FORM 1O-K

                           UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION

                      Washington D.C., 20549

                             FORM 1O-K
         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                THE SECURITIES EXCHANGE ACT OF 1934

             For the Fiscal Year Ended April 30, 2001

                    Commission File No. 2-31909

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

                New Jersey                  22-3067701
  (State of Incorporation)         (IRS Employer I.D. Number)

   3189 Airway Avenue, Building C, Costa Mesa, California 92626
        (Address of Principal Executive Offices) (Zip Code)

    Registrant's Telephone Number and area code: (714) 427-6363

 Securities registered pursuant to Section 12(b) of the Act: NONE
 Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate  by  check mark whether the registrant (1) has  filed  all
reports  required  to  be  filed by Section  13  or  15(d)  of  the
Securities Exchange Act of 1934 during the preceding 12 months  (or
for  such shorter period that the registrant was required  to  file
such reports), 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 filings pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be  continued, to the best of registrant's knowledge in  definitive
proxy  or information statements incorporated by reference in  Part
III of this Form 10-K or any amendment to this Form 10-K.

         YES (X)  NO (  )

Indicate  the  number  of  shares  outstanding  of  each   of   the
registrant's classes of common stock, as of the latest  practicable
date,  June  25, 2001: 84,705,976 shares of $.01 par  value  common
stock.   The  aggregate market value of the  shares  held  by  non-
affiliates of the registrant (assuming officers, directors and  10%
shareholders are affiliates) was approximately $23,643,758 based on
the  closing bid price of the Registrants Common Stock on June  25,
2001 of $0.30 per share.

List hereunder the following documents if incorporated by reference
and  the  Part  of  the  Form  10-K  into  which  the  document  is
incorporated:  (1) Any annual report to security holders;  (2)  Any
proxy  or  information  statement; and  (3)  Any  prospectus  filed
pursuant  to Rule 424 (b) or (c) under the Securities Act of  1933.
None of the above-listed documents are incorporated by reference.
<PAGE>
FORWARD-LOOKING STATEMENTS

This Form 10-K contains forward-looking statements in "Management's
Discussion  and  Analysis  of Financial Condition  and  Results  of
Operations"  and  elsewhere.   These statements  relate  to  future
events or our future financial performance.  In some cases, you can
identify  forward-looking statements by terminology such as  "may",
"will",  "should",  "expects", "plans", "anticipates",  "believes",
"estimates", "predicts", "potential" or "continue" or the  negative
of  such  terms or other comparable terminology.  These  statements
are   only  predictions  and  involve  known  and  unknown   risks,
uncertainties and other factors, including the risks outlined under
"Risk  Factors,"  that  may  cause our  or  our  industry's  actual
results,  levels  of  activity, performance or achievements  to  be
materially different from any future results, levels of activities,
performance  or achievements expressed or implied by such  forward-
looking statements.

Although we believe that the expectations reflected in the forward-
looking  statements  are  reasonable, we  cannot  guarantee  future
results,   levels   of  activity,  performance   or   achievements.
Moreover,  neither  we nor any other person assumes  responsibility
for the accuracy and completeness of such statements.  We are under
no  duty to update any of the forward-looking statements after  the
date  of  this  Form 10-K or to conform such statements  to  actual
results.

                              PART I

ITEM 1 - BUSINESS

Synthetic Blood International, Inc. ("SBI" or the "Company")  is  a
development-stage   company  which   is   developing   OXYCYTE,   a
proprietary synthetic blood substitute and FLUOROVENT, a liquid for
assisting  oxygen exchange in damaged or diseased lungs based  upon
perfluorocarbon  ("PFC") technology. In addition  the  Company  has
developed  an implantable continuous reading glucose biosensor  for
diabetics.  The  Company  is now in the preclinical  stage  and  is
completing activities necessary for the preparation of applications
with  the  United  States Food and Drug Administration  ("FDA")  to
begin  clinical  testing.  After the submission  to  the  FDA,  the
Company's  products will require extensive clinical testing  before
FDA  approval  may be granted. No assurance may be given  that  FDA
approval will be granted.

The Company's technology is based on research done by Dr. Leland C.
Clark, Jr., a widely recognized, pioneering inventor and scientist.
Dr.  Clark,  who  is  credited  with  developing  the  first  blood
oxygenator   for   open  heart  surgery  as  well   as   biomedical
applications for perfluorocarbons and biosensors, was the Company's
Vice  President of R&D until 1998. Dr. Clark currently serves as  a
consultant to SBI.

The  Company  began  conducting business in  its  current  form  in
September  1990, shortly thereafter changed its name  to  Synthetic
Blood  International,  Inc., and revised its  business  purpose  to
developing a line of blood substitutes.

MARKET

The  Company's lead products - Oxycyte(TM), Fluorovent(TM), and  an
implantable  glucose biosensor - will compete in what  the  Company
believes  are  four multibillion-dollar markets: blood substitutes,
oxygen therapeutics, acute respiratory distress, and diabetes.

Blood Substitutes

The  search  for blood replacement fluids began centuries  ago.  In
modern  times,  this  search has been given a new  impetus  by  the
threat  of disease transmission, most notably HIV and hepatitis  C.
The  risks are low but unacceptable because of the high death  rate
from  these  diseases.  In underdeveloped countries,  the  risk  of
serious disease transmission is much greater.

An  increasingly  short  supply  of  blood  is  also  driving  this
research. In the US, the number of blood donors continues  to  fall
while  the number of elderly, the group that needs blood the  most,
is  growing.  By  2030, experts project an annual  shortfall  of  4
million  units  in  the US. In other countries where  cultural  and
logistical  issues  constrain  blood  collection  even  more,   the
shortfall is believed to be much greater.

The  third major force behind this search is the military's  desire
for  a blood substitute that can be stockpiled and used immediately
when  needed in battlefield conditions without special storage  and
matching  of  human  donor  blood.  Current  techniques  for  blood
transfusions do not meet these requirements.

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Approximately 100 million units of human donor blood are  collected
annually worldwide. About 15 million units are collected in the  US
each  year.  The  global  market for  blood  substitutes  has  been
estimated at $2-5 billion.

Oxygen Therapeutics

The  availability of parenteral oxygen-carrying products for animal
and  clinical research has lead to the identification of  potential
new  uses  for products traditionally defined as blood substitutes.
These uses, for example in ischemic conditions, specifically depend
on the ability to deliver oxygen, not on a patient's need for blood
or  blood  components.  These new uses include  stroke,  myocardial
infarction,   angioplasty,  and  malignant  disease.  In   ischemic
conditions, cell damage is caused by a lack of oxygen.  In  cancer,
enhanced  oxygen  delivery is thought to  make  solid  tumors,  and
possibly  diffuse cancer cells, more susceptible to  radiation  and
chemotherapy.  Combined, these conditions affect 3-4 million people
in  the  U.S.  The  company estimates these new  uses  for  oxygen-
carrying  blood  substitutes  to constitute  a  multibillion-dollar
market.

Acute Respiratory Distress

Thousands   of   premature  infants  are  born   each   year   with
underdeveloped lungs and a condition of impaired pulmonary function
known  as acute respiratory distress syndrome (ARDS). This syndrome
has  multiple  causes  and  also occurs  in  children  and  adults.
Although  many  of  these  patients  are  treated  with  mechanical
ventilation, this treatment can add further injury to the lungs and
the mortality rate is still high. This has prompted research for  a
safer,  more  effective treatment. While more research  is  needed,
current  studies  with partial liquid ventilation  in  animals  and
patients,  both infants and adults, suggest that liquid ventilation
may be a safe and effective treatment of ARDS.

