, Scope: Part A, it is stated that the
regulation does not apply to manufacturers of component parts of finished
devices.  At the current time, hydrogel is sold as a component part to
various medical device/cosmetic manufacturers.  If at any time in the future
the Company manufactures products which would require such filings or
registration, HDS will take the appropriate steps to comply.

Health Care Industry
---------------------
     Legislation and regulations at both the federal and state levels may be
enacted which may change the methods by which health care providers, including
hospitals, physicians and home care dealers, are reimbursed for costs of
providing services to Medicare and Medicaid program beneficiaries.  Changes
may also be made by third-party payors in coverage policies for various items.

                                      6
<Page>


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.  There can be no assurance that future pending patent
applications will be approved or that any patents will provide competitive
advantages for the Company's products or will not be challenged or
circumvented by competitors.  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(R) and on
SmartMed(TM) 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.

     There are no patents related to the hydrogel products.  HDS holds a
registered trademark on Aquamatrix(TM) which is used on its hydrogels.

Product Liability Insurance
----------------------------
     Companies in the health care market are subject to lawsuits alleging
negligence, product liability and other legal theories, many of which involve
large claims and significant defense costs.  The Company could be subject to
claims alleging personal injuries resulting from the use of its products.
The Company has obtained product liability insurance since it has commenced
sales of its products.  However, there can be no assurance that such policies
will be sufficient to cover potential claims or the costs of any resulting
litigation or that a policy can be maintained in force at an acceptable cost
to the Company.  A successful claim against the Company in excess of the
Company's insurance coverage could have a material adverse effect upon the
Company's business and results of operations.  In addition, claims against
the Company, regardless of their merit or eventual outcome, also may have a
material adverse effect upon the Company's reputation.  The Company currently
has product liability coverage of $1,000,000 and a $9,000,000 excess liability
policy.

                                    7
<Page>

Employees
----------
     As of July 17, 2003, the Company employed one (1) full time 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.

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.  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."

     In addition, in February 1997, the Company leased a 16,500 square foot
facility in Langhorne, PA.  The lease was for a term of seven years with an
annual rent of $116,000 which was to increase to $119,000 per annum over the
term of the lease. The entire facility was  subleased to HDS for the
full rental amount through April 30, 1999.  On May 1, 1999, the amount of the
sublease to HDS was reduced to approximately 82% pro-rata share as the
Company began to utilize a portion of the premises.  In October, 1999, the
Company ceased use of this space and increased the amount of the sublease to
the full rental amount.  In February, 2000, the annual rent was increased to
$123,000 as per the escalation clause in the lease.  On January 25, 2002, the
Company entered into an Assignment and Amended and Restated Lease Agreement
with HDS, the existing sub-tenant of the premises leased by the Company at
2150 Cabot Blvd. West, Langhorne, PA.  By such agreement, HDS accepted an
assignment of the Lease from the Company.  Also, on such date, the building in
which the leasehold premises are contained was purchased by 2150 Cabot, LLC, a
related party of the Company.  Subsequent to the lease assignment, the
Landlord of the premises and the Company conducted discussions respecting an
outright release of the Company from contingent or other obligations of the
Company to the Landlord including, but not limited to, the obligation of the
Tenant to restore the leasehold premises to its original condition upon
expiration of the Lease.  The Landlord granted a general  release to the
Company from any and all contingent or other obligations under the Lease in
exchange for a release of any claim for a return of its security deposit in the
amount of $79,625.  This forfeiture of the deposit was charged to operations
in the year ended April 30, 2002.  Management determined, based on estimates,
that the actual cost that would be incurred to restore the premises to its
condition as existed prior to the Lease between the former Landlord and
the Company would exceed the amount of the deposit.

                                 8
<Page>


Item 3.  LEGAL PROCEEDINGS.
        -------------------
     The Company has 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 assert 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 is 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 seeks 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 $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.  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. In December 2002, the court approved the
settlement.

                                 9
<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.


                                10
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PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON
         EQUITY AND RELATED STOCKHOLDER MATTERS.
         ---------------------------------------
     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, 2003 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.

Common Stock
------------                           Quoted Bid Price
                                        High      Low
                                       ------    ------
          2001 Calendar Year
          ------------------
          First Quarter                1/16          .00
          Second Quarter               1/16          .05
          Third Quarter                .05           .03
          Fourth Quarter               .03           .02

          2002 Calendar Year
          ------------------
          First Quarter                .02           .01
          Second Quarter               .02           .00
          Third Quarter                .03           .00
          Fourth Quarter               .01           .00

          2003 Calendar Year
          ------------------
          First Quarter                .01           .00
          Second Quarter               .01           .00

                                   11
<Page>


     On July 16, 2003, the closing price of the Common Stock as reported on the
OTC-Bullletin Board  was $.005  On August 9,  2002, there were 664  holders of
record of common stock.

                                  12
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Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
         ----------------------------------------------
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  $(10,285,000)
cumulative to April 30, 2003.  At April 30, 2003, the Company has a net
working capital deficit  of approximately  $(359,000)  and a stockholders'
deficit of approximately $(572,000) , 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.

     The Company's statement of cash flows for the year ended April 30, 2003
reflects cash used in operating activities of approximately $188,000. This
use of cash is primarily attributable to general and administrative expenses
consisting of salaries, rent, insurance and other general expenses . The
repayment of the HDS credit line of approximately $187,000 was used to fund
current operations.

     The Company expects to incur additional expenditures over the next six (6)
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 to retain the
CEO whose function is to explore and evaluate future potential financial
opportunities for the Company.  The Company's management does not believe
that the Company's cash on hand will be sufficient to fund the Company's
operations for the next six (6) months. However, management continues to
believe that the outstanding amount due from HDS, which was due September 30,
2002, of approximately $69,000 will be repaid during the next (6) months.
Management believes that collection of this receivable will fund the Company for
approximately (6) months.  During the year ended April 30, 2003,  HDS repaid
approximately $187,000 of the outstanding receivable balance to the Company
and has continued to make additional payments subsequent to April 30, 2003.
In addition, the Company's management has set up a reserve of approximately
$34,000 or approximately 50% of the outstanding balance at April 30, 2003,
based upon anticipated probable collectibility of the balance. Within the next
six (6) months, the Company will seek alternative methods  to begin generating
sufficient revenues to support operations subsequent to this period.  These
alternatives include : (a) the potential licensing or distribution or new
products or product lines, both within the medical industry and outside the
medical arena; and (b) the acquisition of an operating entity or entities
(subject to the Company's ability to raise sufficient capital to complete
such an acquisition).

