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, 2000
                               --------------
               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.)

565 Fifth Avenue
New York, New York                                             10017
---------------------                                        ---------
 (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 $43,526.

     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 25, 2000, was approximately $509,500.

     Number of shares outstanding of the issuers common stock, as of July 25,
2000, was 6,995,000.

           DOCUMENTS INCORPORATED BY REFERENCE:  None.
                                                 -----


<PAGE>

                             PART I
                             ------
Item 1.  BUSINESS.
         --------
     Embryo Development Corporation, is a development stage 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
licensed a patent for a product  which is being developed to be sold in the
medical field. The Company has not derived any significant revenues since its
inception.  In addition, the Company holds patents for products in two (2)
distinct market segments; emergency medical equipment and peritoneal dialysis
warming devices.

     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. See
"Certain Transactions".

     The termination of  the above six license agreements follows a
determination by management to conserve capital and that the six products
licensed could not profitably be developed and commercially marketed by the
Company at this time.  However, management of the Company believes its
relationship with Dr. Marks continues to be good.

     In addition, Dr. Marks has given the Company a right of first refusal on
any devices he should develop in the future.

     The Company holds patents to five (5) other  medical devices and is the
exclusive licensee of one (1) medical device in the areas of emergency
medical equipment and peritoneal dialysis warming devices ("C.F. Medical
Devices").  Two (2) of the devices, the Hot-Sack II(TM) and Hot-Sack

                                 2
<PAGE>

II+(TM), are used in connection with the warming of 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  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.  The Company is presently evaluating the
marketability of these patents and exploring alternative means of production of
these products.  However, even if alternative means of production of these
products is found, the Company would still need to obtain additional capital
to restart production, for which there can be no assurance.

     The Company also holds a 13.1% minority investment interest in Hydrogel
Design Systems, Inc. ("HDS"), a privately held company engaged in the
manufacturing, marketing, selling and distribution of hydrogel materials.
Hydrogel is a product used in wound care as well as a component of a variety
of medical devices including cardiac defibrillator pads and various types of
electrodes. 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."


MARKS MEDICAL DEVICE.
----------------------
     The Company has a licensing agreement with Dr. Lloyd Marks which provides
for the exclusive license to commercially exploit a medical device that has been
developed by Dr. Marks. The device is the subject of an existing United
States patent.

     The  Licensing Agreement provides that the Company receive the exclusive
right to develop, commercialize and sell  the medical device. In addition, the
Company has two (2) Royalty Sharing Agreements with Dr. Marks for patented
medical devices. To date, the Company has focused its resources on the
development of this device, the Self-Shielding Needle.

     Self-Shielding Needle (formerly referred to as the Safety Needle)-
     ------------------------------------------------------------------
The Company has aggressively pursued the development and exploitation of Dr.
Marks' patented self-shielding needle design. The self-shielding needle is a
needle which prevents accidental skin punctures, thereby preventing the spread
of infections or diseases to medical personnel.  Although there are several

                                 3
<PAGE>

self-shielding needles developed and on the market, almost all require a
specific act by the user to place it in its safe state.  The Company believes
that the few designs which automatically cap the needle are mechanically
complex and too expensive to achieve commercial success.  As a result,
safety needles are neither generally acceptable nor in common use.

     The Company's self-shielding needle requires no affirmative act on the part
of the user to deploy the protective mechanism.  In addition,
it is mechanically simple and therefore inexpensive to manufacture.  The
needle tip is never exposed from its protective mechanism except when it is
in the patient or an Intramuscular ("IM") injection is about to be
administered.

     In May 1996, the Company entered into contract with two (2) different firms
to commence final design and manufacture of the Self-Shielding Needle.
Subsequently, the Company terminated one of the contracts and the other
contract has been completed.  In January, 1998 the Company entered into a
contract with ACT Medical, Inc. a medical device consulting and manufacturing
firm located in Newton, MA. to assist in the preparation of its 510(k)
notification for its Self-Shielding Needle. 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 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 has temporarily halted plans to complete the development of the
Self-Shielding Needle due to capital constraints and is currently evaluating
whether to submit a PMA application, which will require significant capital,
or to modify the device further and submit a new 510(k) application.  Once
this is completed, and at such time additional capital becomes available,
management will begin to develop its long-term strategy regarding the sale
and marketing of the product.  To further this effort, the Company intends to
market the product to both potential distributors and end users such as
hospitals and clinics as well as explore potential joint venture
opportunities.  However, the Company, has not, at this time, determined the
actual means by which it will implement all such plans, or whether it will be
able to obtain additional capital to proceed with any such plans.

                                   4
<PAGE>


CF MEDICAL DEVICES
--------------------
Emergency Medical Devices and Peritoneal Dialysis Devices
---------------------------------------------------------
     The Company owns three (3) medical devices, Hot-Sack(R), Therm-o-Drug(TM)
and an electronic stethoscope, and is the exclusive licensee of one (1)
medical device, Res-Q-Air(TM), all of which are used in medical rescue
operations by ambulances and other emergency medical technicians. In
addition, the Company owns two (2) devices, Hot-Sack II(TM) and Hot Sack II+
(TM) , that are used in the warming of peritoneal dialysis solution.  The
Company has received minimal revenues from sales of such products. 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.  The Company is presently evaluating the marketability of these
patents and exploring alternative means of production of these products.
However, even if alternative means of production of these products is found,
the Company would still need to obtain additional capital to restart production
for which there can be no assurance.

Hydrogel Design Systems
-----------------------
     The major focus of HDS, in which the Company has a 13.1% minority
investment interest, 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 has an electron beam and is operating in leased space from the
Company in Langhorne, PA. The facility became operational in the fourth quarter
of calendar year 1997.
                                   5

<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.

Sales and Marketing
-------------------
     The Company had marketed the C.F. 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 the
products which are currently in the development stage as these products come to
market.


Manufacturing
-------------
     The Company's medical devices must be manufactured in compliance with
applicable regulatory requirements and at acceptable cost.  Many of the
Company's competitors rely on third party manufacturers to produce and
assemble some or all of the components of their products.  The Company's
success depends to a material degree upon its ability to contract with third
parties to manufacture the Company's proposed products according to the
Company's designs and specifications, in accordance with applicable
regulations, and at a unit cost to the Company that will permit the Company
to market its products at an acceptably competitive purchase price to its
customers.

     Management believes, although there can be no assurance, that the Company
will be able to maintain sources of manufacturing supply for its products that
will satisfy the foregoing requirements, should manufactuting operations be
restarted.

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 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

                                 6

<PAGE>

upon its ability to get 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.  In addition, the Company must compete with other existing
and new technologies in the allocation of hospitals' capital spending budgets.

Government Regulation
---------------------
     The majority of the Company's products 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.

     In manufacturing some of its products, the Company must comply with FDA
regulations and is subject to various other FDA record-keeping requirements and
to 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, but has not yet done so.  If
the FDA believes that its regulations and other guidelines have not been
followed, it may seek to implement extensive enforcement powers, which were
recently 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.
The Company believes that it is in substantial compliance with applicable FDA
regulations.

      Three (3) of the medical devices that the Company acquired from C.F. 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

                                    7
<PAGE>

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 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 has
temporarily halted plans to complete the development of the Self-Shielding
Needle due to capital constraints and is currently evaluating whether to submit
a PMA application, which will require significant capital,  or to modify the
device further and submit a new 510(k) application.  To date, the Company, has
not received the approval of the FDA to market the Marks Medical Device.

     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 the Company's products.

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.

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 has the exclusive license to the Marks Medical Device, the
Self-Shielding Needle,  which has been issued a United States patent.  The
Company also owns the patent for the Hot Sack and the exclusive license to
the Res-Q-Air, which has been issued a United States patent. 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

                                    8
<PAGE>

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 is was used on  products in the past  and
may be used on future products.


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 $10,000,000  umbrella policy.


Employees
---------
     As of June 30, 2000, the Company employed three (3) full time persons,
including one (1) in sales marketing and product development, and two (2) 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 February 10, 1999, the Company entered into a sixteen (16) month lease
commencing March 1, 1999, for office space which was personally guaranteed by
an officer of the Company. Commencing July 1, 2000, the Company has continued
to rent the space on a month to month basis.  See "Certain Transactions."   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.

                                    9
<PAGE>

     In addition, in February 1997, the Company leased a 16,500 square foot
facility in Langhorne, PA.  The lease is for a term of seven years with an
annual rent of $116,000 which increases 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.


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

                                  10
<PAGE>


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.  The settlement is contingent upon, among other things, execution
of the definitive documentation and approval by the court.  There can be no
assurance that the settlement will be concluded.  At April 30, 2000, the Company
has set up a reserve of $100,000, which is included in current liabilities,
for this obligation, although at the present time the Company does not have
sufficient capital to fund such payment.


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.




                                  11
<PAGE>


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 ommon 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, 2000 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
                                                  ----      ---
          1998 Calendar Year
          ------------------
          First Quarter                           5/16      1/8
          Second Quarter                          3/16      1/8
          Third Quarter                           1/8      1/16
          Fourth Quarter                          1/5      1/32

         1999 Calendar Year
         ------------------
          First Quarter                          1/16       .02
          Second Quarter                          .08       .02
          Third Quarter                           .10       .00
          Fourth Quarter                          .03       .00

          2000 Calendar Year
          ------------------
          First Quarter                           .42       .00
          Second Quarter                          .20       .09

                                      12
<PAGE>

     On July 25, 2000, the closing price of the Common Stock as reported on the
OTC-Bullletin Board  was $.10.  On July 25, 2000, there were 660 holders of
record of common stock.



                                      13
<PAGE>



Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
         ----------------------------------------------
Liquidity and Capital Resources

     The Company had a net working capital deficit  of $(237,959) at April 30,
2000.  Approximately $9,000 of current assets represents cash on hand.  The
Company remains in its development stage as it has not yet derived significant
revenues from the sale of its products.

     The Company's statement of cash flows for the year ended April 30, 2000
reflects cash used in operating activities of approximately $350,000. This use
of cash is primarily attributable to general and administrative expenses and
product development expenses. The cash and cash equivalents balance decreased
in the year ended April 30, 2000 by approximately $352,000, which was the
cash used to fund current operations.