The  incident  of  ARDS in the US is about 250,000 cases  annually.
While ARDS is the primary disease target for liquid ventilation  at
this  time, SBI believes that it may also be beneficial in  chronic
obstructive pulmonary disease (COPD), a condition that occurs in 10
million  people in the US. The company believes that  the  ultimate
market for liquid ventilation is in the multibillion-dollar range.

Diabetes

Diabetes  and  its  associated complications  are  among  the  most
prevalent,   costly  diseases  in  the  world.  Its  incidence   is
increasing  at a significant rate. Diabetes affects men  and  women
equally but occurs most frequently in the elderly. Direct costs are
estimated  at  about $50 billion, almost 6% of the  total  personal
healthcare expenditures in the US.

A  ten  year  study,  the Diabetes Control and Complications  Trial
(DCCT)  sponsored  by  the  National  Institutes  of  Diabetes  and
Digestive   and  Kidney  Diseases,  showed  that  "tight   diabetes
control,"  keeping  blood sugar levels close to  normal  by  recent
blood  sugar  testing, several daily insulin shots,  and  lifestyle
changes,   was  associated  with  a  major  reduction  in  diabetic
complications. These findings led the American Diabetes Association
to  recommend tight control as an important way to delay the  onset
and   dramatically  slow  the  progression  of  complications  from
diabetes.

People with diabetes measure their blood glucose levels by sticking
a  finger with a needle to obtain a blood drop that is placed on  a
test  strip  and analyzed by a portable instrument. Repeating  this
procedure  several  times  a  day  becomes  painful,  leading  many
patients,   especially  the  elderly,  to  perform  the   procedure
infrequently.  Furthermore,  the accuracy  of  some  blood  glucose
analyzers  is poor. A less invasive system for accurately measuring
blood   glucose   on  demand  would  increase  glucose   monitoring
compliance and provide a better basis for tight diabetes control.

More  than  16 million people, approximately half undiagnosed,  are
estimated  to suffer from diabetes in the US. Between  600,000  and
700,000  new cases are diagnosed each year. About 800,000 diabetics
are  insulin-dependent. Mortality from diabetes and its  associated
complications is high; it is the seventh leading cause of death  in
the  US.  Globally, the incidence of diabetes is estimated  at  120
million  people. While insulin-dependant diabetics are  thought  to
have  the  greatest  need for tight diabetic control,  evidence  is
increasing that better control of blood glucose in type 2 diabetics
also  leads  to a reduction in diabetic complications. The  company
estimates  the global market for a less invasive glucose monitoring
system to be a multibillion-dollar market.

TECHNOLOGY

The   Company's  principal  technologies  -  biomedical  uses   for
perfluorocarbons  and  substrate  analysis  with  biosensors   were
conceptualized and advanced by Dr. Leland C. Clark, Jr.  While  his
pioneering discoveries in these two areas

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<PAGE>

spawned  decades of research worldwide, Dr. Clark has been  one  of
the most prolific contributors and has remained at the forefront of
scientific  advances  in  these areas,  leading  to  the  Company's
patented perfluorocarbon and biosensor technology platforms.

Perfluorocarbons in Biomedicine

Following an experiment showing that a mouse could live and breathe
submerged  in  oxygen-saturated silicone oil, Dr. Clark  showed  in
1965  that animals could be kept alive submerged for several  hours
in  oxygen-saturated  perfluorocarbon  liquids.  These  experiments
suggested  that  perfluorocarbons  might  be  useful  in  medicine,
principally  in liquid breathing and in blood substitutes,  and  in
1975, Dr. Clark was issued the first patent for an oxygen-carrying,
perfluorocarbon-based  blood substitute.  Although  the  technology
described in this patent was used by the Green Cross Corporation in
Japan  to develop and obtain FDA approval for Fluosol DA, Dr. Clark
recognized  that further research would be necessary  before  safe,
effective perfluorocarbons could be identified. Since that time,  a
principal  focus  of  his research has been the  identification  of
optimal   properties  for  biomedical  perfluorocarbons,  and   the
screening of numerous compounds.

Biosensor Substrate Analysis

In  the mid-1950's, Dr. Clark developed the first oxygen electrode.
Ten  years  later, he applied for a patent describing  enzyme-based
biosensors  that  could  accurately measure glucose,  lactate,  and
other  substrates. By 1974, Yellow Springs Instrument  Company  had
developed  and  marketed the Clark glucose analyzer based  on  this
technology.  In the early 1980's, Dr. Clark published studies  with
implanted  glucose  biosensors, and in the late  1980's  and  early
1990's,  was  issued several seminal patents on  implanted  glucose
biosensors.  Since then, research and development  efforts  at  SBI
have  focused  on optimizing performance and design characteristics
of the implanted glucose biosensor.

PRODUCTS

Fluorovent

Fluorovent(TM), a unique oxygen-carrying perfluorocarbon, has  been
selected  for  the  treatment  of  ARDS  after  screening  numerous
available perfluorocarbons for optimal properties. When given as  a
liquid  directly  into the lungs, it acts as  a  surfactant  and  a
highly effective medium for gas exchange, thus increasing pulmonary
function  and  the  diffusion  of  oxygen  and  carbon  dioxide  in
respiratory distress.

Based  on  laboratory  and animal studies  thus  far,  the  company
believes that Fluorovent has significant competitive advantages  as
a  liquid  ventilation  treatment.  Its  boiling  point  and  vapor
pressure result in longer pulmonary retention without the need  for
continuous replacement of evaporated fluid, offering the  potential
for  less  costly,  less  time-intensive procedures.  It  does  not
contain  bromine  or  chlorine and thus presents  no  environmental
hazard.   In   animals,  it  does  not  produce  a   hyperinflated,
noncollapsible  lung  condition  seen  with  other  perfluorocarbon
liquids being tested. There can be no assurance any such advantages
will  be  demonstrated in further animal studies,  or  in  clinical
trials,  or that it will ever be marketed, sold or generate revenue
for the Company.

Oxycyte

SBI  is developing Oxycyte, an oxygen-carrying intravenous emulsion
made  from the same base perfluorocarbon in Fluorovent. Blood gases
such   as   oxygen  and  carbon  dioxide  are  highly  soluble   in
perfluorocarbons, making Oxycyte an effective means of transporting
oxygen to tissues and carbon dioxide to the lungs. In comparison to
hemoglobin,  the component of blood that binds with and  transports
oxygen,  Oxycyte  can  carry  at  least  five  times  more  oxygen.
Additionally,   perfluorocarbons  are  much  more  effective   than
hemoglobin  at  unloading oxygen at the tissue  level.  Oxycyte  is
directed  at the blood substitute and oxygen therapeutics  markets.
There  can be no assurance any such advantages will be demonstrated
if  Oxycyte  enters  clinical trials,  or  that  it  will  ever  be
marketed, sold or generate revenue for the Company.

Implanted Glucose Biosensor

SBI  has developed an implanted glucose biosensor to monitor  blood
glucose  without  the need for finger sticks.  Termed  a  biosensor
because it utilizes an enzyme specific for glucose, SBI believes it
will  provide glucose measurement significantly more accurate  than
possible from current portable measuring devices. Once implanted in
subcutaneous  tissue  during  a simple  outpatient  procedure,  the
biosensor, which is about the size of a cardiac pacemaker, provides

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continuous,  accurate  monitoring  of  glucose  levels.   A   radio
frequency signal from the implanted biosensor is transmitted to  an
external receiving device the size of a pager that displays glucose
levels  as a digital readout, has high and low glucose alarms,  and
stores data for downloading at the physician's office. The external
device  can  also be programmed to monitor glucose according  to  a
preset schedule, eliminating the monitoring compliance problem  and
providing the data necessary for tight glucose control. Ultimately,
it  is  intended the biosensor will be linked to an  insulin  pump,
creating  a closed-loop mechanical pancreas. It is anticipated  the
implant life of the biosensor will exceed one year. There can be no
assurance any such advantages will be demonstrated if the biosensor
enters  clinical trials, or that it will ever be marketed, sold  or
generate revenue for the Company.