                                      13

<Page>

     In the event the Company is unable to satisfy its capital needs through one
of the transactions described above, management will pursue the sale of some or
all of the Company's assets.  At this time, the primary asset is the
Company's equity position in Hydrogel Design Systems, Inc.  As of April 30,
2003, the Company held 537,500 shares of HDS common stock representing 10.3%
of the outstanding equity securities of HDS.

     Management is in discussions with several entities regarding such
transactions, however at this time no letter of intent or definitive agreement
has been made.  If such agreements are formalized the Company will disclose
this information in the appropriate filings.

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 majority owned manufacturer of gel related products.  HDS
was a majority subsidiary in which the Company presently owns a 10.3% voting
share.

       At April 30, 2003, 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 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 $10,285,000 through
April 30, 2003.  The Company is attempting to reduce operating losses
through reductions in operating expenses until such time as it can generate,
or raise additional capital for future operations.

                                    14
<Page>

     The net loss for the year  ended April 30, 2003 was approximately ($85,000)
as compared to a net loss of approximately ($184,000) for the year ended April
30, 2002.  There were no revenues in either of the two periods.  The
reduction in the loss of approximately  $99,000 for the year ended April 30,
2003 as compared to the year ended April 30, 2002 is primarily attributable to a
reduction in overhead costs of approximately $64,000 in the current year
consisting primarily of reductions in salaries, rent and insurance and a
one-time forfeiture of a security deposit of $80,000 in the prior year offset
by a reduction in interest income from HDS of approximately $11,000 as a
result of the repayments on the revolver and the gain on sale of HDS stock in
the prior period of approximately $23,000.

Plan of Operation
------------------
      The Company has effectively terminated all of its license agreements as of
April 30, 2003.  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 retained a 10.3% investment, in its nonconsolidated
affiliate HDS, which is accounted for under the cost method commencing
January 31, 1999.  The manufacturing facility of HDS became fully operational
in late 1997.  The Company anticipates that the future operations of HDS
could allow HDS to repay its obligations to the Company in the future.

     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 presently exploring several alternatives, inclusive of a
possible acquisition of a new line of business, which may or may not be
related to the development of medical devices or the potential licensing or
distribution of new products or product lines both within the medical
industry and outside of the medical arena.  Management anticipates that to
meet current operating costs  would require raising additional funds from
either the debt or equity markets in the next six (6) months.  Alternatively,
the Company may need to consider liquidating its investment in HDS to meet its
cash requirements. No assurances can be made as to the success of these  capital
raising alternatives.

                                15
<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


                                16
<Page>


                              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             39        President, Chief Executive
                                             Officer, Chief Financial
                                             Officer  and Director

   Dr. Daniel Durchslag            58        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., in which the Company has a 10.3% minority
voting interest, since October 1996. 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.

                               17
<Page>


     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.

                                 18
<Page>

Item 10.  EXECUTIVE COMPENSATION
          ----------------------
<TABLE>
<CAPTION>
                         SUMMARY COMPENSATION TABLE
                         --------------------------
                                                                     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(#)    ($)    ($)
---------------------------  ----  ---------   --------  ---------------  ----------  --------- ------- ------------

                          <c>    <c>        <c>             <c>           <c>           <c>     <c>     <c>
Matthew L. Harriton, CEO     2003   $60,000    $   -0-         0             ---           0       0       0
                             2002   $60,000    $   -0-         0             ---           0       0       0
                             2001   $60,000    $   -0-         0             ---           0       0       0
____________________
</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
----------------   --------------------     --------------------   -------------  -----------

                            <c>                  <c>                <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
----------------  ---------------      ------------- --------------------  --------------

                      <c>               <c>            <c>               <c>
Matthew Harriton         0                 $ 0            -0-0-             -0-/-0-

</TABLE>

                                      19
<Page>



Employment Agreements
---------------------
     On January 1, 1997 the Company entered into a two (2) year employment
agreement with Matthew L. Harriton which provides for a base salary of
$90,000 for the first year and $100,000 for the second year, with provisions
for a discretionary bonus.  The agreement also provides for the issuance to
Mr. Harriton of options to purchase 100,000 shares of the Company's Common Stock
at ($.65) per share. In September 1997, the Company amended the January 1, 1997
employment agreement.  The agreement, as amended, provides for annual
compensation of $60,000 effective January 1, 1998.  Mr. Harriton was also
granted options to purchase an additional 400,000 shares of the Company's
common stock at an exercise price equal to the market price on the date of the
amendment ($0.59) exercisable for a period of four (4) years.   In June 1998,
the options to purchase the aggregate of 500,000 shares of the Company's common
stock were repriced to an exercise price equal to the market price in June of
1998 of $.0938.

     In January 1999, the Company renewed this employment agreement for an
additional two years.  The agreement provides for annual compensation of $60,000
effective January 1, 1999.  Mr. Harriton was also granted rights to purchase
200,000 shares of HDS common stock from the Company at a price of $1.00 per
share for a period of two (2) years.  In January 2001, 2002, and 2003 this
agreement was extended for successive (1) year terms under the same terms and
conditions of the original agreement.  On June 26, 2001, Mr. Harriton
purchased 25,000 shares of HDS common stock from the Company at a price of $1.00
per share.

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.

                               20
<Page>

     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 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 June, 2003 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.

                                     21
<Page>

     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.

     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.