     In August 1999, an agreement of principle was entered into providing for
settlement of a 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.  The settlement is contingent upon, among other things, execution
of the definitive documentation and approval by the court.  There can be no
assurance that the settlement will be concluded.  The Company has set up a
reserve of $100,000 for this obligation, which is included in current
liabilities, as of April 30, 2000.

     The Company expects to incur additional expenditures over the next 6 to 12
months for general and administrative expenses and to continue its product
development.  The Company's management no longer believes that the Company's
cash on hand will be sufficient to fund the Company's operations for the next
twelve (12) months. However, management continues to believe that the
outstanding amount due from HDS, which is due January 31, 2001, of
approximately $750,000 will be at least partially repaid during the next (6)
months although it has been classified as a long-term asset based on the
financial condition of HDS as of April 30, 2000. In the fourth fiscal
quarter,  HDS repaid approximately $111,000 of the outstanding receivable
balance to the Company.  In May, 2000, an additional $54,000 was repaid. In
addition, the Company's management has set up a reserve of approximately
$375,000 or approximately 50% of the outstanding balance at April 30, 2000,
based upon anticipated probable collectibility of the balance. In the event that
no additional repayment or an insufficient repayment is made in the next (6)
months, the Company will seek alternative methods of raising additional

                                14
<PAGE>

capital or the possible liquidation of assets.  To the extent that the Company
will not be able to collect the balance of its investee receivable, its ability
to continue operating will be dependent upon its ability to successfully
sell other assets of the Company or raise additional capital.

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 the C.F. Medical Devices and
the start-up of HDS.  In March 1998, the Company decided not to make the
minimum payment obligations due on six (6) of the medical devices developed
by Dr. Lloyd Marks due to capital constraints.  Accordingly, the unamortized
cost of these licenses of $487,000 was charged to operations in the year ended
April 30, 1998. In August 1998, the Company notified Dr. Marks that it was
terminating these six (6) license agreements due to financial constraints.

     On January 22, 1999, the Company amended the Licensing Agreement dated
March 31, 1995 pertaining to the seventh device, for the manufacture and
marketing of the self-shielding needle.  The amendment eliminates the "
Minimum Payment Obligation" as defined in the original agreement. The last
such payment which was due on September 30, 1998 in the amount of $50,000 was
paid on January 26, 1999 upon execution of the amendment.

     In consideration for eliminating all future and any prior minimum payment
obligations on this invention and any other products or inventions currently or
previously licensed by the Company from the licensor, the Company agreed to
(a) increase the royalty on future sales from 8% to 10%; and (b) pay the
licensor a "cap" on minimum royalty payments of $450,000.  Such payments shall
be payable at the rate of $2,500 per month plus 10% of the proceeds received by
the Company from any capital raised which exceeds $600,000, and 10% of annual
pre-tax income until the aggregate "cap" payment is made.  The aggregate royalty
of $450,000 was charged to operations in the year ended April 30, 1999.

     In addition, if the Licensor terminates the agreement for any reason, the
maximum royalty shall be reduced by $125,000 and all information with respect to
the invention (the "Know-How") shall be returned to the licensor free and
clear of any liens.  If the Company terminates the agreement, the licensor
may acquire the Know-How for a reduction in the remaining balance due
equal to the lesser amount of $125,000 or the remaining balance due.
If the Company does not obtain the necessary government approval to market the
self-sheilding needle within (2) two years, the agreement shall terminate
unless the Company pays the licensor an additional $250,000, which
will extend the regulatory approval requirement by (2) two additional years.

     In October 1999, the Company ceased sales on the C.F. Medical products due

                                  15
<PAGE>

to the relatively low level of sales, capital constraints and price increases by
C.F.  The Company is presently evaluating the marketability of the licensed
technology relating to these products and exploring alternative means of
production of these products. However, even if alternative means of
production of these products is found, the Company would still need to obtain
additional capital to restart production, for which there can be no
assurance.  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 assets.

     The Company has not derived significant revenues since its inception in
March 1995. The total revenue earned from inception through April 30, 2000 is
$1,393,279. This is a result of the sale of the C.F. Medical Devices of
approximately $658,000 and HDS sales of hydrogel and apnea
monitor products of  approximately $735,000 which are included in the
statement of operations through January 21, 1998.
As a result of the Company's start-up expenses and acquisition oflicenses and
royalty rights for the products in the development stage, the Company had an
accumulated deficit of $9,625,756 as of April 30, 2000.  The Company is
attempting to reduce operating losses through reductions in operating expenses
until such time it can generate significant revenues from the sale of its
products.

Plan of Operation
-----------------
      The Company has temporarily halted plans to complete the development of
the Self-Shielding Needle due to capital constraints.  The Company intends to
continue with the development as additional working capital becomes available
through collection of its investee receivable or possible liquidation of
certain assets.  On May 26, 1998 the Company completed its 510(k)
notification for its Safety Needle (due to regulatory restrictions and
liability issues the Safety Needle is now referred to as the Self-Shielding
Needle) and submitted it to the FDA.  The notification was
prepared with the assistance of ACT Medical, Inc. a medical device consulting
and manufacturing firm located in Newton, MA.  The Company's primary focus since
inception has been the development of the Self-Shielding Needle.  The
ubmission of the 510(k) notification was a critical step in the development
process.  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
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 Safety 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 is currently evaluating whether to submit a PMA application
or to modify the device further and submit a new 510(k) application.  Once this
is completed, management will begin to develop its long-term strategy regarding
the sale and marketing of the product. However, the Company, has not, at this
time, determined the actual means by which it will implement all such plans,
or whether it will be able to obtain additional capital to proceed with any
such plans.

                                   16
<PAGE>

     The Company's management no longer believes that the Company's cash on hand
will be sufficient to fund the Company's operations for the next twelve (12)
months. However, management continues to believe that the outstanding amount due
from HDS, which is due January 31, 2001, of approximately $750,000 will be at
least partially repaid during the next (6) months although it has been
classified as a long-term asset based on the financial condition of HDS as of
April 30, 2000. In the fourth fiscal quarter,  HDS repaid approximately $111,000
of the outstanding receivable balance to the Company.  In May, 2000, an
additional $54,000 was repaid. In addition, the Company's management has set
up a reserve of approximately $375,000 or approximately 50% of
the outstanding balance at April 30, 2000, based upon anticipated probable
collectibility of the balance. In the event that no additional repayment or an
insufficient repayment is made in the next (6) months, the Company will seek
alternative methods of raising additional capital or the possible liquidation
of certain assets.  To the extent that the Company will not be able to collect
the balanceof its investee receivable, its ability to continue operating will be
dependent upon its ability to successfully sell other assets of the Company
or raise additional capital.

     The Company also has retained a 13.1% 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.

     However, no assurance can be made with respect to the viability of the
Company in the longterm.  Realization of the revenue potential of the Self-
Shielding Needle may require additionalcapital expenditures and other expenses.
Management anticipates that to meet such needs would require raising
additional funds from either the debt or equity markets.  Alternatively,  the
Company may need to consider liquidating some of its assets to meet cash
requirements.  No assurances can be made as to the success of these working
capital raising alternatives.




                                 17
<PAGE>



Item 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
         ---------------------------------------------
      See financial statements following Item 13 of this Annual Report on Form
      10-KSB.

Item 8.  CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE.
         -----------------------------------------------
         Changes in Registrant's Certifying Accountant
         ----------------------------------------------
(a) Moore Stephens, P.C., Registrant's former independent accountant previously
    engaged as the principal accountant to audit the Registrant's financial
    statements, was dismissed on April 10, 2000.  On April 10, 2000, the
    Board of Directors of Registrant appointed Rothstein, Kass & Company, P.C.
    as independent auditors of Registrant for the fiscal year ending April 30,
    2000.

(b) During the two most recent fiscal years and interim period subsequent to
    April 30, 1999, there have been no disagreements with Moore Stephens, P.C.,
    on any matter of accounting principles or practices, financial statement
    disclosure, or auditing scope or procedure or any reportable events.

(c)Moore Stephens, P.C.'s report on the financial statements for the past two
   years was unqualified with an explanatory paragraph relating to Registrant's
   ability to continue as a going concern.

(d) The Registrant requested that Moore Stephens, P.C. furnish it with a
    letter addressed to the SEC stating whether it agrees with the above
    statements.  A copy of Moore  Stephens P.C.'s  letter  to the SEC, dated
    April 11, 2000, was filed as Exhibit 16.1 to the Form 8-K filed on April
    13, 2000.


                                  18

<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 are elected annually.

           Name               Age       Position Held
     -------------------     ----       -----------------
     Matthew L. Harriton      36        President, Chief Executive Officer,
                                        Chief Financial Officer  and Director

     Dr. Daniel Durchslag     55        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 13.1% minority
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.  He is
presently Team Dentist for the Los Angeles Raiders.

                                   19
<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.




                                  20
<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(#)    ($)       ($)
--------------------------  ---- --------- -------- --------------- --------- -------- ------- ------------

<S>                        <C>   <C>      <C>            <C>        <C>      <C>         <C>      <C>
Matthew L. Harriton, CEO   2000  $60,000  $   -0-         0          ---           0     0        0
                           1999  $60,000  $6,000          0          ---     750,000     0        0
                           1998  $80,000  $9,000          0          ---     400,000     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
-----------------------------------   --------------------   ------------   ----------
<S>                     <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
----------------- ---------------   -----------  --------------------    ------------------
<S>                    <C>            <C>             <C>               <C>
Matthew Harriton       0              $ 0             -0-0-             -0-/-0-


</TABLE>

                                          21
<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.

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.

                                  22
<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, 2000 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.

                                     23
<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.


                                    24

<PAGE>




Item 11. SECURITY OWNERSHIP OF CERTAIN
         BENEFICIAL OWNERS AND MANAGEMENT.
         ---------------------------------
     The following table sets forth certain information, as of  July 25, 2000
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           Comb ined
of Beneficial Owner      Stock Owned    Stock       Preferred Stock(2)    Vote(2)
-------------------      -----------   ---------    ------------------  ------------
<S>                        <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
565 Fifth Avenue
New York, NY  10017

Karen Nazzareno             400,000        5.7          ---                 3.1
565 Fifth Avenue
New York, NY  10017

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.