OTHER PRODUCTS

Biosensors

SBI has identified potential new applications for its biosensor
technology in the following areas:

*Clinical analysis of other biochemical substrates
*In-process analysis in bulk biotechnology and chemical synthetic
  processes
*Veterinary medicine

There is, however, no assurance that any products for these markets
will ever be marketed or generate revenue for the Company.

MARKETING/BUSINESS STRATEGY

Three important elements to the Company's strategy are:

Minimize Fixed Expenses

The  Company's strategy is to minimize fixed expenses  by  staffing
only  as  necessary  to  meet the Company's goals,  minimize  fixed
expenses,  and utilize contract services where possible  to  assist
the Company in its goal to move quickly and maximize the return and
progress from invested funds.

Partnering

SBI  intends  to  partner as early as possible with  global  and/or
national  pharmaceutical  and medical device  companies  to  attain
additional  funding,  commercial-scale manufacturing  capabilities,
and  maximum global market penetration for the Company's  products.
While  major  partnerships  many times are  not  consummated  until
clinical  trials  are  under way, SBI has begun  to  systematically
identify   and  meet  with  interested  and  appropriate  candidate
companies.  The  Company  has  not  entered  into  any  partnership
arrangements and there can be no assurance it will enter into  such
arrangements in the future.

Market Entry

A  final important element of the Company's strategy deals with the
timing  of  market entry. The Company's current product  markets  -
liquid  ventilation,  blood substitutes, oxygen  therapeutics,  and
implantable  biosensors  -  are new and will  require  considerable
effort  and  money to develop. If SBI is not the first  company  to
market these products, the Company believes it should benefit  from
the  investment  made by the competition, and its  future  strategy
will  be to enter established markets and capture market share with
superior  products  that  have significant competitive  advantages.
Additionally,  SBI  intends to be selective  in  picking  the  most
appropriate corporate marketing partner for each product.

COMPETITION

Fluorovent

SBI  is  aware  of  only  one  other company  developing  a  liquid
ventilation product. Alliance Pharmaceutical Corporation's product,
LiquiVent,  is  in Phase III clinical trials in adults  with  acute
respiratory distress.

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Oxycyte

Nine  other  companies  in  addition to  SBI  are  believed  to  be
developing   oxygen-carrying  blood   substitutes.   Six   -   Apex
Bioscience,  Baxter  International, Biopure,  Enzon,  Hemosol,  and
Northfield Laboratories - are developing hemoglobin-based  products
and  three  -  Alliance Pharmaceutical, Sonus  and  Sanquine  -  is
developing  a  perfluorocarbon based  product.  Alliance,  Hemosol,
Biopure,  and  Northfield are in Phase II or III  clinical  trials.
Baxter  recently  terminated clinical trials with HemAssist,  their
bovine hemoglobin product.

Implanted Glucose Sensor

Historically,   the  critical  issues  that  have  confronted   the
development   and  commercialization  of  effective,  less-invasive
glucose  monitoring  systems include stable sensor  life,  accuracy
through  a  wide glucose range, inappropriate biological ratios  of
oxygen  and  glucose  to  optimally drive  enzyme  biosensors,  and
biocompatibility.  Many research groups have attempted  to  resolve
these  problems with varying success. SBI does not consider glucose
sensor  systems  proposed by academic groups as viable  competition
because  it  believes  they lack commercial  input,  and  promising
systems are usually acquired by industry.

SBI is aware of 8 other companies that are developing less-invasive
glucose   monitoring   systems  -  MiniMed,   Cygnus   Therapeutic,
Biocontrol  Technology, Sensor Solutions, Integ,  Bioject  Medical,
Sensors  for  Medicine and Technology, and Technical Chemicals  and
Products.  Only one - Sensors for Medicine - is pursuing  a  sensor
that  is fully implantable. However, it is in the design stage  and
no  performance test data are available. Systems under  development
by  the  other  companies are skin surface or percutaneous  systems
that  are  at  least minimally invasive and/or require  replacement
every  few  hours  to days. For example, MiniMed's system  requires
subcutaneous insertion of a catheter-like device every three  days,
while  the Cygnus GlucoWatch requires replacement of its autosensor
pad  every 12 hours. Six systems are in clinical trials, Biocontrol
Technology  has  made 510(k) submissions, and  Cygnus  and  MiniMed
recently received approval to market their systems.

The  Company  believes the ability to begin and  then  to  complete
clinical trials on a timely basis with the desired results, and the
ability to obtain timely regulatory approvals to market its product
candidates are likely to be significant competitive factors.

MANUFACTURING AND SOURCES OF SUPPLY

     The Company believes it has suitable sources of supply for key
ingredients  and  components, e.g. perfluorocarbons  and  biosensor
materials,  for  all  three products under  development.   It  also
believes  it has or will be able to reach suitable agreements  with
appropriate  contract manufacturers to implement its  strategy  for
not  manufacturing  these products internally at commercial  scale.
The Company is using its best efforts to secure these relationships
on  a long tern basis.  However, there cannot be complete assurance
that  these  relationships  can be secured  or  maintained  to  the
benefit of the Company.

PATENTS/INTELLECTUAL PROPERTY

Perfluorocarbon products:

SBI   has   four  issued  U.S.  (5,674,913;  5,824,703;  5,840,767;
56,167,887)  and  two Australian (690,277; 720,712) perfluorocarbon
patents that protect the use of perfluorocarbons of interest to the
Company  as  gas transport agents in blood substitutes  and  liquid
ventilation.   Additionally, through an exclusive supply  agreement
with  the  Company's perfluorocarbon supplier,  SBI  benefits  from
eight  perfluorocarbon manufacturing process patents  that  further
protect the perfluorocarbons with which the Company is working.

Biosensor:

The  Company  has  two  issued U.S. biosensor  patents  (5,914,026;
5,964,993)  and  one  Australian biosensor  patent  (720,712)  that
protect what the Company believes are important design features  of
the  Company's  implanted  glucose biosensor  and  other  biosensor
applications,  both  medical  and  industrial.   Another  biosensor
patent  application  has been submitted and all  claims  have  been
allowed.   SBI  has  also  exclusively licensed  three  fundamental
biosensor  patents issued to Dr. Clark that have been  assigned  to
Children's Hospital in Cincinnati.

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For  all  U.S.  patents and applications, the Company also  submits
applications  and  pursues  patents in Europe,  Canada,  Japan  and
Australia.  There can be no assurance that any issued patents would
survive a challenge and be valid and enforceable.  Also, there  can
be no assurance any pending applications will result in issued U.S.
or   foreign  patents.  SBI  therefore  has  a  number  of  foreign
perfluorocarbon  and  biosensor patent applications  submitted  and
pending.

GOVERNMENT REGULATION

Regulation  by  governmental authorities in the United  States  and
other  countries  is  a significant factor in the  manufacture  and
marketing of pharmaceuticals and in the Company's ongoing  research
and  development  activities.  All of the Company's  products  will
require  regulatory  approval  by governmental  agencies  prior  to
commercialization.  In particular, human therapeutic  products  are
subject  to  rigorous preclinical testing and clinical  trials  and
other pre-marketing approval requirements by the FDA and regulatory
authorities  in  other  countries.  In the United  States,  various
federal,  and  in  some cases state statutes and  regulations  also
govern   the  Company's  impact  upon  the  manufacturing,  safety,
labeling,  storage, record-keeping and marketing of such  products.
The   lengthy  process  of  seeking  required  approvals  and   the
continuing  need  for  compliance  with  applicable  statutes   and
regulations,  require  the  expenditure of  substantial  resources.
Regulatory approval, when and if obtained, may be limited in scope,
which  may  significantly  limit the indicated  uses  for  which  a
product may be marketed.  Further, approved drugs, as well as their
manufacturers,  are  subject to ongoing review,  and  discovery  of
previously  unknown  problems  with such  products  may  result  in
restrictions  on  their  manufacture,  sale  or  use  or  in  their
withdrawal from the market.