                                22
<Page>

Item 11. SECURITY OWNERSHIP OF CERTAIN
         BENEFICIAL OWNERS AND MANAGEMENT.
         ---------------------------------
     The following table sets forth certain information, as of  July 17, 2003
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:

<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(2)      Vote(2)
--------------------    ------------  ----------- ------------------  ------------

                           <c>          <c>       <c>                   <c>
M.D. Funding, Inc.(1)         --           --        6,000,000             46.2
5 Old Woods Drive
Harrison, NY 10528


Daniel Durchslag               250,000       3.6         ---                 1.9
9400 Brighton Way
Suite 402
Beverly Hills, CA 90210

Matthew L. Harriton          1,250,000      17.9         ---                 9.6
305 Madison Avenue
New York, NY  10165

Karen Nazzareno                400,000       5.7         ---                 3.1
305 Madison Avenue
New York, NY  10165

All directors and officer    1,500,000      21.4         ---                11.5
as a group (2 persons)
</TABLE>

     (1)  M.D. Funding, Inc. is a corporation which is wholly-owned by Donna
Field, whose address is 5 Old Woods Drive, Harrison, NY 10528,  the beneficial
owner of such shares.   M.D. Funding, Inc. is not affiliated with any of the
officers or directors of the Company.

     (2)  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.

                                   23
<Page>



Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          ------------------------------------------------
     In January 1997, the Company entered into a subscription agreement to
acquire 50.04% of the Common Stock and 15,000,000 shares of Preferred Stock
for a combined voting interest of 92.9% of Hydrogel Design Systems, Inc.
(HDS). HDS was formed in October 1996 to effect the asset acquisition
described below. As consideration for its interest, the Company paid $150,000
cash, 150,000 shares of its Common Stock and made available to HDS a $500,000
line of credit, bearing interest at 8%, which was increased to $850,000 in
August 1997.  The credit line, which expired on January 31, 1999, was
extended to January 31, 2001, in February 1999 due to the financial condition
of HDS,  no further cash advances were allowed.  In February 2001, the credit
line was again extended through September 30, 2002, under the same terms as the
prior extension.  At April 30, 2003, the outstanding balance on the line of
credit was approximately $69,000. No further extension has been granted.  HDS
has continued to make payments subsequent to April 30, 2003.

     On February 6, 1997 HDS, acquired substantially all of the assets of two
(2)  companies, Novatech, Inc. and Alternative Design Systems R & D Group,
which were related to each other. In consideration for the payment of
$150,000, and the issuance of 150,000 shares of the Company's Common Stock
(subject to certain adjustments) which had previously been issued to HDS, HDS
acquired certain rights and assets, including proprietary formulas and
methodology, necessary to manufacture, market, sell and distribute Hydrogel
and associated products. Hydrogel is a product used in the manufacture of a
variety of medical devices including, cardiac defibrillator pads and various
types of electrodes. HDS has also entered into a contract for the purchase of
manufacturing equipment for $600,000 which has been financed through a
long-term note and security agreement between HDS and Becton Dickinson, a
customer of HDS and a manufacturer and distributor of medical devices and
diagnostic systems.

     On January 21, 1998, the Company's equity interest in HDS, which previously
represented a 50.04% majority common interest and 92.9% voting interest, was
reduced to 45.6% common ownership as a result of the Company surrendering all
15,000,000 shares of voting Preferred Stock in exchange for 21,500 shares of
Common Stock.  The exchange was done at the request of certain third party
investors of a Private Placement by HDS, under which HDS issued approximately
475,000 additional common shares.    In February and April, 1998, the Private
Placement was completed and an additional 1,027,000 shares of HDS stock were
issued, thereby reducing the Company's ownership to 33.3%.  As a result of
the Company's reduced ownership in HDS and surrender of the voting Preferred
Stock, the assets, liabilities and operations of HDS after January 21, 1998
are not included on a consolidated basis in the financial statements of the
Company.  In January 1998, as a result of subsequent litigation between HDS
and the former owners of the entitities HDS acquired, the terms of the
original purchase were modified and the Embryo shares were returned to HDS.

                                  24
<Page>

     Between November 20, 1998 and January 31, 1999, the Company sold an
aggregate of 710,000 shares of the common stock of HDS for $710,000 reducing
its investment to an aggregate of 562,500 shares or 14.4% common ownership of
HDS.  As a result of this transaction, as of January 31, 1999, this
investment is no longer included as an equity investment in the financial
statements of the Company, but is reported at cost.  At April 30, 2003, the
Company holds approximately 11.4% ownership of the common stock of HDS and a
10.3% minority voting interest in HDS.

     In February 1997, HDS entered into a seven-year sublease with the Company,
which provides for minimum monthly rental payments of $9,625 and expires in
2004.  In May, 1999, the minimum rental payment was reduced to $7,892 per
month due to a utilization of a portion of the premises by the Company.  In
October, 1999, the Company ceased use of this space and increased the amount of
the sublease to the original monthly amount of $9,625.  In February 2000, the
monthly rent was increased to $10,214 as per the escalation provision in the
sublease. On January 25, 2002, the Company entered into an Assignment and
Amended and Restated Lease Agreement with HDS, the existing sub-tenant of the
premises leased by the Company at 2150 Cabot Blvd. West, Langhorne, PA.
By such agreement, HDS accepted an assignment of the Lease from the Company.
Also, on such date, the building in which the leasehold premises are
contained was purchased by 2150 Cabot, LLC, a related party of the Company.
2150 Cabot LLC is wholly owned by a stockholder of HDS who is also a related
party of the CEO of the Company.  Subsequent to the lease assignment, the
Landlord of the premises and the Company conducted discussions respecting an
outright release of the Company from contingent or other obligations of the
Company to the Landlord including, but not limited to, the obligation of the
Tenant to restore the leasehold premises to its original condition upon
expiration of the Lease.  The Landlord granted a general  release to the
Company from any and all contingent or other obligations under the Lease in
exchange for a release of any claim for a return of its security deposit in
the amount of $79,625.  This forfeiture of the deposit was charged to
operations in the year ended April 30, 2002.  Management determined, based on
estimates,  that the actual cost that would be incurred to restore the
premises to its condition as existed prior to the Lease between
the former Landlord and the Company would exceed the amount of the deposit.