                                   25
<PAGE>


Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          -----------------------------------------------

     On March 31, 1995 the Company entered into seven (7) License Agreements
with Lloyd A. Marks for the exclusive license of seven (7) separate medical
devices.  The License Agreements provided for the following aggregate payments:

          (i)  $230,000 paid to Dr. Marks, at the closing of the Company's
               initial public offering;.

          (ii) issued to Dr. Marks of 400,000 shares of the Company's Common
               Stock; and

          (iii) payment to Dr. Marks of 6% to 8% of the amount of the net sales
                of the medical device.

     Each of the agreements also provides for minimum payment obligations
commencing 2 1/2 years after the date of the agreement.  The minimum payment
obligations are for each license as follows:



                            Agreement               Minimum Payment
                              Year                    Obligation
                            ---------               ----------------
                            9/30/97                     $25,000
                            3/31/98                     $25,000
                            9/30/98                     $50,000
                            3/31/99                     $50,000
                            9/30/99                    $100,000
                            3/31/00                    $100,000
                            3/31/01+                   $200,000



     On September 30, 1997, the agreements for six (6) of the devices were
amended to extend the date of the first minimum payment obligation to March 31,
1998.  In consideration for the extension, the aggregate first minimum
payment obligation increased from $150,000 to $165,000.

     The Company did not make the minimum payment obligations required under the
License Agreements with respect to six (6) of the devices including the
adjustable blood pressure cuff, a multi-function fluid communication control


                               26
<PAGE>

system and  stereoscopic fluoroscopy apparatus and on August 21, 1998, the
Company notified Dr. Marks that it was terminating the License agreements
pertaining to these devices.  The minimum payment obligations with respect to
the remaining device, the self-shielding needle, were made in accordance with
the terms of the original agreement.

     On January 22, 1999, the Company amended the Licensing Agreement dated
March 31, 1995 pertaining to the seventh device, for the manufacture and
marketing of the self-shielding needle.  The amendment eliminates the
"Minimum Payment Obligation" as defined in the original agreement.  The
last such payment which was due on September 30, 1998 in the amount of
$50,000 was paid on January 26, 1999 upon execution of the amendment.

     In consideration for eliminating all future and any prior minimum payment
obligations on this invention and any other products or inventions currently or
previously licensed by the Company from the licensor, the Company agreed to
(a) increase the royalty on future sales from 8% to 10%;and  (b) pay the
licensor a "cap" on minimum royalty payments of $450,000.  Such payments shall
be payableat the rate of $2,500 per month plus 10% of the proceeds received by
the Company from any capital raised which exceeds $600,000, and 10% of annual
pre-tax income until the aggregate "cap" payment is made.  The aggregate
royalty of $450,000 has been charged to operations in the year ended April
30, 1999.

     In addition, if the Licensor terminates the agreement for any reason, the
maximum royalty shall be reduced by $125,000 and all information with respect to
the invention (the "Know-How") shall be returned to the licensor free and
clear of any liens.  If the Company terminates the agreement, the licensor
may acquire the Know-How for a reduction in the remaining balance due equal to
the lesser amount of $125,000 or the remaining balance due.  If the Company does
not obtain the necessary government approval to market the self-sheilding
needle within (2) two years, the agreement shall terminate unless the Company
pays the licensor an additional $250,000, which will extend the regulatory
approval requirement by (2) two additional years.

     On March 31, 1995, the Company entered into two (2) royalty sharing
agreements with Dr. Marks covering two (2) medical devices he had previously
licensed to unaffiliated third parties.  The royalty sharing agreements
provided for the Company to pay Dr. Marks the aggregate amount of $20,000
paid at the closing of the Company's initial public offering and the
issuance of 50,000 shares of the Company's Common Stock.  The agreements
provide for the Company to receive from Dr. Marks 50% of all royalties he
should receive on each of these medical devices.

     On September 14, 1995, the Company acquired five (5) medical devices and
the exclusive licensing rights to one (1) medical device from C.F. Electronics,
Inc. (the "C.F. Medical Devices").  Two (2) of the acquired medical devices,
the Hot-Sack II(TM) and Hot-Sack II+(TM) are used in connection with the warming
of peritoneal dialysis solution.  Four (4) of the medical devices, Hot-Sack(R),

                                   27
<PAGE>


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.
All of the medical devices acquired from C.F. have received all necessary
regulatory approvals and are in commercial distribution.

     In November, 1995, the Company completed a public offering of 1,000,000
shares of Common Stock at $5.00 per share for an aggregate of $5,000,000.  An
additional 150,000 shares were sold for gross proceeds of $750,000 to the
underwriter to cover over-allotments.  In addition, the underwriter received
an option, for a nominal fee, to acquire 100,000 shares of Common Stock at an
exercise price of $6.75 per share.  The option expires in November 2001.

     Effective with the closing of the offering, the Company entered into a
five year consulting agreement with the underwriter.  The unamortized balance of
the consulting fee of $91,667 was fully charged to operations in 1997 as a
result of the termination of the underwriter's operations.

     In February 1996, the Company entered into two separate multi-year
consulting agreements.  As consideration for these services, the Company issued
225,000 shares of Common Stock to each of the parties.  The value of the
Common Stock granted ($1,800,000) is being charged to operations ratably over
the lives of the consulting agreements.

     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, 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, with no further cash
advances allowed.

     On February 6, 1997 HDS, acquired substantially all of the assets of two
(2) related companies, Novatech, Inc. and Alternative Design Systems R & D
Group. 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),
the Company 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 ofmedical 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.

                                  28
<PAGE>

     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.

     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, 2000, the
Company holds approximately 13.1%  ownership of the common stock of 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 August 1997, HDS entered into a one-year management agreement with the
Company subject to automatic renewal each year.  The management agreement
provides for an annual fee of the greater of $75,000 per annum or ten (10%)
percent of the gross sales generated by the Company's sales representatives
in consideration for Embryo providing HDS with administrative, marketing and
management services.  In May, 1998, HDS notified the Company that the
agreement will not be renewed in August 1998.

     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 Frabrikant and Dr.
Daniel Durchslag, Directors of the Company, and options to purchase 400,000

                                   29
<PAGE>


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 are due in
five (5) years, bear interest at 8% per annum and are secured by the common
stock purchased.

     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 June 16, 2000, 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 February 10, 1999, the Company entered into a sixteen (16) month lease
commencing March 1, 1999, for office space which was personally guaranteed by an
officer of the Company. Commencing July 1, 2000, the Company has continued to
rent the space on a month to month basis.

     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."

                                    30
<PAGE>


                                PART IV
                                -------

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 - F-2

Balance sheet as of April 30, 2000                                 F-3

Statements of operations for the years ended
  April 30, 2000 and 1999                                          F-4

Statements of stockholders' equity for the years
  ended April 30, 2000 and 1999                                    F-5 - F-7

Statements of cash flows for the years ended
  April 30, 2000 and 1999                                          F-8 - F-9

Notes to financial statements                                      F-10 - F-24



                                    31
<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.  `

10.01*         March 1995 Bridge Loan Agreements.

10.02*         Consulting Agreement by and between Dr. Lloyd Marks and the
                     Company dated as of March 31, 1995.

10.03*         Licensing Agreement by and between Dr. Lloyd Marks and the
                     Company re: SmartMonitor dated of March 31,1995.

10.04*         Licensing Agreement by and between Dr. Lloyd Marks and the
                     Company re: Multi-Function Fluid Communication Control
                     System dated as of March 31, 1995.

10.05*         Licensing Agreement by and between Dr. Lloyd Marks and the
                     Company re: Adjustable Blood Pressure Cuff and Method of
                     Measuring Blood Pressure dated of March 31,1995.

10.06*         Licensing Agreement by and between Dr. Lloyd Marks and the
                     Company re: Stereoscopic Fluoroscopy Apparatus dated of
                     March 31,1995.

10.07*         Licensing Agreement by and between Dr. Lloyd Marks and the
                     Company re: Adjustable Blood Pressure Cuff and Method of
                     Using Same dated as of March 31,1995.

10.08*         Licensing Agreement by and between Dr. Lloyd Marks and the
                     Company re: Multiple Cuff Blood Pressure System dated of
                     March 31,1995.

                                     32
<PAGE>


10.09*         Licensing Agreement by and between Dr. Lloyd Marks and the
                     Company re: Safety Needle dated of March 31,1995.

10.10*         Royalty Sharing Agreement by Dr. Lloyd Marks and the Company re:
                     Computer Assisted Admittance Plethysmography dated as of
                     March 31, 1995.

10.11*         Royalty Sharing Agreement by Dr. Lloyd Marks and the Company re:
                     Method of and Apparatus of Detecting Cardiac Rhythm
                     Disturbance dated as of March 31, 1995.

10.12*         Employment Agreement by and between Donn Gordon and the
                     Company dated as of March 31, 1995.

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

10.14*         Supply Agreement by and between C.F. Electronics, Inc. and the
                     Company dated September 14, 1995.

10.15*         Supplier - Produced Finished Goods Purchase Agreement (the
                     Company has filed a request seeking confidential
                     treatment of this agreement).

10.16*         Consulting Agreement by and between the Company and David Meridor
                     dated August 29 1995.

10.17*         Sublicensing Agreement by and between the Company and Advanced
                     Technologies International, Ltd. dated July 1995.

10.18*         Distributorship Agreement by and between the Company and Medical
                     Marketplace, Inc. dated July 25, 1995.

10.19**        Consulting Agreement by and between the Company and Stanley
                     Krasnoff dated February 12, 1996.

10.20**        Consulting Agreement by and between the Company and Randolph K.
                     Pace dated February 12, 1996.

                                     33
<PAGE>

10.21+    Asset Purchase Agreement by and between Hydrogel Design Systems,
                Inc. and Alternative Design Systems R & D Group dated
                February 6, 1997.