To  obtain  FDA  approval,  the  FDA requires  clinical  trials  to
demonstrate  the  safety,  efficacy, and  potency  of  the  product
candidates.   Clinical trials are the means by  which  experimental
drugs  or  treatments are tested in humans. New therapies typically
advance   from   laboratory,  research,  testing  through   animal,
preclinical testing and finally through several phases of clinical,
human  testing.   Upon  successful completion of  clinical  trials,
approval  to market the therapy for a particular patient population
may  be  requested  from the FDA in the United  States  and/or  its
counterparts in other countries.

Clinical  trials are normally done in three phases.   In  Phase  I,
trials  are  conducted with a small number of patients  or  healthy
volunteers  to  determine the safety profile, the pattern  of  drug
distribution  and  metabolism.  In Phase II, trials  are  conducted
with a larger group of patients afflicted with a target disease  in
order to determine preliminary efficacy and optimal dosages.  Phase
III trials are large, pivotal safety and efficacy trials.

Obtaining  FDA  approval  is a costly and  time-consuming  process.
Generally,  in  order to gain FDA pre-market approval,  preclinical
studies  must  be conducted in the laboratory and in  animal  model
systems to gain preliminary information on an agent's efficacy  and
to  identify  any  major safety concerns.   The  results  of  these
studies  are  submitted  as  a  part  of  an  application  for   an
Investigational New Drug, IND, which the FDA must review and  allow
before  human  clinical  trials can  start.   The  IND  includes  a
detailed description of the clinical investigations.

A  company  must sponsor and file an IND for each proposed  product
and  must  conduct  clinical  studies to  demonstrate  the  safety,
efficacy  and  potency that are necessary to obtain  FDA  approval.
The  FDA receives reports on the progress of each phase of clinical
testing,  and  it  may  require  the modification,  suspension,  or
termination of clinical trials if an unwarranted risk is  presented
to patients.

After completion of clinical trials of a new product, FDA marketing
approval must be obtained.  If the product is classified as  a  new
drug,  a  New  Drug Application (NDA), is required.  The  NDA  must
include  results  of  product development  activities,  preclinical
studies  and  clinical trials in addition to detailed manufacturing
information.

Applications  submitted to the FDA are subject to an  unpredictable
and potentially prolonged approval process.  The FDA may ultimately
decide  that  the  application does not satisfy  its  criteria  for
approval  or  require additional preclinical or  clinical  studies.
Before  marketing clearance is secured, the manufacturing  facility
will  be  inspected for current Good Manufacturing Practices  (GMP)
compliance  by  FDA  inspectors.  The manufacturing  facility  must
satisfy current GMP requirements prior to marketing clearance.   In
addition,  after marketing clearance is secured, the  manufacturing
facility will be inspected periodically for GMP compliance  by  FDA
inspectors,  and,  if  the facility is located  in  California,  by
inspectors  from  the  Food  and  Drug  Branch  of  the  California
Department of Health Services

The  Company  is also subject to various federal, state  and  local
laws,  regulations  and recommendations relating  to  safe  working
conditions,    laboratory   and   manufacturing   practices,    the
experimental use of animals and the use and disposal of

                                 7
<PAGE>

hazardous  or  potentially hazardous substances used in  connection
with our research.  The extent of government regulation which might
result  from any future legislation or administrative action cannot
be accurately predicted.

EMPLOYEES

On  April 30, 2001, the Company employed 9 individuals, six of whom
were  scientific  personnel,  two are executives,  and  one  office
manager/bookkeeper. None of its employees are currently represented
by a union or any other form of collective bargaining unit.

ITEM 2 - PROPERTIES

The  Company  owns  no  real  property  and  currently  leases  its
principal  administrative and laboratory facilities at 3189  Airway
Avenue,  Building C, Costa Mesa, California 92626. In addition  the
company  leases  office and laboratory space at Kettering  Research
Center   in   Kettering,  Ohio.  The  current   monthly   rent   is
approximately $10,700 per month.

ITEM 3 - LEGAL PROCEEDINGS

None

ITEM 4 - SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

During the fiscal year ended April 30, 2001 the Company solicited
the written consent of its shareholders.  The Company mailed a
Consent Solicitation Statement for Shareholder Action by Written
Consent on or about August 23, 2000 soliciting the written consent
of the shareholders on three proposals.  There were issued and
outstanding on August 21, 2000, the record date, approximately
85,735,042 shares of common stock.

     Proposal 1 solicited the vote of the shareholders to approve
     an amendment to the Company's Certificate of Incorporation
     ("Certificate") to authorize 10 million share of undesignated
     preferred stock.  Proposal 1 received the following consents

          For         58,188,027
          Against      1,601,261
          Abstain        207,996

     Proposal 2 solicited the vote of the shareholders to amend the
     Company's Certificate to reduce the shareholder vote required
     for amendments to the Certificate from two-thirds of the
     outstanding shares to a majority of the outstanding shares.
     Proposal 2 received the following consents:

          For          57,667,139
          Against       2,073,027
          Abstain         257,118

     Proposal 3 solicited the vote of the shareholders to approve
     the 1999 Stock Plan which authorizes the issuance of 4 million
     shares of common stock.  Proposal 3 received the following
     consents:


          For         68,910,275
          Against      1,391,280
          Abstain        286,871

Proposals 1,2 and 3 were adopted and ratified based on the above
consents.

                                 8
<PAGE>

                              PART II

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The  Common  Stock of the Company is traded on the  OTC  Electronic
Bulletin  Board.  The over-the-counter quotations set  forth  below
reflect  inter-dealer prices, without retail mark-up, mark-down  or
commissions  and may not necessarily represent actual transactions.
For  the  past  two fiscal years, the minimum bid and  highest  ask
prices as determined by Company records were as follows:


                      2001              2000
             Quarter      Low    High     Low      High

                 1st     $.46    $1.01   $0.13    $0.21
                 2nd     $.28    $.68    $0.13    $0.19
                 3rd     $.20    $.53    $0.11    $0.18
                 4th     $.21    $.45    $0.12    $2.25

During   fiscal  2001,  the  Company  issued  244,819   shares   of
unregistered,  restricted common stock to an  unrelated  party  for
services  rendered.  The Company recognized an expense of  $121,368
representing the fair value of the stock at the date of issuance.

During  fiscal  2001,  the  Company  issued  6,649,452  shares   of
unregistered  common  stock in satisfaction  of  deposits  received
prior  to April 30, 2000 at prices ranging from $.07 to $.3846  per
share.

During  fiscal  2001,  the  Company  issued  1,172,978  shares   of
unregistered  common stock to third party investors  in  connection
with the exercise of warrants for $106,757 with a range of exercise
prices from $.07 to $0.14.

During  fiscal  2001, the Company cancelled its stock  subscription
receivable of $600,000 and the related 4.5 million shares of common
stock.

The  sale and issuance of each of the transactions referenced above
were  deemed  to be exempt transactions under Section 4(2)  of  the
Securities Act of 1933, as transactions by an issuer not  involving
any  public  offering.   In  each of  the  referenced  transactions
appropriate legends were placed on the certificates issued  to  the
purchasers.

As  of  April  30, 2001 the approximate number of  holders  of  the
Common  stock  of the Company was 11,000. To the best knowledge  of
management, the Company has never paid dividends since the date  of
its  incorporation. The Company does not expect to declare  or  pay
dividends in the foreseeable future.