     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.

                                25
<Page>

     While the exercise of the options resulted in the issuance of 2,150,000
shares of common stock, the Company does not believe there has been a change of
control since the Company's Articles of Incorporation provide that the shares of
common stock vote together as one class with the shares of the Company's
preferred stock.  As of July 17, 2003, the holders of the preferred stock
held 46.2% of the voting power.

     Although the persons exercising the options may be deemed to operate as a
group, they disclaim they are operating as a group.   While no immediate changes
in the direction of the Company are presently contemplated, depending upon
future circumstances, the persons exercising the options may in the future
attempt to influence the direction of the Company.

     On September 1, 2001, the Company entered into a sublease with HDS for
office space on a month to month basis at the rental rate of $2,000 per month.
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.

     M.D. Funding, Inc. may be deemed a parent of the Company as a result of its
control of the Company voting stock.  M.D. Funding, Inc. is a corporation
which is wholly owned by Donna Field, the beneficial owner of such shares.
M.D. Funding, Inc. is not affiliated with any of the officers or directors of
the Company.  See "Principal Stockholders."


                             26
<Page>

Item 13. EXHIBITS AND REPORTS ON FORM 8-K
         ---------------------------------
(a)(1)  Financial Statements.

The following financial statements are included in Part II, Item 7:

Index to Financial Statements and Schedules

Report of Independent Certified Public Accountants                F-1

Balance sheet as of April 30, 2003                                F-2

Statements of operations for the years ended
  April 30, 2003 and 2002                                         F-3

Statements of stockholders' equity (deficit) for the years
  ended April 30, 2003 and 2002                                   F-4

Statements of cash flows for the years ended
  April 30, 2003 and 2002                                         F-5

Notes to financial statements                                     F-6 - F-14

                                    27
<Page>



(a)(3)  Exhibits.

1.01*               Form of Underwriting Agreement.

1.02*               Form of Selected Dealers Agreement.

3.01*               Certificate of Incorporation of the Company.

3.02*               By-Laws of the Company.

4.01*               Form of Warrant Agreement by and among the Company and
                    American Stock Transfer & Trust Company.

4.02 *              Form of Underwriter's Share Purchase Option.

10.13*         Asset Purchase Agreement by and between C.F. Electronics, Inc.
                    and the Company dated September 14, 1995.

10.25***       Employment Agreement by Matthew Harriton and the Company dated
                    January 1, 1997.

10.26***       Equipment Financing Agreement by Becton Dickinson and Hydrogel
                    Design Systems, Inc. dated January 24, 1997.

10.27+         Real Property Lease by and between the Company and Circon
                    Corporation dated January 1997.

10.28++        Revolving Credit Agreement between Hydrogel Design Sytems, Inc.
                    and the Company dated January 1997.

10.29++        Amended Revolving Credit Agreement between Hydrogel Design
                    Systems, Inc. and the Company dated August 31, 1997.

10.33++        Amendment #1 to Employment Agreement by Matthew Harriton
                    and the Company dated September 16, 1997.

10.38****      Amendment No. 1 to Licensing Agreement of Safety Needle by and
                    between Dr. Lloyd Marks and the Company dated January 22,
                    1999.

                                     28
<Page>



10.39#         Employment Agreement by Matthew Harriton and the Company dated
                    January 1, 1999.

10.40#         Amendment #2 to Revolving Credit Agreement between Hydrogel
                    Design Systems, Inc. and the Company dated February 1,
                    1999.

10.41####       Amendment #3 to Revolving Credit Agreement between Hydrogel
                    Design Systems, Inc. and the Company dated February 1,
                    2001 .

10.42####      Promissory Note between  Sterling Foster Securities Litigation
                   Fund and the Company dated June 26, 2001.

16+++          Letter from Holtz Rubenstein & Co., LLP re Change in Certifying
                    Accountant dated May 7, 1998.

16.1##         Letter from Moore Stephens, P.C. re Change in Certifying
                   Accountant dated April 11, 2000.

99###          Letter from the Nadaq SmallCap Market dated March 16, 1998.

99.1           Certification of the Chief Executive Officer and Chief Financial
                   Officer pursuant to 18 U.S.C. Section 1350, as adopted
                   pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

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

+    Incorporated by reference to the Company's Form 10KSB  dated April 30,
     1997.

++   Incorporated by reference to the Company's Form 10QSB dated October 31,
     1997.

###  Incorporated by reference to the Company's Form 8-K filed on April 16,
     1998.

+++  Incorporated by reference to the Company's Form 8-K filed on May 8, 1998.

**** Incorporated by reference to the Company's Form 8-K filed on February 12,
     1999.

#    Incorporated by reference to the Company's Form 10KSB dated April 30,
     1999.

##   Incorporated by reference to the Company's Form 8-K filed on April 13,
     2000.

                                29
<Page>

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

(B)  Reports on Form 8-K.

     None.

                                  30
<Page>


Item 14. CONTROLS AND PROCEDURES
         -----------------------

     (a) Evaluation of disclosure controls and procedures.  Based on his
evaluation of the Company's disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as of a
date within 90 days of the filing date of this Annual Report on Form 10-KSB,
our chief executive officer and chief financial officer has concluded that
our disclosure controls and procedures are designed to ensure that the
information we are required to disclose in the reports we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and are operating in an
effective manner.

     (b)     Changes in internal controls.  There were no significant changes in
our internal controls or in other factors that could significantly affect these
controls subsequent to the date of their most recent evaluation.


                                    31
<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
        July 21, 2003

                         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,     July 21, 2003
-----------------------
Matthew L. Harriton           Chief Financial Officer,
                              Principal Accounting Officer
                              and Director


/s/ Daniel Durchslag          Director                     July 21, 2003
---------------------
Daniel Durchslag




                                    32

<Page>





          CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER
                  AND CHIEF FINANCIAL OFFICER
          ---------------------------------------------
I, Matthew L. Harriton certify that:

1.  I have reviewed this annual report on Form 10-KSB of Embryo  Development
    Corporation.

2.  Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading.