10.22+    Asset Purchase Agreement by and between Hydrogel Design Systems,
                Inc. and Novatech, Inc. dated February 6, 1997.

10.23+    Employment Agreement by John Essmyer and Hydrogel Design
                Systems, Inc. dated February 6, 1997.

10.24+    Employment Agreement by Michael Periera and Hydrogel Design
                Systems, Inc. dated February 6, 1997.

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.

10.30++   Management Agreement between Hydrogel Design Systems, Inc.
                and the Company dated August 31, 1997.

10.31++   Amendment No. 1 to Licensing Agreement by and between Dr.
                Lloyd Marks and the Company dated September 30, 1997.

10.32++   Loan Agreement and Promissory Note between Hydrogel Design
                Systems, Inc. And BH Funding, LLC dated October 1, 1997.

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

10.34^^   Stock Option Agreement between the Company and Andrew Frabrikant
                dated June 17, 1998.

                                      34
<PAGE>


10.35^^   Stock Option Agreement between the Company and Dr. Daniel Durchslag
                dated June 17, 1998.

10.36^^   Stock Option Agreement between the Company and Matthew Harriton
                dated June 17, 1998.

10.37^^   Stock Option Agreement between the Company and Karen Nazzareno
                dated June 17, 1998

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

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.

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.

27        Financial Data Schedule (filed herewith).

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

**   Incorporated by reference to the Company's Form S-8 dated March 8, 1996.

***  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.

                                   35
<PAGE>


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

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


(B)  Reports on Form 8-K.

     On April 13, 2000, the Company filed a report on Form 8-K, reporting under
Item 4, disclosing that the Company had changed independent auditors for the
fiscal year ending April 30, 2000.



                                    36
<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 27, 2000

                         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 27 , 2000
-----------------------
Matthew L. Harriton           Chief Financial Officer,
                              Principal Accounting Officer
                              and Director


/s/ Daniel Durchslag          Director                     July 27,  2000
-----------------------
Daniel Durchslag






                               37

<PAGE>


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



Independent auditors' reports                                    F-1 -F2

Balance sheet                                                    F-3

Statements of operations                                         F-4

Statements of stockholders' equity                               F-5 -F-7

Statements of cash flows                                         F-8 -F-9

Notes to financial statements                                    F-10 - F-24









                                   38
<PAGE>







                  REPORT OF INDEPENDENT AUDITORS


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 [a development stage company] as of April 30, 2000, and
the related statements of operations, stockholders' equity, and cash flows
for  the  year  then ended.  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 audit.

              We conducted our audit in accordance with generally accepted
auditing standards. 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 audit provides a reasonable
basis for our opinion.

              In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Embryo
Development Corporation [a development stage company] as of April 30, 2000,
and the results of its operations and its cash flows for the year then ended,
in conformity with generally accepted accounting principles.  We express no
opinion on the cumulative period from inception [March 3, 1995] through April
30, 2000 as shown in the cumulative columns on the statements of operations
and the statements of cash flows, nor on the statements of stockholders'
equity for the period from inception [March 3, 1995] through April 30, 1999.

              The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 1,
the Company is in the development stage and 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 an accumulated
deficit, 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
June 30, 2000







                               F-1


<PAGE>

REPORT OF INDEPENDENT AUDITORS


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


              We have audited the accompanying  statements of operations,
stockholders' equity, and cash flows of Embryo Development Corporation [a
development stage company]for the fiscal year  ended of April 30, 1999.
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 audit.

              We conducted our audit in accordance with generally accepted
auditing standards.  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 audit provide a
reasonable basis for our opinion.

              In our opinion, the financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Embryo Development Corporation [a development stage company] for the fiscal
year ended April 30, 1999, in conformity with generally accepted accounting
principles.

              The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 1,
Embryo Development Corporation is in the development stage and the Company's
ability to continue in the normal course of business is dependent upon
the success of future operations.  The Company has utilized during the two
years ended April 30, 1999 approximately $1,926,000 in cash for operations,
primarily as a result of net losses totaling approximately $4,943,000 for the
two years ended April 30, 1999 and has a cash balance of approximately
$361,000 as of April 30, 1999.  These uncertainties 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/ Moore Stephens, P.C.
                                                   -------------------------
                                                  MOORE STEPHENS, P. C.
                                                  Certified Public Accountants.

Cranford, New Jersey
June 17, 1999




                                 F-2


<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
------------------------------------

<TABLE>

BALANCE SHEET AS OF APRIL 30, 2000.
-------------------------------------
<S>                                                              <C>
Assets:
Current Assets:
  Cash                                                           $      8,894
  Accounts Receivable                                                   7,628
  Prepaid Expenses and Other Current Assets                            16,052
                                                                 ------------
  Total Current Assets                                                 32,574
                                                                 ------------
Property and Equipment - At Cost -
 Net of Accumulated Depreciation of $26,905                            14,100

Licensed Technology - At Cost -
 Net of Accumulated Amortization of $505,238
 and Reserve of $155,357                                               79,405

Investment in Unconsolidated Investee - At Cost                        40,841

Other Assets:
  Due from Unconsolidated Investee - Net of Reserve of $374,758       374,758
  Interest Receivable                                                  29,615
  Deposits                                                             95,881
                                                                -------------
  Total Other Assets                                                  500,254
                                                                -------------
  Total Assets                                                  $     667,174
                                                                =============
Liabilities and Stockholders' Equity:
Current Liabilities:
  Accounts Payable and Accrued Expenses                         $     240,533
  Royalty Payable                                                      30,000
                                                                -------------
  Total Current Liabilities                                           270,533
                                                                -------------
Royalty Payable - Long-Term                                           381,500

Commitments and Contingencies

Stockholders' Equity:
  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

  Unearned Compensation                                              (150,000)

  Deficit Accumulated During  Development Stage                    (9,625,756)

  Notes Receivable                                                   (201,670)
                                                                   -----------
  Total Stockholders' Equity                                           15,141
                                                                   -----------
  Total Liabilities and Stockholders' Equity                     $    667,174
                                                                   ===========
</TABLE>
See Notes to Financial Statements.


                                 F-3

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
------------------------------

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                        Cumulative
                                                                     From Inception
                                                  Years ended       March 3, 1995 to
                                                   April 30,           April 30,
                                                2 0 0 0   1 9 9 9        2 0 0 0
                                                -------  ----------  ----------------
<S>                                         <C>         <C>          <C>
Revenues                                    $   43,526  $   113,999  $ 1,393,279
                                            ----------  -----------  -----------

Costs and Expenses:
  Cost of Sales                                 37,610      103,802    1,222,035
  General, Selling and Administrative          825,175      960,483    5,984,614
  Royalties                                         --      500,841      583,593
  Research and Development                      26,428      145,904    1,090,027
  Amortization                                 105,714      105,714      888,453
  Loss on Write-off of Licensed Technology     155,357           --      642,142
  Loss on Write-off of Inventories              10,755           --       10,755
  Interest Income - Related Party              (59,684)     (45,183)    (115,889)
  Interest and Other [Income] Expense           (6,734)      22,764      431,636
  Equity Loss of Operations of Unconsolidated
   Investee                                         --      298,630      665,374
  Provision for Litigation Settlement          100,000           --      100,000
  Adjustment for Collectibility of Amount Due
   from Unconsolidated Investee                  1,416      373,342      374,758
  Gain on Sale of Stock of Unconsolidated
   Investee                                         --     (653,510)    (653,510)
                                            -----------  -----------  -----------
  Total Costs and Expenses                   1,196,037    1,812,787   11,223,988
                                            -----------  -----------  -----------
  Loss Before Minority Interest             (1,152,511)  (1,698,788)  (9,830,709)

  Minority Interest in Net Loss of Subsidiary       --           --      204,953
                                            -----------  -----------  ------------
   Net Loss                                $(1,152,511) $(1,698,788) $(9,625,756)
                                            =========== ============ =============

  Basic and Diluted Net Loss Per Share      $     (.17) $      (.26) $     (1.82)
                                            =========== ===========  ============
  Weighted Average Number of Shares of
   Common Stock Outstanding                  6,995,000    6,635,685    5,287,291
                                            =========== ===========  ============
</TABLE>
See Notes to Financial Statements.





                                F-4


<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
------------------------------

STATEMENTS  OF STOCKHOLDERS' EQUITY
------------------------------------


<TABLE>
<CAPTION>
                                                                       Additional
                                Common Stock      Preferred Stock        Paid-in
                                Shares    Amount     Shares   Amount     Capital
                                ---------------  -------------------  ------------
<S>                             <C>         <C>    <C>        <C>     <C>
Issuance of Stock for Cash at
 Inception March 3, 1995:
 Common                          2,400,000  $ 240         --  $   --   $   108,936
 Preferred                              --     -    6,000,000    600        10,224
Issuance of Stock for Licensed
 Technology                        325,000     33         --      --       974,967
Issuance of Stock for Research
 and Development                   125,000     12         --      --       374,988
Issuance of Stock in Connection
 with Subscription Agreement       180,000     18         --      --       539,982
Net Loss                                --     --         --      --           --
                               -----------  ------  ---------- ------   -----------
 Balance - April 30, 1995        3,030,000    303   6,000,000    600     2,009,097
Issuance of Stock in Connection
 with Initial Public Offering    1,150,000    115         --      --     4,337,093
Issuance of Stock in Connection
 with Consulting Agreements       510,000      51         --      --     2,039,949
Compensation Earned in
 Connection with Consulting
 Agreements                            --      --         --      --          --
Net Loss                               --      --         --      --          --
                              ------------   -----  ---------- ------    -----------
 Balance - April 30, 1996 -
  Forward                       4,690,000  $  469   6,000,000  $ 600 $   8,386,139

</TABLE>

See Notes to Financial Statements.


EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
----------------------------------

STATEMENTS  OF STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
                                                  Deficit
                                                Accumulated
                                                During the                Total
                                   Unearned     Development    Notes    Stockholders'
                                Compensation       Stage     Receivable    Equity
                                ------------   ------------  ---------- ------------
<S>                             <C>            <C>         <C>           <C>
Issuance of Stock for Cash at
 Inception March 3, 1995:
 Common                         $       --     $       --  $       --    $   109,176
 Preferred                              --             --          --         10,824
Issuance of Stock for Licensed
 Technology                             --             --          --        975,000
Issuance of Stock for Research
 and Development                        --             --          --        375,000
Issuance of Stock in Connection
 with Subscription Agreement            --             --          --        540,000
Net Loss                                --        (483,310)        --       (483,310)
                               ------------   ------------- ----------    -----------
 Balance - April 30, 1995               --        (483,310)        --      1,526,690

Issuance of Stock in Connection
 with Initial Public Offering           --             --          --      4,337,208
Issuance of Stock in Connection
 with Consulting Agreements      (2,040,000)           --          --            --
Compensation Earned in
 Connection with Consulting
 Agreements                          97,500            --          --          97,500
Net Loss                                --      (1,139,761)        --      (1,139,761)
                               ------------  --------------  ----------  -------------

 Balance - April 30, 1996 -
  Forward                       $(1,942,500)   $(1,623,071)$       --     $4,821,637


</TABLE>
See Notes to Financial Statements.




                                                F-5

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
--------------------------------

STATEMENTS  OF STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>


                                                                       Additional
                                   Common Stock      Preferred Stock     Paid-in
                                 Shares     Amount    Shares    Amount   Capital
                                 -----------------  ------------------ ------------
<S>                             <C>         <C>      <C>        <C>    <C>
 Balance - April 30, 1996 -
  Forwarded                     4,690,000   $  469   6,000,000  $  600 $  8,386,139

Issuance of Stock for Services      5,000        1          --      --       17,499
Issuance of Stock in Connection
 with Investment in Subsidiary    150,000       15          --      --       74,985
Compensation Earned in
 Connection with Consulting
 Agreements                          --         --          --      --          --
Issuance of Stock by Subsidiary
 to Minority Holders                 --         --          --      --      (37,350)
Amortization of Unearned
 Compensation of Minority
 Holders-Subsidiary                  --         --          --      --       2,502
Net Loss                             --         --          --      --          --
                               -----------  -------   ---------- ------- ------------
 Balance - April 30, 1997      4,845,000       485    6,000,000   600     8,443,775

Compensation Earned in
 Connection with Consulting
 Agreements                        --           --         --       --          --
Issuance of Stock by Investee
 in Connection with
 Private Placement - April 1998    --           --         --       --    1,330,326
Net Loss                           --           --         --       --          --
                               -----------  -------   ----------- -----   -----------
 Balance - April 30, 1998 -
  Forward                      4,845,000    $ 485     6,000,000 $ 600   $ 9,774,101

</TABLE>
See Notes to Financial Statements.



EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
--------------------------------

STATEMENTS OF STOCKHOLDERS' EQUITY
-------------------------------------

<TABLE>
<CAPTION>
                                                 Deficit
                                                Accumulated
                                                During the                Total
                                  Unearned      Development   Notes      Stockholders'
                                Compensation        Stage     Receivable    Equity
                                ------------    ------------  ---------- -------------
<S>                             <C>           <C>           <C>          <C>
Balance - April 30, 1996 -
  Forwarded                     $(1,942,500)  $ (1,623,071) $      --    $ 4,821,637

Issuance of Stock for Services          --             --          --         17,500
Issuance of Stock in Connection
 with Investment in Subsidiary          --             --          --         75,000
Compensation Earned in
 Connection with Consulting
 Agreements                        495,000             --          --        495,000
Issuance of Stock by Subsidiary
 to Minority Holders                   --              --          --        (37,350)
Amortization of Unearned
 Compensation of Minority
 Holders-Subsidiary                    --              --          --          2,502
Net Loss                               --       (1,907,403)        --     (1,907,403)
                                 ------------  ------------  ----------  ------------
 Balance - April 30, 1997       (1,447,500 )    (3,530,474)        --      3,466,886

Compensation Earned in
 Connection with Consulting
 Agreements                        495,000             --           --       495,000
Issuance of Stock by Investee
 in Connection with
 Private Placement - April 1998        --              --           --     1,330,326
Net Loss                               --       (3,243,983)         --    (3,243,983)
                                ------------  -------------   ----------  -----------
 Balance - April 30, 1998 -
  Forward                   $      (952,500)  $ (6,774,457)$        -- $   2,048,229
</TABLE>


See Notes to Financial Statements.
                                                 F-6


<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
--------------------------------

STATEMENTS  OF STOCKHOLDERS' EQUITY
------------------------------------

<TABLE>
<CAPTION>


                                                                        Additional
                                  Common Stock         Preferred Stock    Paid-in
                                Shares    Amount     Shares      Amount   Capital
                               -----------------   --------------------- ----------
<S>                            <C>        <C>      <C>        <C>     <C>
 Balance - April 30, 1998 -
  Forwarded                    4,845,000  $  485   6,000,000  $  600  $   9,774,101

Exercise of Options July 1998
 with Notes Receivable         2,150,000     215         --       --        201,455
Compensation Earned in
 Connection with Consulting
 Agreements                        --        --          --       --            --
Amortization of Unearned
 Compensation of Minority
 Holders - Investee                --        --          --        --         3,437
Issuance of Stock by Investee
 in Connection with Exercise
 of Options - January 1999         --        --          --        --        12,274
Net Loss                           --        --          --        --           --
                               ---------  -------  ---------  ------- -------------
 Balance - April 30, 19 99     6,995,000  $  700   6,000,000  $   600 $   9,991,267

Compensation Earned in
 Connection with Consulting
 Agreements                        --        --          --        --           --
Net Loss                           --        --          --        --           --
                               ---------  ------  ----------  ------- -------------
Balance - April 30, 2000       6,995,000  $  700   6,000,000  $   600 $   9,991,267
                               =========  ======  ==========  ======= =============
</TABLE>


See Notes to Financial Statements.






EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
------------------------------

STATEMENTS  OF STOCKHOLDERS' EQUITY
------------------------------------

<TABLE>
<CAPTION>
                                                Deficit
                                              Accumulated
                                               During the                  Total
                                 Unearned      Development     Notes     Stockholders'
                                Compensation      Stage       Receivable    Equity
                                ------------  -------------  ----------- --------------
<S>                           <C>             <C>            <C>         <C>
Balance - April 30, 1998 -
  Forwarded                   $   (952,500)   $ (6,774,457)  $     --    $  2,048,229

Exercise of Options July 1998
 with Notes Receivable                 --               --    (201,670)            --
Compensation Earned in
 Connection with Consulting
 Agreements                        435,000              --          --        435,000
Amortization of Unearned
 Compensation of Minority
 Holders - Investee                   --                --          --          3,437
Issuance of Stock by Investee
 in Connection with Exercise
 of Options - January 1999            --                --          --         12,274
Net Loss                              --       (1,698,788)          --     (1,698,788)
                                  ---------    ------------   ---------   ------------
    Balance - April 30, 1999      (517,500)    (8,473,245)    (201,670)       800,152

Compensation Earned in
 Connection with Consulting
 Agreements                        367,500             --           --        367,500
Net Loss                             --        (1,152,511)          --     (1,152,511)
                                 ---------    -------------  ----------   ------------
Balance - April 30, 2000         $(150,000)   $(9,625,756)   $(201,670)    $   15,141
                                 ==========   =============  ===========  =============
</TABLE>

See Notes to Financial Statements.






                                                 F-7

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
--------------------------------

STATEMENTS OF CASH FLOWS
--------------------------
<TABLE>
                                                                         Cumulative
                                                                        From Inception
                                                     Years ended        March 3, 1995 to
                                                      April 30,           April 30,
                                                   2 0 0 0     1 9 9 9     2 0 0 0
                                                 ----------- ------------ ------------
<S>                                              <C>          <C>          <C>
Operating Activities:
   Net Loss                                      $(1,152,511) $(1,698,788) $(9,625,756)
  Adjustments to Reconcile Net Loss to Net
   Cash [Used for] Operating Activities:
   Depreciation and Amortization                     110,630      113,529    1,549,370
   Write-Off and Reserve of Licensed Technology      155,357          --       642,142
      Write-Off of Inventories                        10,755          --        10,755
   Gain on Sale of Stock of Unconsolidated Investee       --     (653,510)    (653,510)
   Adjustment for Collectibility of Amount Due from
     Unconsolidated Investee                           1,416      373,342      374,758
   Minority Interest in Loss of Subsidiary                --          --      (204,953)
   Equity Loss in Operations of Unconsolidated
     Investee                                             --      298,630      665,374
   Provision for Litigation Settlement               100,000          --       100,000
   Non-Cash Consideration - Other                    367,500      435,000    1,946,233
   Non-Cash Consideration - Research and
     Development                                          --          --       440,000

  Changes in Assets and Liabilities:
   [Increase] Decrease:
     Accounts Receivable                              16,730        9,748     ( 87,325)
     Interest Receivable                             (16,178)     (10,655)    (  1,433)
     Inventories                                      21,900       39,196     ( 55,791)
     Prepaid Expenses and Other Current Assets         9,567      169,501     ( 26,552)
     Other Assets                                     (3,831)     (89,876)    (243,923)

   Increase [Decrease]:
     Accounts Payable and Accrued Expenses            58,500     (191,500)     830,481
     Royalty Payable                                 (30,000)     441,500      411,500
                                                    ----------  ----------  -----------
   Net Cash - Operating Activities - Forward        (350,165)   ( 763,883)  (3,928,630)
                                                    ----------  ----------  ------------
Investing Activities:
  Proceeds from Sale of Stock of Unconsolidated
   Investee                                              --       710,000      710,000
  Purchase of Short-Term Investments                     --           --      (847,000)
  Proceeds from Sale of Short-Term Investments           --       288,000      847,000
  Purchase of Investments in Available-for-Sale
   Securities                                            --           --   ( 6,129,521)
  Proceeds from Sale of Investments in Available-
   for-Sale Securities                                   --           --     6,129,521
  Net Cash Paid for Asset Acquisition                    --           --      (200,588)
  Purchase of Licensed Technology                        --           --      (450,000)
  Purchase of Property and Equipment                  (1,457)      (8,109)  (1,036,373)
  Divestiture of Cash of Subsidiary                       --          --       (77,794)
                                                  ----------  ----------- -------------
   Net Cash - Investing Activities - Forward      $   (1,457) $   989,891 $ (1,054,755)
                                                  ----------- ----------- --------------
</TABLE>
See Notes to Financial Statements.