ITEM 6 - SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

                      April 30,     April 30,   April 30,    April 30,   April 30,
                        2001          2000        1999         1998        1997
<S>                 <C>            <C>          <C>         <C>            <C>
Other Income         $   331,019   $   16,141   $   23,994   $     3,069   $       914

Total expenses       $ 2,003,261   $  927,480   $  857,829   $ 1,284,101   $ 1,911,290

Net loss            ($ 1,672,242) ($  911,339) ($  833,835) ($ 1,281,032) ($ 1,910,376)
Weighted average
 number of shares
 outstanding, basic
 and diluted          86,401,830   65,365,438   51,388,471    46,000,749    36,053,557
Net loss per share,
 basic and diluted   $     (0.02)  $    (0.01)  $    (0.02)  $     (0.03)  $     (0.05)

Cash                 $ 4,250,898   $ 5,466,391  $  193,013   $   740,215   $    53,857
</TABLE>

                                     9


<PAGE>

<TABLE>
<S>                  <C>           <C>          <C>          <C>           <C>
Working captial      $ 4,020,203   $ 5,592,016  $(348,339)   $ (228,400)   $(529,393)

Total assets         $ 4,842,296   $ 6,199,651  $ 530,906    $  985,914    $ 318,163

Total liabilities    $   344,068   $   345,440  $ 602,226    $  531,340    $ 600,675

Long-term debt                 -             -  $  47,327    $  103,021            -

Stockholders' equity $ 4,498,228   $ 5,854,211  $(118,647)   $  351,553    $(282,512)
</TABLE>

ITEM  7  -  MANAGEMENT'S  DISCUSSIONS  AND  ANALYSIS  OF  FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

FISCAL 2001 COMPARED TO FISCAL 2000

The  Company  is  a  development-stage company that  is  developing
products  in  the medical field and therefore has no  revenue  from
operations.  For the fiscal year ended April 30, 2001 Other  Income
increased  to $331,019 from $16,141 in the fiscal year ended  April
30,  2000.  This increase was due to increased interest  income  on
cash balances available for investment.

The  General and Administrative expenses of $1,219,852  for  fiscal
year  2001  increased $532,277 or 77% over fiscal year  2000.   The
increase was the result of higher general office expenses  in  2001
of   $97,000,  along  with  increases  in  consulting  services  of
$119,000, market research expenses of $63,000 and investor expenses
of $83,000 over the prior fiscal year.  In addition, travel related
expenses increased during 2001 by $25,000 over fiscal year 2000.

The  Research and Development expenses increased 249% from $224,023
for  the  fiscal  year ended April 30, 2000, to  $782,339  for  the
fiscal  year  ended  April  30, 2001.   During  fiscal  year  2001,
laboratory  wages and salaries increased $387,000, laboratory  rent
increased  $87,000 and laboratory supplies increased  $83,000  from
fiscal  year  2000. The Company was able to substantially  increase
its  research and development activities because of cash  that  was
made available from capital investment.

The  interest  expense decreased from $15,882 for the  fiscal  year
ended April 30, 2000, to $1,070 for the fiscal year ended April 30,
2001.  This  decrease was due to a reduction of  outstanding  notes
payable during fiscal year 2001.

FISCAL 2000 COMPARED TO FISCAL 1999

The  Company  is  a  development-stage company that  is  developing
products  in  the medical field and therefore has no  revenue  from
operations. For the fiscal year ended April 30, 2000, other  income
decreased  to $16,141 from $23,994 for the fiscal year ended  April
30,  2000. This decrease was mainly due to a forfeiture of a  stock
subscription fee of $10,000 received in during fiscal year 1999.

The  General  and  Administrative  expenses  of  $687,575  remained
substantially  the  same for fiscal year 2000 as  for  fiscal  year
1999.   During the year ended April 30, 2000 legal fees and  moving
expenses  increased  $22,000  and  $18,000,  respectively.    These
increases  were  offset  by a decrease in  fiscal  2000  wages  and
contract labor of $60,000 over the amounts recorded in fiscal  year
1999.   Also, in the year ended April 30, 2000 the Company realized
a  loss  of  $13,000  due  to the write-off  of  old  and  obsolete
furniture and equipment.

The  Research and Development expenses increased 32% from  $170,058
for  the  fiscal  year ended April 30, 1999, to  $224,023  for  the
fiscal   year  ended  April  30,  2000.  This  increase   was   due
substantially  to the addition of a laboratory in  California  with
corresponding  increases in lab supplies of $18,000,  lab  rent  of
$15,000 and wages and contract labor of $55,000.

                                10
<PAGE>

The interest expense decreased 28% from $20,395 for the fiscal year
ended  April  30, 1999, to $15,882 for the fiscal year ended  April
30, 2000. This decrease was due to a reduction of outstanding notes
payable during fiscal year 2000.

QUARTERLY RESULTS OF OPERATIONS

The following table presents the Company's operating results for
each of the eight fiscal quarters in the period ended April 30,
2001.  The information for each of these quarters is unaudited and
has been prepared on the same basis as the audited financial
statements included in this Form 10K.  In the opinion of
management, all necessary adjustments, which consist only of normal
and recurring accruals, have been included to fairly present the
unaudited quarterly results.  This data should be read together
with the financial statements and the notes thereto included in
this Form 10K.
<TABLE>
<CAPTION>

                                                    Three Months Ended
                                      July 30,   October 31,  January 31,  April 30,
                                       1999        1999        2000         2000
<S>                                <C>          <C>         <C>          <C>
Statement of Operations Data

Research and development expenses   $   43,698   $  26,545   $   69,764   $  84,016

General and administrative expenses    172,508     174,252      109,330     231,485

Interest expense                         4,892       2,779        2,816       5,395

Total Expenses                         221,098     203,576      181,910     320,896

Other (Income) Expense                    (741)    (25,360)        (238)     10,198

NET LOSS                             ($220,357)  ($178,216)   ($181,672)  ($331,094)
NET LOSS PER SHARE, BASIC
  AND DILUTED                          ($0.004)    ($0.003)     ($0.003)    ($0.003)

WEIGHTED AVERAGE
  NUMBER OF SHARES
  OUTSTANDING, BASIC
  AND DILUTED                       55,860,937  60,167,165   65,194,496  74,163,812
</TABLE>

<TABLE>
<CAPTION>

                                                      Three Months Ended
                                      July 30,    October 31,   January 31,   April 30,
                                       2000         2000         2001          2001
<S>                                <C>          <C>          <C>          <C>
Statement of Operations Data

Research and development expenses    $ 109,841    $ 175,197    $ 234,760   $ 262,541

General and administrative expenses    233,969      424,324      257,194     304,365

Interest expense                           808          262            -           -

Total Expenses                         344,618      599,783      491,954     566,906

Other (Income) Expense                 (90,935)     (91,333)     (85,004)    (63,747)

NET LOSS                             ($253,683)   ($508,450)   ($406,950)  ($503,159)
NET LOSS PER SHARE, BASIC
  AND DILUTED                          ($0.003)     ($0.006)     ($0.004)    ($0.003)

WEIGHTED AVERAGE
  NUMBER OF SHARES
  OUTSTANDING, BASIC
  AND DILUTED                       81,917,908    86,706,915   87,642,240   88,900,661
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES

The  Company has financed its operations since September 1990, when
current  management became involved, through the issuance  of  debt
and  equity securities and loans from stockholders. As of April 30,
2001 the Company had $4,364,271 in total current assets and working
capital  of  $4,020,203  compared to $5,937,456  in  total  current
assets and working capital of $5,592,016 as of April 30, 2000.