3. Based on my knowledge, the financial statements, and other financial
   information included in this annual report, fairly present in all material
   respects the financial condition, results of operations and cash flows of the
   registrant as of, and for, the periods presented in this annual report.

4. I am responsible for establishing and maintaining disclosure controls and
   procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
   registrant and I have:

        a) designed such disclosure controls and procedures to ensure that
           material information relating to the registrant  is made known to me
           by others within the entity;

        b) evaluated the effectiveness of the registrant's disclosure controls
           and procedures as of a date within 90 days prior to the filing date
           of this annual report (the "Evaluation Date");

        c) presented in this annual report my conclusions about the
           effectiveness of the disclosure controls and procedures based  on my
           evaluation as of the Evaluation  Date;

5.  I have disclosed, based on my most recent evaluation, to the  registrant's
    auditors and the audit committee of registrant's  board of directors (or
    persons performing the equivalent function):

        (a)  all significant deficiencies in the design or operation of internal
             controls which could adversely affect the registrant's ability to
             record, process, summarize and report financial data and have
             identified for the registrant's auditors any material weaknesses
             in  internal controls; and

        (b)  any fraud, whether or not material, that involves management or
             other employees who have a significant role in the registrant's
             internal controls; and

6.   I have indicated in the annual report whether or not there were significant
     changes in internal controls or in other factors that  could significantly
     affect internal controls subsequent to the date of my most recent
     evaluation, including any corrective actions with  regard to significant
     deficiencies and material weaknesses.

                                   33
<Page>

Date: July 21, 2003

/s/ Matthew L. Harriton
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Matthew L. Harriton
Chief Executive Officer and Chief Financial Officer



                                   34
<Page>




                 EMBRYO DEVELOPMENT CORPORATION
                 (A DEVELOPMENT STAGE COMPANY)
                       REPORT ON AUDIT OF
                      FINANCIAL STATEMENTS
                ---------------------------------



Independent auditors' report                                F-1

Balance sheet                                               F-2

Statements of operations                                    F-3

Statements of stockholders' equity (deficit)                F-4

Statements of cash flows                                    F-5

Notes to financial statements                               F-6-F-14






                                   35
<Page>




                  INDEPENDENT AUDITORS' REPORT


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, 2003, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the  years  ended April
30, 2003 and April 30, 2002.  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 audits in accordance with auditing standards
generally accepted in the United States of America.  Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.

          In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Embryo Development
Corporation as of April 30, 2003, and the results of its operations and its
cash flows for the  years  ended April 30, 2003 and April 30, 2002, 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, the
Company's ability to continue in the normal course of business is dependent
upon the success of future operations.  The Company has a working capital
deficit and has not generated any revenue in the last two fiscal years
ended April 30, 2003 and April 30, 2002, which raise substantial doubt about
its ability to continue as a going concern.  Management's plans in regard to
these 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 18, 2003


                               F-1

<Page>

EMBRYO DEVELOPMENT CORPORATION
BALANCE SHEET AS OF APRIL 30, 2003.
-----------------------------------
<TABLE>
Assets:
Current Assets:
 
                                                                 <c>
 Cash                                                                $     116
 Prepaid Expenses and Other Current Assets                              11,361
                                                                     ---------
 Total Current Assets                                                   11,477
                                                                     ---------
Property and Equipment -  Net of Accumulated Depreciation of $37,204     4,167
                                                                     ---------

Investment in Unconsolidated Investee - At Cost                         39,026
                                                                     ---------
Other Asset:
 Due from Unconsolidated Investee - Net of Reserve of $34,633           34,634
                                                                     ---------

 Total Assets                                                      $    89,304
                                                                   ===========
Liabilities and Stockholders' Deficit:
Current Liabilities:
 Accounts Payable and Accrued Expenses                            $    198,034
    Note and Interest Payable                                           84,679
 Royalty Payable - Current Portion                                      87,500
                                                                  -----------
 Total Current Liabilities                                             370,213
                                                                  -----------
Long-term Liabilities:
   Royalty Payable - Long-Term                                         291,500
                                                                   -----------
     Total Long-term Liabilities                                       291,500
                                                                   -----------
Commitments and Contingencies

Stockholders' Deficit:
 Preferred Stock, $.0001 Par Value; Authorized 15,000,000
   Shares; 6,000,000 Issued and Outstanding,
   Liquidation Preference $600,000                                         600

 Common Stock, $.0001 Par Value, Authorized 30,000,000
   Shares; 6,995,000 Issued and Outstanding                                700

 Additional Paid-in-Capital                                          9,991,267

 Accumulated Deficit                                               (10,285,291)

 Notes and Interest Receivable                                        (279,685)
                                                                   ------------
 Total Stockholders' Deficit                                          (572,409)
                                                                   ------------
 Total Liabilities and Stockholders' Deficit                       $    89,304
                                                                   ===========
</TABLE>

                                 F-2


See Accompanying Notes to Financial Statements.

<Page>


EMBRYO DEVELOPMENT CORPORATION
STATEMENTS OF OPERATIONS
-------------------------------
<TABLE>
                                                    Years ended
                                                     April 30,
                                                2 0 0 3        2 0 0 2
                                                -------       --------

 
                                           <c>              <c>
 (Income) expenses:
 General, Selling and Administrative           187,679          251,280
 Interest Income - Related Party              ( 12,445)        ( 12,495)
 Interest and Other                              3,409          (13,708)
 Adjustment for Collectibility of Amount Due
  from Unconsolidated Investee                ( 93,578)         (97,212)
 Forfeiture of Security Deposit                    --            79,625
 Gain on Sale of Stock of
  Unconsolidated Investee                          --           (23,185)
                                              ----------       ----------
  Total (income) expenses                       85,065          184,305
                                              ----------       ----------
    Net Loss                                $(  85,065)     $(  184,305)
                                            ===========     =============
  Basic and Diluted Net Loss Per Common
   Share                                     $    (.01)      $     (.03)
                                            ===========     =============
 Weighted Average Number of Common
  Shares Used in Computing Basic and
  Diluted Loss Per Common Share              6,995,000        6,995,000
                                            ===========      ============


</TABLE>


                                 F-3
         See Accompanying Notes to Financial Statements.