                                                          F-8
<PAGE>


EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
---------------------------------

STATEMENTS OF CASH FLOWS
---------------------------------

<TABLE>
<CAPTION>

                                                                         Cumulative
                                                                        From Inception
                                                 Years ended            March 3, 1995 to
                                                 April 30,                April 30,
                                                 2 0 0 0      1 9 9 9     2 0 0 0
                                               -----------  -----------  ---------------
<S>                                            <C>          <C>          <C>

  Net Cash - Operating Activities - Forwarded  $ (350,165)  $ (763,883)  $  (3,928,630)
                                               -----------  -----------  ---------------
  Net Cash - Investing Activities - Forwarded      (1,457)     989,891      (1,054,755)
                                               -----------  -----------  ---------------
Financing Activities:
  Proceeds from Issuance of Debt                      --           --          650,000
  Proceeds from Issuance of Stock                     --           --          120,000
  Proceeds from Issuance of Subsidiary Stock to
   Minority Shareholder                               --           --          150,000
  Repayment of Loans to Unconsolidated Investee       --           --          258,821
  Repayment of Debt                                   --           --         (550,000)
  Proceeds of Stock Offering, Net of Deferred Costs   --           --        4,337,208
  Due from Unconsolidated Investee                    --           --           26,250
                                               ------------ ------------  -------------
  Net Cash - Financing Activities                     --           --        4,992,279
                                               ------------ ------------  -------------
  Net Increase [Decrease] in Cash and Cash
   Equivalents                                   (351,622)    226,008            8,894

Cash and Cash Equivalents - Beginning of
 Periods                                          360,516     134,508               --
                                               -----------  -----------   -------------
Cash and Cash Equivalents - End of Periods   $      8,894   $ 360,516     $      8,894
                                             ============   ===========   =============

</TABLE>
See Notes to Financial Statements.





                               F-9

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS
------------------------------------

[1] Organization and Nature of Operations

Embryo Development Corporation [the "Company"] is a Delaware Corporation which
was formed 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 onward.  HDS is engaged in the manufacture,
marketing, selling and distribution of hydrogel, an aqueous polymer-based
radiation ionized medical/consumer product.

The Company is in the development stage, as defined in Statement of Financial
Accounting Standard No. 7, "Accounting and Reporting for Development Stage
Enterprises."  To date, the Company has generated minimal sales and devoted
its efforts primarily to various organizational activities, including
negotiating of license agreements, developing its business strategy, hiring
management personnel, raising capital through an initial public offering
which was completed in November 1995 [See Note 5], and undertaking
preliminary activities for the commencement of operations.  In February 1997,
HDS acquired certain assets and the business of a group of companies engaged
in the manufacture and distribution of hydrogel and after-market apnea
monitoring components.  HDS has devoted substantial efforts to the establishment
of a manufacturing facility for its accelerator beam equipment used in the
production of hydrogel, which was completed during the year ended April 30,
1998, and in contacting prospective customers of hydrogel and related
accelerator beam products.  In September 1995, the Company purchased certain
assets and the on-going business of a medical products division of an
existing business [See Note 7].  The Company has not generated any
significant revenue to date and is presently evaluating the commercial
value of the products obtained under its business acquisitions license
agreements.  There can be no assurance that the Company will be successful
in marketing any such products or licensing rights.

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern.  The Company has incurred cumulative losses
of approximately $9,626,000, has a working capital deficit of approximately
$238,000,  and utilized cash of approximately $350,000 for operating activities
for the year ended April 30, 2000.  Management recognizes that the Company
must generate additional revenue to achieve profitable operations and obtain
equity and debt financing.  Management's plans to increase revenues and
reduce expenses to achieve profitable operations include the development of a
marketing strategy of the Self-Shielding Needle, one of its licensed products.
This product  requires final design changes be made for a 510(K) resubmission to
the FDA.  The Company has temporarily halted plans to complete the development
of the Self-Shielding Needle due to capital constraints.

Management believes that the Company's cash balance totaling approximately
$9,000 and the  repayment of a portion of its revolving line of credit from
HDS will be sufficient to fund the Company's operations for the next twelve
(12) months.  Management believes the outstanding amount due from HDS of
approximately $750,000 will be at least partially repaid during the next (12)
months although it has been classified as a long-term asset based on the
current financial condition of HDS.    In May, 2000, HDS made a net payment
of approximately $54,000 of this obligation and has continued to make payments
in June, 2000.  In the event that no further repayment can be made in the next
(12) months, the Company will seek alternative methods of raising additional
capital.

In an effort to strengthen the Company's position until a meaningful revenue
stream and positive cash flow can be achieved, management has undertaken a
significant cost reduction program.


                                F-10
<PAGE>


EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #2
----------------------------------------


[1] Organization and Nature of Operations [Continued]

However, no assurance can be made with respect to the viability of the Company
in the long-term.  Realization of the revenue potential of the self-shielding
needle may require additional capital expenditures and other expenses.
Management anticipates that to meet such needs would require raising
additional funds from either the debt or equity markets.  Alternatively, the
Company may need in the long-term to consider liquidating some of its assets
to meet cash requirements.  No assurance can be made as to the success of
these capital raising alternatives.

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

Principles of Consolidation - The accompanying financial statements include the
accounts of the Company and its subsidiary, Hydrogel Design Systems, Inc.
["HDS"] through January 21, 1998.  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 as a result of a reduction in ownership,
voting interest and the lack of management control.  This investment was
accounted for using the equity method of accounting from January 21, 1998
through January 31, 1999 and accounted for using the cost method subsequent
to January 31, 1999.

Upon consolidation, all significant intercompany accounts and transactions have
been eliminated.

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, 2000 and 1999 and the
cumulative period from inception [March 3, 1995] through April 30, 2000
amounted to $4,916, $7,815 and $119,286, respectively.

Concentrations of Credit Risk - Financial instruments which potentially subject
the Company to concentrations of credit risk are cash,  accounts receivable 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, 2000, 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.




                                F-11
<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #3
----------------------------------------


[2] Summary of Significant Accounting Policies [Continued]

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.

Cash Equivalents  - The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.  At
April 30, 2000, the Company had no cash equivalents.

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

Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles 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.

Advertising - The Company charges advertising costs to expense as incurred.
Advertising costs approximated $-0-, $2,000, and $78,000 for the years ended
April 30, 2000 and 1999, and the cumulative period from inception [March 3,
1995] through April 30, 2000, respectively.

Impairment - Certain long-term assets [including licensed technology] 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. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of."  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.  As of April 30,
2000, management expects these assets net of existing reserves to be fully
recoverable.

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.





                               F-12

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #4
-----------------------------------------


[2] Summary of Significant Accounting Policies [Continued]

Earnings Per Share [Continued] - 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.  Options
and warrants disclosed in Note 12 may dilute earnings per share in the future.

Stock Options and Similar Equity Instruments - On May 1, 1997, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards ["SFAS"] No. 123, "Accounting for Stock-Based Compensation," for stock
options and similar equity instruments [collectively "Options"] issued to
employees and directors, however, the Company will continue to apply the
intrinsic value based method of accounting for options issued to employees
prescribed by Accounting Principles Board ["APB"] Opinion No. 25, "Accounting
for Stock Issued to Employees" rather than the fair value based method of
accounting prescribed by SFAS No. 123.  SFAS No. 123 also applies to
transactions in which an entity issues its equity instruments to acquire
goods and services from non-employees.  Those transactions must be accounted
for based on the fair value of the consideration received or the fair value
of the equity instruments issued, whichever is more reliably measurable.

[3] Investment in HDS

n January 1997, the Company entered into a subscription agreement to acquire
1,251,000 shares of HDS common stock and 15,000,000 shares of HDS Series A
preferred stock.  HDS was formed to effect the asset acquisition described in
Note 7B.  As consideration for its interest, the Company contributed $150,000
in cash, 150,000 shares of its common stock, and the commitment to make
available to HDS a $500,000, 8% revolving line of credit.

At April 30, 1997, the Company's ownership of HDS represented 50.04% of the
common stock and 92.9% of total voting shares.

On January 21, 1998, the Company's equity interest in HDS, 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 fully subscribed, and the Company's ownership decreased to approximately
33.3% of common interest.

As a result of the surrender of the voting preferred stock and the issuance of
additional common stock, the Company's ownership in HDS was reduced to below 50%
interest and therefore, the assets, liabilities and operations of HDS after
January 21, 1998 were not included on a consolidated basis in the financial
statements of the Company subsequent to January 21, 1998.

Approximately $287,000 of the loss applicable to minority interest for the
period May 1, 1997 through January 21, 1998 was in excess of minority interest
in capital, and accordingly has been charged to the Company's operations.


                                F-13
<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #5
------------------------------------------


[3] Investment in HDS [Continued]

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.  The Company previously
held a total investment of 1,272,500 shares of HDS which represented 33.3%
common ownership.  As a result of this transaction, the Company held 562,500
shares or 14.4% common ownership of HDS.  On January 31, 1999, as a
result of this transaction, the ownership decreased below 20% and the Company
changed the accounting for this investment from the equity method to the cost
method.

Summarized financial information for HDS, which prior to January 21, 1998 was
consolidated, commencing January 21, 1998 through January 31, 1999 was accounted
for using the equity method, and subsequent to January 31, 1999 is being
accounted for on the cost method, is no longer presented due to
the reduction of the investment, which is currently reported at cost.  As of
April 30, 2000, the Company holds approximately 13.1% ownership of the common
stock of HDS.

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, 2000, borrowings under the revolver approximated
$750,000 including accrued interest.