During  the  year  ended  April 30, 2001, the  Company  had  a  net
decrease  in  cash  and  cash equivalents of $1,215,493,  of  which
$1,537,617  was  used  in  operations and  $317,458  was  used  for
investing  activities, primarily for the purchase of equipment  and
patent  expenditures.  These  cash outflows  were  offset  by  cash
provided  from financing activities of $639,582, primarily  through
the  sale  of  common  stock.   In addition  the  Company  borrowed
$135,000  for  the  purchase  of  laboratory  equipment   under   a
Promissory  note  bearing  interest at 8%  per  annum,  payable  in
monthly  principal  and interest installments  of  $11,745  through
April  19, 2002.  The Company does not have any lines of credit  or
other  arrangements with lenders. The Company believes its existing
cash should fund current operations for approximately 2 years.

The  Company  is in the pre-clinical trial stage in the development
of  its  products. These products must undergo further  development
and  testing prior to submission to the FDA for approval to  market
its products. This additional development

                                11
<PAGE>

and  testing  will require significant additional financing.  There
can  be  no assurance these proposed funding arrangements  will  be
successful,  or that if they are not the Company will  be  able  to
secure additional capital.

RISK FACTORS

You  should  carefully consider the risks described below  together
with  all of the other information included in this report on  Form
10-K.   An investment in the Company's common stock is very  risky.
If  any  of  the  following  risks actually  occur,  our  business,
financial  condition or results of operations could be harmed.   In
such  an  event,  the trading price of the Company's  common  stock
could decline, and you may lose part or all of your investment.

The  Company expects to incur losses for the foreseeable future and
may never achieve profitability.

The  Company has incurred net losses since the business was revised
in  1990  to develop a line of blood substitutes.  Net losses  were
($833,835)  in 1999, ($911,339) in 2000 and ($1,672,242)  in  2001.
As of April 30, 2001, the accumulated deficit was  ($12,985,580).

The  Company expects to incur substantial and increasing losses for
the  foreseeable  future as a result of increases in  research  and
development  costs,  including  costs  associated  with  conducting
preclinical testing and clinical trials.  It is expected  that  the
amount  of  operating  losses  will  fluctuate  significantly  from
quarter  to  quarter  as  a  result of increases  or  decreases  in
research  and  development  efforts,  the  initiation,  success  or
failure of clinical trials, or other factors.

Chances   for  achieving  profitability  will  depend  on  numerous
factors, including success in:

     *developing and testing new product candidates;

     *receiving regulatory approvals;

     *manufacturing products;

     *marketing products; and

     *competing with products from other companies.

Many  of  these  factors  will depend on circumstances  beyond  the
Company's  control.  The Company expects to rely heavily  on  third
parties  with  respect to many aspects of its  business,  including
research  and  development,  clinical  testing,  manufacturing  and
marketing.   It  cannot  be assured the Company  will  ever  become
profitable.

The  Company  needs  substantial additional financing  to  complete
development and introduce products.

The  costs to complete preclinical tests and to begin and  complete
the  Company's  proposed clinical trials  are  very  high.   It  is
expected   existing   capital  resources   will   satisfy   capital
requirements   through  approximately  December   2003.    However,
substantial  additional  financing will  be  needed  to  begin  and
continue  clinical trials on its products. Currently there  are  no
commitments  for  any additional financing.  Any additional  equity
financing  may be dilutive to stockholders, and debt financing,  if
available, may include restrictive covenants and there  can  be  no
assurance  additional financing will be received.   Future  capital
requirements will depend on many factors, including:

     *results of preclinical tests;

     *results of any clinical trials;

     *continued scientific progress in the research and development
      program;

     *the time and cost involved in obtaining regulatory approvals;


                                12
<PAGE>


     *future collaborative relationships;

     *competing technological and market developments;

     *patient costs; and

     *the cost of manufacturing.

If adequate funds are not available, the Company may be required to
curtail   operations  or  to  cease  operations.   The  amount   of
additional financing required cannot be estimated, however it  will
be substantial.

If  the Company is unable to develop and successfully commercialize
its  product candidates, it may never generate significant revenues
or become profitable.

Product candidates are all in early stages of development, and none
are  in  clinical  trials.  The Company must successfully  complete
preclinical  tests  on product candidates before  applying  for  or
beginning  clinical trials on any of the product  candidates.   The
Company  has  not  commercialized any products  or  recognized  any
revenue from product sales.  It will require significant additional
investment  in  research and development, preclinical  testing  and
clinical  trials,  regulatory approval,  and  sales  and  marketing
activities.  Product candidates, if successfully developed, may not
generate  sufficient or sustainable revenues to enable the  Company
to be profitable.

The  Company  must overcome significant obstacles  to  successfully
develop or market product candidates.

The development of product candidates is subject to the significant
risks  of  failure  which are inherent in the  development  of  new
pharmaceutical  products and products based  on  new  technologies.
These risks include:

     *delays  in preclinical testing, product development, clinical
       testing or manufacturing;

     *unplanned  expenditures  for  product  development,  clinical
       testing or manufacturing;

     *failure  of the product candidates to have the desired effect
       or an acceptable safety profile;

     *failure to receive regulatory approvals;

     *emergence of superior or equivalent products;

     *inability  to  manufacture  on our own,  or  through  others,
       product candidates on a commercial scale;

     *inability  to  market products due to third-party proprietary
       rights;

     *inability  to  find collaborative partners to pursue  product
       development; and

     *failure  by  future  collaborative partners  to  successfully
       develop products.

Research and development efforts may not result in any commercially
viable products if those risks materialize.

Commercialization  of  products  depends  on  collaborations   with
others.   If  the  Company is unable to find collaborators  in  the
future, it may not be able to develop products.

The   Company's   strategy  for  the  research,   development   and
commercialization of products requires it to enter into contractual
arrangements with corporate collaborators, licensors, licensees and
others.   The  Company does not have the funds to develop  products
and  intends  to  depend  on  collaborators  to  develop  products.
Currently  there are no contractual arrangements with any corporate
collaborators, licensors, licensees or others to develop  products.
Even if collaborative partners are found, it may not be possible to
completely  control  the  amount and  timing  of  resources  future
collaborative  partners  will  devote  to  products.   The  Company
intends  to seek collaborative arrangements for Oxycyte, Fluorovent
and  implantable  glucose  biosensor to  help  cover  the  cost  of
development, however, there is no assurance this will be


                                13
<PAGE>
successful.   If  collaborative relationships or other  sources  of
financing cannot be found, the Company may not be able to  continue
development  programs and may be forced to sell  assets,  including
technology, to raise capital.

Dependence   on  collaborative  arrangements  with  third   parties
subjects   the  Company  to  a  number  of  risks.   These   future
collaborative  arrangements may not be on terms  favorable  to  the
Company.   Agreements with collaborative partners  typically  allow
partners  significant discretion in electing whether to pursue  any
of  the  planned activities.  The Company cannot control the amount
and  timing of resources collaborative partners may devote  to  the
product  candidates, and partners may choose to pursue  alternative
products.   Partners may not perform their obligations as expected.
Business  combinations or significant changes  in  a  collaborative
partner's  business  strategy  may  adversely  affect  a  partner's
willingness  or  ability  to  complete its  obligations  under  the
arrangement.   Moreover,  the  Company  could  become  involved  in
disputes  with partners, which could lead to delays or  termination
of  development programs with them and time-consuming and expensive
litigation  or  arbitration.   Even if  the  Company  fulfills  its
obligations   under  a  collaborative  agreement,  a  partner   can
terminate  the  agreement  under  certain  circumstances.   If  any
collaborative partner were to terminate or breach an agreement with
it,  or  otherwise  fail to complete its obligations  in  a  timely
manner,  chances of successfully commercializing products would  be
materially and adversely affected.