<Page>

EMBRYO DEVELOPMENT CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
--------------------------------------------
<TABLE>


                                                                    Additional                  Notes and       Total
                                Common Stock      Preferred Stock    Paid-in   Accumulated      Interest     Stockholders'
                               Shares   Amount   Shares    Amount    Capital      Deficit       Receivable      Deficit
                               ------   -------  ---------  -----   ---------- -----------      ----------   -------------

                           <c>       <c>      <c>        <c>     <c>         <c>            <c>           <c>
Balance - April 30, 2001      6,995,000 $  700   6,000,000  $  600  $ 9,991,267 $(10,015,921)  $(201,670)    $(  225,024)

Reclassification of Interest on
 Notes Receivable                                                                              ( 61,882)    (     61,882)
Net Loss                           --       --         --       --         --    (   184,305)         --     (   184,305)
                              ---------   -----  ---------   -----    ---------  ------------   ----------   ------------
Balance - April 30, 2002      6,995,000    700   6,000,000     600    9,991,267  (10,200,226)    (263,552)   (   471,211)

Interest on Notes Receivable                                                                     ( 16,133)    (   16,133)
Net Loss                           --       --         --       --        --      (   85,065)         --      (   85,065)
                              --------- ------   ---------   ------ ----------- -------------   ----------
Balance - April 30, 2003      6,995,000 $  700   6,000,000   $ 600  $ 9,991,267 $(10,285,291)   $(279,685)   $(  572,409)
                              ========= ======   =========   ====== =========== =============   ==========
</TABLE>

                                               F-4
See Accompanying Notes to Financial Statements.
<Page>

EMBRYO DEVELOPMENT CORPORATION
STATEMENTS OF CASH FLOWS
-------------------------------
<TABLE>

                                                           Years ended
                                                            April 30,
                                                      2 0 0 3        2 0 0 2
                                                     ---------      --------

                                                  <c>           <c>
Operating Activities:
   Net Loss                                          $( 85,065)    $( 184,305)
  Adjustments to Reconcile Net Loss to Net
   Cash Used in Operating Activities:
   Depreciation and Amortization                         2,799          3,110
   Gain on Sale of Stock of Unconsolidated Investee         --        (23,185)
   Adjustment for Collectibility of Amount Due from
    Unconsolidated Investee                           ( 93,578)      ( 97,212)
  Changes in Assets and Liabilities:
   [Increase] Decrease:
   Interest Receivable                                 (16,133)       (16,133)
   Prepaid Expenses and Other Current Assets          (  2,232)        10,682
      Other Assets                                         --          95,176

  Increase [Decrease]:
   Accounts Payable and Accrued Expenses                 6,149         (5,009)
   Royalty Payable                                         --        (  2,500)
                                                     ----------     ----------
  Net Cash - Operating Activities                     (188,060)     ( 219,376)
                                                     ----------     ----------
Investing Activities:
  Proceeds from Sale of Stock of
   Unconsolidated Investee                                  --         25,000
  Repayment of Loans from Unconsolidated Investee      187,154        194,424
                                                     ----------     ----------
     Net Cash - Investing Activities                   187,154        219,424
                                                     ----------     ----------

Net Increase [Decrease] in Cash and Cash
   Equivalents                                            (906)            48

Cash and Cash Equivalents - Beginning of Period          1,022            974
                                                     ----------     ----------
Cash and Cash Equivalents - End of Period             $    116       $  1,022
                                                     ==========     ==========

</TABLE>



                                 F-5
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.

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 is being
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.  The Company presently holds
11.4% of the common stock of HDS and 10.3% of total voting shares.

 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.

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 $10,285,000, has a working
capital deficit of approximately $359,000,  and utilized cash of approximately
$188,000 for operating activities for the year ended April 30, 2003.  In
addition, the Company has not generated any revenue in the last two fiscal
years ended April 30, 2003 and April 30, 2002.  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, inclusive of the
possible acquisition of a new line of business, which may or may not be
related to the development of medical devices.

The Company expects to incur additional expenditures over the next six (6)
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 to retain the CEO
whose function is to explore and evaluate future potential financial
opportunities for the Company.  The Company's management does not believe
that the Company's cash on hand will be sufficient to fund the Company's
operations for the next six (6) months. However, management continues to
believe that the outstanding amount due from HDS, which was due September 30,
2002, of approximately $69,000 will be repaid during the next (6) months.
Management believes that collection of this receivable will fund the Company
for approximately (6) months.  During the year ended April 30, 2003,  HDS
repaid approximately $187,000 of the outstanding receivable balance to
the Company and has continued to make additional payments subsequent to April
30, 2003.  In addition, the Company's management has set up a reserve of
approximately $34,000 or approximately 50% of the outstanding balance at April
30, 2003, based upon anticipated probable collectibility of the balance.
Within the next six (6) months, the Company will seek alternative methods  to
begin generating sufficient revenues to support operations subsequent to this
period.  These alternatives include : (a) the potential licensing or
distribution or new products or product lines, both within the medical
industry and outside the medical arena; and (b) the acquisition of an
operating entity or entities (subject to the Company's ability to raise
sufficient capital to complete such an acquisition).

                                   F-6
<Page>

EMBRYO DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS, Sheet #2
-----------------------------------------
[1] Organization and Nature of Operations [Continued]

In the event the Company is unable to satisfy its capital needs through one of
the transactions described above, management will pursue the sale of some or all
of the Company's assets.  At this time, the primary asset is the Company's
equity position in HDS.  As of April 30, 2003, the Company held 537,500
shares of HDS common stock representing 10.3% of the outstanding equity
securities of HDS.  Alternatively, the Company may need to consider liquidating
its investment in HDS to meet its cash requirements.