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 [See
Note 6D].  In May 1999, these payments were reduced to $7,892 per month due
to 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 August 1997, HDS entered into a one-year management agreement with the
Company subject to automatic renewal each year.  The management agreement
provided for an annual fee of the greater of $75,000 per annum or ten (10%)
percent of the gross sales generated by the Company's sales representatives
in consideration for Embryo providing HDS with administrative, marketing and
management services.  General and administrative expenses have been reduced
by $-0-, $25,000 and $43,750 for the years ended April 30, 2000 and 1999 and
for the cumulative period from inception [March 3, 1995] through April 30,
2000, respectively.  On May 4, 1998, HDS notified the Company that the
agreement would not be renewed effective August 1998.

On January 31, 1999, all amounts under the revolver became due.  The Company
requested payment from HDS for an aggregate of $667,000 which represented all
monies due inclusive of interest under the revolver and all monies due under
the terms of the management agreement.  HDS was unable to make
the required payment due to its current financial condition.  The original
line of credit which expired on January 31, 1999 was extended to January 31,
2001.  The terms of the extension prohibit any future cash advances on the
credit line and provide 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, with any remaining outstanding balance due on January
31, 2001.  The Company's management has set up a reserve of approximately
$375,000 or approximately 50% of the outstanding balance at April 30, 2000
of approximately $750,000, based upon anticipated probable collectibility.
In addition, the Company has classified this receivable as a long-term asset
although it is due on January 31, 2001, due to the financial condition of HDS
as of April 30, 2000.  Approximately $57,000 was collected through June 30,
2000.



                               F-14

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #6
----------------------------------------


[4] License Agreements

In March 1995, the Company entered into seven license agreements for the rights
to manufacture and market seven medical devices.  Each of the seven agreements
also provide for minimum payment obligations commencing 2 1/2 years after the
dateof the agreements.  On September 30, 1997, the agreements for six (6) of
the devices were amended to extend the date for the first minimum payment
obligation to March 31, 1998.  In consideration for the extension, the aggregate
first minimum payment obligation increased from $150,000 to $165,000.

The Company did not make the minimum payments required under the License
Agreements with respect to six (6) of the devices including 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 through March 31, 1998.  On August 21, 1998, the Company
notified the licensor that it was terminating the agreements with respect to
these six (6) devices.  The remaining unamortized cost of $486,785 for these
agreements was charged to operations in the year ended April 30, 1998.

On January 22, 1999, the Company amended the Licensing Agreement dated March 31,
1995 pertaining to the seventh device, for the manufacture and marketing of the
self-shielding needle.  The amendment eliminates the "Minimum Payment
Obligation" as defined in the original agreement.  The last such payment
which was due on September 30, 1998 in the amount of $50,000 was paid on
January 26, 1999 upon execution of the amendment.

In consideration for eliminating all future and any prior minimum payment
obligations on this invention and any other products or inventions currently
or previously licensed by the Company from the licensor, the Company agreed
to (a) increase the royalty on future sales from 8% to 10%, and (b)
pay the licensor a maximum royalty of $450,000.  Such payments shall be
payable at the rate of $2,500 per month plus 10% of the proceeds received by
the Company from any capital raised which exceeds $600,000, and 10% of annual
pre-tax income.  The aggregate royalty of $450,000 was charged to operations
in the year ended April 30, 1999.

In addition, if the Licensor terminates the agreement for any reason, the
maximum royalty shall be reduced by $125,000 and all information with respect to
the invention [the "Know-How"] shall be returned to the licensor free and
clear of any liens.  If the Company terminates the agreement, the licensor
may acquire the Know-How for a reduction in the remaining balance due equal
to the lesser amount of $125,000 or the remaining balance due.  If the
Company does not obtain the necessary government approval to market the self-
shielding needle withing two (2) years, the agreement shall terminate unless
the Company pays the licensor an additional $250,000, which will extend the
regulatory approval requirement by two (2) additional years.

In March 1995, the Company also entered into royalty sharing agreements under
which it is entitled to 50% of the royalties received by the licensor under
license agreements for two medical devices.  Consideration under these
agreements consisted of the issuance of $20,000 in notes and 50,000 shares of
the Company's common stock.  The royalty sharing agreements are in effect over
the lives of the underlying agreements.  In addition, the Company has the
right to license the patents for the products in the event the underlying
licenses are terminated.

The common stock issued under these agreements was valued at $3 per share.




                               F-15
<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #7
-----------------------------------------


[4] License Agreements [Continued]

The medical devices underlying five of these license and royalty sharing
agreements were deemed to be in the development stage, and accordingly, the
consideration paid ($440,000) was charged to operations [research and
development] in the period ended April 30, 1995.  The consideration for the
remaining four agreements ($1,160,000) was recorded as licensed technology.  At
April 30, 1998, the unamortized cost of $486,785 for three of these agreements
was charged to operations as the minimum royalty payments were not made and
the agreements were effectively terminated on August 21, 1998.

[5] Stockholders' Equity

[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] Initial Capitalization - In March 1995, the Company issued 2,400,000 shares
of common stock and 6,000,000 shares of preferred stock ["Founders' Stock"] for
an aggregate amount of $120,000.

[C] Subscription Agreements - In March 1995, the Company entered into
subscription agreements in connection with a bridge loan in the aggregate amount
of $300,000, [the "Bridge Loans"].  In connection with the Bridge Loan, the
Company issued the aggregate amount of 180,000 Bridge Units, each Bridge
Unit consisting of one share of common stock and one Class B Warrant.
Each Class B Warrant entitles the holder to acquire one share of common stock at
an exercise price of $10 per share. The warrants expired in November, 1999.
The promissory notes issued in connection with the Bridge Loan were
repaid with interest at 8% on November 22, 1995, with the proceeds from the
public offering.  The 180,000 shares of the Company's common stock represented a
financing cost of $540,000 [$3 per share] which was amortized in full upon
the successful completion of the public offering.

[D] Public Offering - In November 1995, the Company completed a public offering
of 1,000,000 shares of common stock at $5.00 per share for an aggregate of
$5,000,000.  An additional 150,000 shares were sold for gross proceeds of
$750,000 to the underwriter to cover over-allotments.  In addition, the
underwriter received an option, for a nominal fee, to acquire 100,000 shares of
common stock at an exercise price of $6.75 per share.  The option, which was to
expire in November 2001, has been cancelled as the underwriter ceased
operations in 1997.

Effective with the closing of the offering, the Company entered into a
consulting agreement with the underwriter.  The underwriter ceased operations in
1997, and the unamortized balance of the consulting fee ($91,667) was charged
to operations in the year ended April 30, 1997.

[E] Issuance of Securities - In July 1996, the Company issued 5,000 shares of
common stock to its medical advisory board of services.  The value of the common
stock granted ($17,500) was charged to operations.

In May 1996, the Company issued a five-year warrant, exercisable at any time,
for the purchase of 100,000 shares of common stock of the Company at $6 per
share.  The warrant was issued in connection with the termination of a
sublicensing agreement.


                                F-16

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #8
---------------------------------------


[5] Stockholders' Equity [Continued]

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 ($.0938)
under the Incentive Stock Option Plan (See [G] below).  In addition, an
aggregate of 500,000 options which were granted to an officer under the terms of
a prior employment agreement were amended to have an exercise price of
($.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, bear interest at 8%, and are
secured by the related securities.

[F] Consulting Agreements - In February 1996, the Company entered into two
separate multi-year consulting agreements.  As consideration for these
services, the Company issued 225,000 shares of common stock to each of the
parties.  The value of the common stock granted ($1,800,000) is being
charged to operations ratably over the lives of the consulting agreements
which range between four and five years.

In August 1995, the Company entered into a three-year consulting agreement for
services related to the development of strategic sales and marketing plans in
the United States, and internationally.  The agreement, which initially
provided for a monthly consulting fee of $5,000, was amended in March 1996,
at which time the Company issued 60,000 shares of common stock in lieu of
the monthly consulting fee.  The value of the common stock granted ($240,000)
was charged to operations ratably over the remaining life of the consulting
agreement which was thirty-two months.

[G] 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.

[H] Loss Per Share - Loss per share was computed by dividing net loss by the
weighted number of shares outstanding.  Potential common shares of 200,000 have
been excluded as their effect would be anti-dilutive.

[I] Reserved Shares - Common shares reserved at April 30, 2000 are as follows:

Incentive Stock Option Plan                         350,000
Non-Qualified Stock Option Plan                   2,000,000
Key Employee Options                                100,000
Other                                               100,000
                                                  ---------
Total                                             2,550,000
                                                  =========




                               F-17

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #9
----------------------------------------


[6] 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 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 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 fora 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.  The settlement is contingent upon, among
other things, execution of the definitive documentation and
approval by the court.  There can be no assurance that the settlement will
be concluded.  At April 30, 2000, the Company has recorded a reserve of
$100,000, which is included in accounts payable and accrued expenses, for
this obligation.

[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.

In 1995, the Company granted a former officer an option to purchase 100,000
shares of the Company's common stock  exercisable commencing March 1997, at
an exercise price equal to the fair market value at March 31, 1997 ($.5625).
These options are exercisable over a four-year period.

[C] Consulting Agreement - In 1995, the Company entered into a four-year
consulting agreement with the licensor of the medical devices discussed in
Note 4.  The agreement provided for an annual consulting fee of $75,000.  In
addition, the consultant was issued warrants to purchase 600,000 shares of the
Company's common stock at an exercise price of $3 per share.  On June 22, 1998,
notice was given to licensor to terminate the agreement effective July 22, 1998.
The warrants expired in November, 1999.

                                F-18

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #10
-----------------------------------------


[6] Commitments and Contingencies [Continued]

[D] 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 provides for monthly minimum lease
payments of $9,625.  The lease contains a five-year renewal option and
provides that the Company shall pay for insurance, taxes and maintenance.
In addition, the lease contains 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 provides
for minimum monthly rental payments of $9,625 to be received, and expires in
2004.  On May 1, 1999, the minimum rental payment on the sub-lease with HDS
was reduced to $7,892 due to 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 April 1998, the Company along with other co-tenants entered into a fourteen
month lease for office space with an entity controlled by the former Chairman
of Embryo.  The Company's portion of the monthly lease payment amounted to
$3,600.  At April 30, 1998, the total lease payments of $50,400 were held in
escrow by the landlord's attorney.  The Company vacated the premises March 1,
1999 and the total lease payments of $50,400 are included in operations in
the year ended April 30, 1999.