If  clinical trials for the Company's products are unsuccessful  or
delayed, the stock price may decline.

The  Company must demonstrate first through preclinical testing and
then  through clinical trials that its product candidates are  safe
and  effective  for  use  in humans before  it  obtains  regulatory
approvals for the commercial sale of any products.  The Company has
not  yet  completed  preclinical testing on any  of  its  products.
Conducting  clinical  trials  is  a  lengthy,  time-consuming   and
expensive process.

If  there  is progress to beginning clinical trials, completion  of
clinical trials may take several years or more.  The start  of  and
rate  of  completion  of clinical trials may  be  delayed  by  many
factors, including:

     *unsuccessful preclinical testing results;

     *lack of efficacy during the clinical trials;

     *unforeseen safety issues;

     *slower than expected rate of patient recruitment;

     *government or regulatory delays;

     *inability to adequately follow patients after treatment; or

     *inability  to manufacture sufficient quantities of  materials
       for use in clinical trials.

The  results from preclinical testing and early clinical trials are
often  not predictive of results obtained in later clinical trials.
A  number  of  new drugs have shown promising results  in  clinical
trials, but subsequently failed to establish sufficient safety  and
efficacy  data  to  obtain  necessary regulatory  approvals.   Data
obtained  from preclinical and clinical activities are  susceptible
to  varying  interpretations, which may  delay,  limit  or  prevent
regulatory  approval.  In addition, regulatory delays or rejections
may be encountered as a result of many factors, including perceived
defects  in the design of clinical trials and changes in regulatory
policy during the period of product development.

The  Company's  product candidates are in preclinical  development,
and   the  Company  has  not  submitted  investigational  new  drug
applications to commence clinical trials involving these  products.
Preclinical  development efforts may not be successfully  completed
and   the  Company  may  not  file  any  investigational  new  drug
applications.  If there is progress to clinical trials, any  delays
in,   or  termination  of,  clinical  trials  will  materially  and
adversely affect development and commercialization timelines, which
would  cause the stock price to decline.  Any of these events would
also seriously impede the ability to obtain additional financing.

If  future  third  party clinical trial managers  do  not  perform,
clinical   trials  for  product  candidates  may  be   delayed   or
unsuccessful.


                                14
<PAGE>


The  Company has no experience in conducting and managing  clinical
trials.   The  Company intends to rely on third parties,  including
future collaborative partners, clinical research organizations  and
outside  consultants, to assist in managing and  monitoring  future
clinical  trials.  Reliance on these third parties  may  result  in
delays in completing, or failing to complete, these trials if  they
fail to perform under the terms of agreements with them.

If the Company's products are not accepted by the market, it is not
likely to generate significant revenues or become profitable.

Even  if  the  Company  obtains regulatory  approval  to  market  a
product,  products may not gain market acceptance among physicians,
patients, healthcare payors and the medical community.  The  degree
of   market  acceptance  of  any  pharmaceutical  product  that  is
developed will depend on a number of factors, including:

     *demonstration of clinical efficacy and safety;

     *cost-effectiveness;

     *potential advantages over alternative therapies;

     *reimbursement policies of government and third-party  payors;
       and

     *effectiveness of our marketing and distribution capabilities.

Physicians  will  not  recommend  therapies  using  products  until
clinical  data  or  other  factors  demonstrate  their  safety  and
efficacy  as  compared to other drugs or treatments.  Even  if  the
clinical  safety  and  efficacy  of  therapies  using  products  is
established,  physicians may elect not to recommend  the  therapies
for  any  number of other reasons, including whether  the  mode  of
administration  of  products is effective for certain  indications.
Physicians, patients, third-party payors and the medical  community
may  not accept and utilize any product candidates that the Company
or its future collaborative partners, if any, develop.  If products
do  not  achieve significant market acceptance, the Company is  not
likely to generate significant revenues or become profitable.

If  the  Company is unable to attract and retain key employees  and
consultants,  it  will  be  unable  to  develop  and  commercialize
products.

The  Company  is highly dependent on the principal members  of  its
scientific  and  management  staff.  In  order  to  pursue  product
development,  marketing and commercialization  plans,  the  Company
will  need  to hire personnel with experience in clinical  testing,
government  regulation, manufacturing, marketing and finance.   The
Company  may  not  be  able  to attract  and  retain  personnel  on
acceptable  terms given the intense competition for such  personnel
among   high   technology  enterprises,  including   biotechnology,
pharmaceutical  and  healthcare companies,  universities  and  non-
profit research institutions.  Most of the Company's scientific and
management  staff  does  not  have employment  contracts.   If  the
Company  loses  any of these persons, or is unable to  attract  and
retain  qualified  personnel,  business,  financial  condition  and
results of operations may be materially and adversely affected.

If   the   Company   fails  to  enter  into  successful   marketing
arrangements  with  third  parties,  it  would  not  be   able   to
commercialize products and it would not become profitable.

The Company currently has no sales and marketing infrastructure and
has  no  experience  in marketing, sales and distribution.   Future
profitability will depend in part on plans to enter into successful
marketing arrangements with third parties.  To the extent that  the
Company  enters  into marketing and sales arrangements  with  other
companies,  revenues will depend on the efforts of  others.   These
efforts  may not be successful.  If the Company is unable to  enter
into  third-party arrangements, it may not be able to commercialize
its products.

If the Company does not compete successfully in the development and
commercialization   of   products  and   keep   pace   with   rapid
technological  change, it will be unable to capture and  sustain  a
meaningful market position.

The   biotechnology  and  pharmaceutical  industries   are   highly
competitive  and  subject  to significant and  rapid  technological
change.   The  Company  is  aware  of  several  pharmaceutical  and
biotechnology companies that are actively


                                15
<PAGE>
engaged  in  research  and  development in  areas  related  to  the
Company's   products.   Most  of  these  companies  have  commenced
clinical  trials.  Many of these companies are addressing the  same
diseases and disease indications.

Many  of these companies and institutions, either alone or together
with  their  collaborative  partners,  have  substantially  greater
financial resources and larger research and development staffs.  In
addition, many of these competitors, either alone or together  with
their collaborative partners, have significantly greater experience
in:

     *developing products;

     *undertaking preclinical testing and human clinical trials;

     *obtaining FDA and other regulatory approvals of products; and

     *manufacturing and marketing products.

Developments by others may render the Company's product  candidates
or  technologies obsolete or noncompetitive.  The Company faces and
will continue to face intense competition from other companies  for
collaborative  arrangements with pharmaceutical  and  biotechnology
companies for establishing relationships with academic and research
institutions  and  for licenses of proprietary  technology.   These
competitors, either alone or with their collaborative partners, may
succeed  in  developing  technologies or  products  that  are  more
effective than those the Company has.

If  the Company's intellectual property does not adequately protect
product candidates, others could compete more directly against  the
Company, which would hurt profitability.

Success depends in part on the Company's ability to:

     *obtain patents or rights to patents;

     *protect trade secrets;

     *operate  without  infringing upon the proprietary  rights  of
       others; and

     *prevent others from infringing on its proprietary rights.

The  Company  will  be  able  to protect  proprietary  rights  from
unauthorized  use  by  third  parties  only  to  the  extent   that
proprietary rights are covered by valid and enforceable patents  or
are  effectively maintained as trade secrets.  The patent  position
of  biopharmaceutical companies involves complex legal and  factual
questions  and, therefore, enforceability cannot be predicted  with
certainty.   Patents, if issued, may be challenged, invalidated  or
circumvented.   Thus, any patents that are owned or  licensed  from
third  parties may not provide any protection against  competitors.
Pending patent applications, those that the Company may file in the
future,  or those that may be licensed from third parties, may  not
result  in  patents  being issued.  Also,  patent  rights  may  not
provide  adequate proprietary protection or competitive  advantages
against competitors with similar technologies.  The laws of certain
foreign  countries do not protect intellectual property  rights  to
the same extent as do the laws of the United States.