Management is in discussions with several entities regarding such transactions,
however at this time no letter of intent or definitive agreement has been made.
If such agreements are formalized the Company will disclose this information
in the appropriate filings.

In an effort to conserve cash the Company's  management has undertaken a
significant cost reduction program.

No assurance can be made as to the success of these capital raising alternatives
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, 2003 and 2002  amounted to
$2,799 and $3,110, respectively.

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
its customers and third party payors and believes that its accounts
receivable credit risk exposure is limited.  The Company places its cash
with high credit quality financial institutions.  The amount on deposit in
any one institution that exceeds federally insured limits is subject to
credit risk.  As of April 30, 2003, the Company had no funds with a financial
institution subject to credit risk beyond the insured amount.  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.
                                F-7
<Page>

EMBRYO DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS, Sheet #3
-----------------------------------------

[2] Summary of Significant Accounting Policies [Continued]


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.

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.  The
provisions of this Statements are to be applied to financial statements for
fiscal years ending after December 15, 2002.  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, 2003 and 2002 there
were no stock options or warrants outstanding.



                                F-8
<Page>

EMBRYO DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS, Sheet #4
---------------------------------------
[2] Summary of Significant Accounting Policies [Continued]

New Accounting Pronouncements - In April 2002, the FASB issued SFAS No. 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections."  This accounting standard, which is
effective for fiscal years beginning after May 15, 2002, requires, among
other things, that debt extinguishments used as a part of an entity's risk
management strategy no longer meet the criteria for classification as
extraordinary items.  The adoption of SFAS No. 145 is not expected to have a
material effect on the Company's financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" which nullifies Emerging Issues Task Force
(EITF) issued No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to exit an Activity (including Certain
Costs Incurred in a Restructuring)."  This accounting standard, which is
effective for exit or disposal activities that are initiated after December
31, 2002, addresses financial accounting and reporting for costs associated
with exit or disposal activities.  The adoption of SFAS No. 146 is not
expected to have a material effect on the Company's financial position or
results of operations.

In April 2003, the FASB issued SFAS 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", SFAS 149 amends and clarifies
financial accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts and for
hedging activities under SFAS 133.  The Statement is generally effective for
contracts entered into or modified after June 30, 2003 and for hedging
relationships designated after June 30, 2003 and should be applied
prospectively.  The implementation of this standard is not expected to have a
material impact on the Company's financial position or results of operations.

In May 2003, the FASB issued SFAS 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS 150
requires certain freestanding financial instruments, such as mandatory
redeemable preferred stock, to be measured at fair value and classified as
liabilities.  The provisions of SFAS 150 are effective for fiscal years
beginning after July 1, 2003.  The implementation of this standard is not
expected to have a material impact on the Company's financial position or
results of operations.

[3] Investment in HDS

As of April 30, 2003, the Company holds approximately 11.4% ownership of the
common stock of HDS and 10.3% of total voting shares.  This investment is
reported under the cost method.

In January 1997, the Company entered into a commitment to make available to HDS
a $500,000, 8% revolving line of credit as part of its investment interest.  In
August 1997, the Company increased the amount of the revolving line of credit
to $850,000.  At April 30, 2003, borrowings under the revolver approximated
$69,000 including accrued interest.  The original line of credit, which was
extended several times, expired on September 30, 2002.  The terms of the initial
extension in 1999 prohibited any future cash advances on the credit line and
provided  for repayment of an amount equal to 50% of any cash flow from
operations in excess of $500,000 annually to be paid within 45 days of the
fiscal year end of HDS. The Company's management has set up a reserve of
approximately $34,000 or approximately 50% of the outstanding balance at
April 30, 2003 of approximately $69,000, based upon anticipated probable
collectibility.  In addition, the Company has classified all of this receivable
as a long-term asset due to the financial condition of HDS as of April 30,
2003.   Approximately $187,000 and $194,000 of the original obligation  was
collected during the years ended April 30, 2003 and April 30, 2002,
respectively.  HDS has continued to make additional payments subsequent
to April 30, 2003.



                                F-9

<Page>

EMBRYO DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS, Sheet #5
---------------------------------------
[3] Investment in HDS [Continued]

In February 1997, HDS entered into a seven-year sublease with the Company, which
provided for minimum monthly rental payments of $9,625 and was to expire in 2004
[See Note 7C].   On January 25, 2002, the Company entered into an Assignment
and Amended and Restated Lease Agreement with HDS, the existing sub-tenant of
the premises leased by the Company at 2150 Cabot Boulevard West, Langhorne,
PA.  By such agreement, HDS accepted an assignment from the lease from the
Company.  Also, on such date, the building in which the leasehold premises
are contained was sold to 2150 Cabot, LLC, a related party.

[4] 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.  At April 30, 2003, the remaining unpaid balance of $379,000 is
included in current and long-term liabilities.  During the year  ended April
30, 2003, the Company has not paid any royalty payments and is in arrears for
the past twenty (23) months in the amount of $57,500 to the licensor as a result
of cash flow deficiencies.

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.

[5] Note Payable

In conjunction with the litigation settlement as described in Note 7A , the
Company recorded a long-term note payable in the amount of $75,000 which is due
on June 26, 2003 and bears interest at 7% per year.

[6] 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 the event of any liquidation, holders of the issued
and outstanding shares of preferred stock will be entitled to receive, prior to
any distribution to the holders of common stock, the sum of $.10 per share.

[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 ($.0938) under the Incentive Stock Option Plan (See
[C] below).  In addition, an aggregate of 500,000 options which were granted
to an officer under the terms of a prior employment agreement were amended to
have an exercise price of ($.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 to the three (3)
directors and an employee in the aggregate of $201,670 for payment of the
shares.  The notes mature in five (5) years, with interest at 8%, and are
secured by the related securities.



                               F-10
<Page>

EMBRYO DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS, Sheet #6
----------------------------------------
[6] Stockholders' Deficit [Continued]

[C] 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, 2003 and
April 30, 2002, there are no outstanding options under this plan.