On February 10, 1999, the Company entered into a sixteen (16) month lease for
office space commencing March 1, 1999.  The lease provides for minimum monthly
lease payments of $5,085 and is personally guaranteed by an officer of the
Company.

Aggregate rent expense approximated $176,526, $176,071 and $699,897 for the
years ended April 30, 2000 and 1999, and the cumulative period from inception
[March 3, 1995] through April 30, 2000, respectively.  Rental income from the
sub-lease amounted to approximately $106,838, $115,500, and $251,213 for the
years ended April 30, 2000 and 1999, and the cumulative period from inception
[March 3, 1995] through April 30, 2000, respectively.

Minimum annual rentals under the leases are as follows:

Year ending                                 Rent    Sub-Lease
April 30,                                  Expense    Income
-------------                            ---------- ----------
  2001                                  $  125,670 $ 115,500
  2002                                     115,500   115,500
  2003                                     115,500   115,500
  2004                                      86,625    86,625
  2005                                         --        --
  Thereafter                                   --        --
                                       ----------- ------------
  Totals                               $   443,295 $ 433,125
                                       =========== ============

[E] 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-19

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #11
------------------------------------------



[7] Business Combinations

[A] In September 1995, the Company entered into an agreement to purchase certain
assets and the ongoing business of the Medical Division of C.F. Electronics,
Inc. ["CF"].  Under the agreement, the Company acquired the rights to CF's
medical products for consideration of $450,000 which was capitalized as
licensed technology, of which $45,000 was paid upon closing and the balance
($405,000) was paid on December 12, 1995 from the proceeds from the public
offering.  The Company also purchased CF's finished goods inventory and
demonstration equipment.

In addition, the Company entered into a five year "Supply Agreement" with CF,
which provides for CF to supply the Company with certain products at a price
equal to CF's cost [as defined] plus 10%.  The Agreement provides for minimum
payments to CF during its first two years.

In October, 1999, the Company ceased sales of  these medical products due to the
relatively low level of sales, capital constraints and price increases by CF.
The Company is presently evaluating the marketability of these rights and
exploring alternative means of production of these products.  At April
30, 2000, the unamortized amount of the technology approximated $155,000, of
which the Company has recorded a 100% reserve based upon anticipated
marketability of these rights.

[B] On February 6, 1997, HDS acquired certain assets from a group of entities
for an aggregate purchase price of $150,000 in cash and 150,000 shares of
Embryo common stock [valued at $75,000].  Assets acquired include property
rights and technical data, machinery and equipment, and inventory.  The
Embryo shares vest on the second anniversary date of the agreement only if
HDS has earned $500,000 in cumulative gross revenue derived from the sale of
certain products during the two (2) year period.  If, on the vesting date,
the fair market value of the shares is less than $900,000, the parties may
demand that HDS purchase all of the shares at an aggregate purchase price of
$900,000 in either cash and/or marketable securities.  Expenses of
approximately $51,000 were incurred in connection with this acquisition.
This acquisition has been accounted for as a purchase.

In January 1998, as a result of subsequent litigation between HDS and the former
owners, the terms of the original purchase were modified.  The Embryo shares
were returned to HDS for a cash payment of $450,000 and a long-term
promissory note in the amount of $950,000.

[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, 2000 are as
follows:




                                F-20

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #12
-----------------------------------------


[8] Income Taxes [Continued]

Deferred Tax Assets:
  Net Operating Loss Carryforward                          $2,477,000
  Tax Basis of Intangible Assets in Excess of Book Basis       79,000
                                                          -----------
  Total                                                     2,556,000

Deferred Tax Liability:
  Book Basis of Unearned Compensation in Excess of Tax Basis   60,000
                                                            ---------
Deferred Tax Asset                                          2,496,000
                                                            ---------
Valuation Allowance                                         2,496,000
                                                           -----------
  Net Deferred Tax Asset                                 $       --
  ---------------------                                    ============
The valuation allowance of $2,496,000  represents  an increase of $658,000  over
the preceding year.  Net operating loss carryforwards of approximately
$6,233,000 expire beginning in 2010.


A reconciliation between the statutory federal income tax rate and the effective
rate of income tax expense for the year ended April 30, 2000 and 1999 follows:

                                              2 0 0 0            1 9 9 9
                                              -------        ------------
Statutory Federal Income Tax Rate               (34) %           (34) %
State Income Taxes, net of Federal Effect       ( 6) %           ( 6) %
Valuation Allowance                              40  %            40  %
                                              ---------       ---------
  Effective Income Tax Rate                      --                --
                                              =========      ==========

[9] Major Customers

Customers accounting for 10% or more of revenue for the years ended April 30,
2000 and 1999 are as follows:
                                                 April 30,
                                            2000         1 9 9 9
                                         ---------      ----------
Customer A                          $      13,135     $     12,121
Customer B                          $      10,523     $     17,554
Customer C                          $       6,587     $     13,446
Customer D                          $       5,599     $     14,667
Customer E                          $       4,400     $     15,057
Customer F                          $          --     $     15,089





                                F-21

<PAGE>


EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #13
-----------------------------------------


[10] 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.

[11] Supplementary Information - Statements of Cash Flows

Cash paid during the periods for:
                                                                  Cumulative
                                                                 from Inception
                                                                  March 3,
                                            Years ended           1995 to
                                             April 30,            April 30,
                                        2 0 0 0    1 9 9 9         2 0 0 0
                                        -------   --------     -----------
Interest - Net of Capitalized Interest  $ 3,184  $ 2,457       $   10,041
                                        =======  ========      ===========

Income Taxes                            $   --   $   --        $   14,276
                                        =======  ========      ===========

HDS financed the acquisition of $600,000 of manufacturing equipment with a note
payable. Additionally, $12,500 of interest expense was capitalized during the
year ended April 30, 1997.

In June 1998, the Company issued an aggregate of 2,150,000 shares of common
stock in exchange for an aggregate of $201,670 in promissory notes as payment
for the shares.











                                F-22

<PAGE>

EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #14
----------------------------------------

[12] Stock Options and Warrants


A summary of common stock options and warrants is as follows:
                                                              Weighted Average
                                                        Common   Exercise Price
                                                        Shares      Per Share
                                                       ------- ----------------

Options and Warrants Outstanding at March 31, 1995         --     $       --
  Granted                                               780,000          4.62
  Exercised                                                --              --
  Canceled                                                 --              --
                                                        --------  ------------
Options and Warrants Outstanding at April 30, 1995      780,000           4.62
  Granted                                               300,000           4.10
  Exercised                                                --              --
  Canceled                                                 --              --
                                                      ---------   -------------
Options and Warrants Outstanding at April 30, 1996    1,080,000           4.47
  Granted                                               200,000           3.33
  Exercised                                                --              --
  Canceled                                             (100,000)          6.75
                                                      ---------   -------------
Options and Warrants Outstanding at April 30, 1997    1,180,000           4.09
  Granted                                               450,000            .55
  Exercised                                                --              --
  Canceled                                                 --              --
                                                      ---------   ------------
Options and Warrants Outstanding at April 30, 1998    1,630,000           3.11
  Granted                                             1,650,000           0938
  Exercised                                          (2,150,000)         .0938
  Canceled                                                 --              --
                                                      ---------   ------------
Options and Warrants Outstanding at April 30, 1999    1,130,000           4.22
  Granted                                                  --              --
  Exercised                                                --              --
  Canceled                                             (930,000)          4.42
                                                      ----------  -------------
Options and Warrants Outstanding at April 30, 2000      200,000     $     3.28
                                                      ==========  =============

At April 30, 2000, all options and warrants were exercisable.










                               F-23

<PAGE>


EMBRYO DEVELOPMENT CORPORATION
[A DEVELOPMENT STAGE COMPANY]
NOTES TO FINANCIAL STATEMENTS, Sheet #15
-----------------------------------------

[12] Stock Options and Warrants [Continued]

The following table summarizes information about common stock options and
warrants outstanding at April 30, 2000:

                             Options and Warrants Outstanding
                         --------------------------------------
                       Number          Weighted Average
                       Outstanding at     Remaining       Weighted Average
                       April 30, 2000  Contractual Life    Exercise Price
                     ---------------- -----------------  ----------------

$.56                    100,000          .92 Years              $.56
$6.00                   100,000         1.08 Years              6.00
                        -------        ------------            ------
Totals                  200,000         1.00 Year               $3.28
                        =======        ============            ======
The exercise prices of the options and warrants outstanding at April 30, 2000
range between $.56 and $6.00.

No compensation expense was recorded for the years ended April 30, 2000 and
1999.

Had compensation cost been determined on the basis of fair value pursuant to
SFAS No. 123, the net loss and loss per share for the years ended April 30, 2000
and cumulative from inception March 3, 1995 to April 30, 2000 would have been
as follows:

                                                                  Cumulative
                                                               from Inception
                                                              March 3, 1995 to
                                           April 30,            April 30,
                                  2 0 0 0       1 9 9 9          2 0 0 0
                                -----------  ------------      -------------
Net Loss:
  As Reported                   $(1,152,511) $ (1,698,788)      $(9,625,756)
  Pro Forma                     $(1,152,511) $ (1,698,788)      $(9,867,116)

Net Loss Per Share:
  As Reported                   $     (.17)  $       (.26)      $     (1.81)
  Pro Forma                     $     (.17)  $       (.26)      $     (1.86)

At the grant dates, the weighted average fair value of the above options were
N/A and $.09 during 2000 and 1999, respectively. Generally, stock options and
warrants are exercisable upon granting and expire four years from the date of
grant.

The fair value of each option granted is estimated on the grant date using an
option pricing model which took into account as of the grant date, the exercise
price and the expected life of the option, the current price of the
underlying stock and its expected volatility, expected dividends on the stock
and the risk-free interest rate for the expected term of the option.



                               F-24