[D] Net Loss Per Share - Net loss per share was computed by dividing net loss by
the weighted number of shares outstanding.  Common stock equivalents have been
excluded as their effect would be anti-dilutive.

[E] Reserved Shares - Common shares reserved at April 30, 2003 are as follows:

Incentive Stock Option Plan                         350,000
Non-Qualified Stock Option Plan                   2,000,000
                                                  ---------
Total                                             2,350,000
                                                  =========
[7] Commitments and Contingencies

[A] Litigation - The Company has 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 assert 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 is 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 seeks 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 the Company 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 the Company 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 in 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
$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.
                               F-11

<Page>

EMBRYO DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS, Sheet #7
---------------------------------------

[7] Commitments and Contingencies [Continued]

[A] Litigation [Continued] - 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.  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. In December 2002, the court approved the
settlement.

[B] Employment Agreements - In January 1999, the Company renewed an employment
agreement with an officer.  The two-year agreement provides for annual
compensation of $60,000 effective January 1, 1999.  The officer was also granted
rights to purchase 200,000 shares of HDS common stock from the Company at a
price of $1.00 per share for a period of two (2) years.  On June 26, 2001,
the officer exercised this right and purchased 25,000 shares of HDS common
stock from the Company at a price of $1.00 per share.  In January, 2001, 2002,
and 2003, this agreement was extended for successive one (1) year terms under
the same terms and conditions of the original agreement.

[C] Operating Leases - On February 14, 1997, the Company entered into a seven-
year operating lease for premises to be used for offices and manufacturing.  The
lease provided for monthly minimum lease payments of $9,625.  The lease
contained a five-year renewal option and provided that the Company shall pay
for insurance, taxes and maintenance.  In addition, the lease contained an
escalation clause based upon increases in the consumer price index for years
four through seven. Effective February 14, 1997, the Company entered into a
seven year sub-lease with HDS which provided  for minimum monthly rental
payments of $9,625 to be received, and was to expire in 2004.  On January 25,
2002, the Company entered into an Assignment and Amended and Restated Lease
Agreement with HDS, the existing sub-tenant of the premises leased by the
Company at 2150 Cabot Blvd. West, Langhorne, PA.  By such agreement, HDS
accepted an assignment of the Lease from the Company.  Also, on such date,
the building in which the leasehold premises are contained was purchased by
2150 Cabot, LLC, a related party of the Company. Subsequent to the lease
assignment, the Landlord of the premises and the Company conducted discussions
respecting an outright release of the Company from contingent or other
obligations of the Company to the Landlord including, but not limited to, the
obligation of the Tenant to restore the leasehold premises to its original
condition upon expiration of the Lease.  The Landlord granted a general
release to the Company from any and all contingent or other obligations under
the Lease in exchange for a release of any claim for a return of its security
deposit in the amount of $79,625.  This forfeiture of the deposit was charged
to operations in year ended April 30, 2002.  Management determined, based on
estimates,  that the actual cost that would be incurred to restore the premises
to its condition as existed prior to the Lease between the former Landlord
and the Company would exceed the amount of the deposit.

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.

Aggregate rent expense was $15,170 and $122,265 for the years ended April 30,
2003 and 2002, respectively.  Rental income from the sub-lease amounted to $-0-
and $91,923 for the years ended April 30, 2003 and 2002,  respectively.

[D] Product Liability Insurance - The Company has obtained product liability
insurance since it has commenced sales of its products.  However, there can
be no assurance that such policies will be sufficient to cover potential
claims or the costs of any resulting litigation or that a policy can be
maintained in force at an acceptable cost to the Company.  A successful
claim against the Company in excess of the Company's insurance coverage could
have a material adverse effect upon the Company's business and results of
operations. In addition, claims against the Company, regardless of their
merit or eventual outcome, also may have a material adverse effect upon the
Company's reputation.

                               F-12

<Page>

EMBRYO DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS, Sheet #8
----------------------------------------

[8] 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, 2003 are as follows:


Deferred Tax Assets:
  Net Operating Loss Carryforward                               $ 2,851,000
  Tax Basis of Intangible Assets in Excess of Book Basis             98,000
                                                                -----------
  Total                                                         $ 2,949,000
                                                                ===========

Deferred Tax Asset                                                2,949,000
Valuation Allowance                                              (2,949,000)
                                                                ------------
  Net Deferred Tax Asset                                        $        --
                                                                ============
The valuation allowance of $ 2,949,000  represents  an increase of $124,000
over the preceding year.  Net operating loss carryforwards of approximately
$7,100,000 expire between 2010 and 2017.

A reconciliation between the statutory federal income tax rate and the effective
rate of income tax expense for the years ended April 30, 2003 and 2002 follows:

                                                 2 0 0 3            2 0 0 2
                                                 --------           --------
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                         --                 --
                                                =========           =========


[9] Fair Value of Financial Instruments

In assessing the fair value of these financial instruments, the Company has used
a variety of methods and assumptions, which were based on estimates of market
conditions and risks existing at that time.  For certain instruments,
including cash and due from unconsolidated investee it was estimated that
the carrying amount approximated fair value for the majority of these
instruments because of their short maturities.



                                F-13
<Page>

EMBRYO DEVELOPMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS, Sheet #9
---------------------------------------

[10] Supplementary Information - Statements of Cash Flows

Cash paid during the periods for:

                                                       Years ended
                                                        April 30,
                                                    2 0 0 3    2 0 0 2
                                                   --------   ---------
Interest - Net of Capitalized Interest             $   1,976  $  1,498
                                                   =========  =========
Income Taxes                                       $     --   $    --
                                                   =========  =========

[11]Subsequent Event

On July 1, 2003, the promissory notes dated July 1, 1998 as described in Note
6B, were extended for an additional three (3) year term.  These notes are due
from two (2) directors, a former director and an employee in the aggregate of
$201,670.  The notes bear interest at 8% and are secured by the related
securities.





                               F-14

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