In  addition  to patents, the Company relies on trade  secrets  and
proprietary  know-how.  Protection  is  sought,  in  part,  through
confidentiality  and  proprietary  information  agreements.   These
agreements  may  not  provide  meaningful  protection  or  adequate
remedies  for  technology  in  the event  of  unauthorized  use  or
disclosure of confidential and proprietary information.  Failure to
protect  proprietary  rights could seriously impair  the  Company's
competitive position.

If third parties claim the Company is infringing their intellectual
property   rights,  it  could  suffer  significant  litigation   or
licensing expenses or be prevented from marketing its products.

The areas in which the Company has focused research and development
have  a  number of competitors.  This has resulted in a  number  of
issued  patents  and  still-pending  patent  applications.   Patent
applications in the United States are, in most cases, maintained in
secrecy until patent issue.  The publication of discoveries in  the
scientific  or  patent  literature frequently occurs  substantially
later  than the date on which the underlying discoveries were made.
Commercial success


                                16
<PAGE>
depends  significantly on the Company's ability to operate  without
infringing  the  patents  and  other proprietary  rights  of  third
parties.   The Company's technologies may infringe the  patents  or
violate other proprietary rights of third parties.  In the event of
such  infringement or violation, the Company may be prevented  from
pursuing product development or commercialization.

The   biotechnology   and  pharmaceutical  industries   have   been
characterized by extensive litigation regarding patents  and  other
intellectual  property  rights.  The  defense  and  prosecution  of
intellectual  property  suits, U.S.  Patent  and  Trademark  Office
interference  proceedings  and  related  legal  and  administrative
proceedings  in  the  United  States  and  internationally  involve
complex legal and factual questions.  As a result, such proceedings
are  costly  and  time-consuming to pursue  and  their  outcome  is
uncertain.  Litigation may be necessary to:

     *enforce patents that we own or license;

     *protect trade secrets or know-how that we own or license; or

     *determine  the  enforceability, scope  and  validity  of  the
       proprietary rights of others.

If  the Company became involved in any litigation, interference  or
other administrative proceedings, it will incur substantial expense
and  the  efforts  of technical and management  personnel  will  be
significantly diverted.  An adverse determination may  subject  the
Company   to   loss  of  proprietary  position  or  to  significant
liabilities,  or  require licenses that may not be  available  from
third  parties.   The Company may be restricted or  prevented  from
manufacturing  and selling products, if any, in  the  event  of  an
adverse determination in a judicial or administrative proceeding or
if  we  fail  to obtain necessary licenses.  Costs associated  with
these  arrangements  may  be substantial and  may  include  ongoing
royalties.  Furthermore, the necessary licenses may not be obtained
on satisfactory terms, if at all.

If  the  government and third party payors fail to provide adequate
coverage and reimbursement rates for product candidates, the market
acceptance of products may be adversely affected.

In  both  domestic and foreign markets, sales of product candidates
will  depend  in  part upon the availability of reimbursement  from
third-party  payors.   Such third-party payors  include  government
health  administration authorities, managed care providers, private
health  insurers and other organizations.  These third-party payors
are  increasingly  challenging the price  and  examining  the  cost
effectiveness  of  medical  products and  services.   In  addition,
significant  uncertainty exists as to the reimbursement  status  of
newly  approved  healthcare products.   The  Company  may  need  to
conduct  post-marketing studies in order to demonstrate  the  cost-
effectiveness of products.  Such studies may require the commitment
of  a significant amount of management time and financial and other
resources. Product candidates may not be considered cost-effective.
Adequate third-party reimbursement may not be available to maintain
price  levels  sufficient  to  realize  an  appropriate  return  on
investment   in   product  development.    Domestic   and   foreign
governments  continue to propose and pass legislation  designed  to
reduce  the  cost  of  healthcare.   Accordingly,  legislation  and
regulations  affecting  the pricing of pharmaceuticals  may  change
before  proposed products are approved for marketing.  Adoption  of
such   legislation   could   further   limit   reimbursement    for
pharmaceuticals.

If  a  successful product liability claim or series  of  claims  is
brought against the Company for uninsured liabilities or in  excess
of  insured  liabilities,  it could be forced  to  pay  substantial
damage awards.

The  use  of any of product candidates in clinical trials, and  the
sale  of any approved products, may expose the Company to liability
claims  and financial losses resulting from the use or sale of  our
products.  Although it is intended that insurance coverage will  be
obtained before the Company begins clinical trials, currently there
is no liability insurance.  The Company intends to obtain insurance
coverage  to  include the sale of commercial products if  marketing
approval   is  obtained  for  product  candidates  in  development.
Insurance coverage may not be able to be maintained at a reasonable
cost or in sufficient amounts or scope to protect against losses.

If the Company fails to manage growth, business could be harmed.

The  business plan contemplates a period of substantial  growth  if
clinical  trials  begin  on one or more products  and  the  Company
develops  other products that will place a strain on administrative
and operational infrastructure.  Management infrastructure has been
very limited.  The ability to manage effectively its operations and
growth  requires  the  Company to expand and  improve  operational,
financial and management controls, reporting systems and procedures
and to attract


                                17
<PAGE>
and  retain sufficient numbers of talented employees.  The  Company
may   not   successfully  implement  improvements   to   management
information  and control systems in an efficient or  timely  manner
and may discover deficiencies in existing systems and controls.

If  use  of hazardous materials results in contamination or injury,
the Company could suffer significant financial loss.

Research and manufacturing activities involve the controlled use of
hazardous  materials.   The Company cannot eliminate  the  risk  of
accidental  contamination or injury from these materials.   In  the
event of an accident or environmental discharge, the Company may be
held  liable for any resulting damages, which may exceed  available
financial resources.

The  Company's stock price could continue to be highly volatile and
investors  may not be able to resell shares at or above  the  price
paid for them.

The  market price of the Company's common stock, like that of  many
other  life  sciences companies, has been highly  volatile  and  is
likely  to continue to be highly volatile.  The following  factors,
among  others, could have a significant impact on the market  price
of the common stock:

     *the  results of preclinical tests and future clinical  trials
       or those of  future collaborators or competitors;

     *evidence  of  the  safety  or efficacy  of  products  or  the
       products of competitors;

     *the  announcement  by  the  Company  or  its  competitors  of
       technological innovations or new products;

     *developments  concerning patents or other proprietary  rights
       or  those  of  future competitors, including  litigation  or
       patent office proceedings;

     *loss of key personnel;

     *governmental regulatory actions;

     *changes or announcements in reimbursement policies;

     *agreements with future collaborators;

     *period-to-period fluctuations in operating results;

     *market conditions for life science stocks in general; and

     *changes in estimates of performance by securities analysts.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data as required by this
item are set forth in a separate section of this report.

ITEM  9  -  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS   ON
ACCOUNTING AND
FINANCIAL DISCLOSURES

None

                                18
<PAGE>

ITEM  10 - DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES  OF  THE
REGISTRANT

The  directors,  officers and key employees of the Company  are  as
follows:
          Name            Age              Position
Roger A. Ekbom            74    Chairman of the Board

Robert W. Nicora          61    President and Chief
                                Executive Officer Director
Robert J. Larsen          72    Corporate Secretary Director

Gerald D. Schlatter       67    Director

David Johnson             54    Chief Financial Officer

Howard Jones              64    Director

Richard Kiral,Ph.D        60     Vice   President,  Research
                                 and Development

Douglas Kornbrust, Ph.D.  50     Consultant Director,
                                 PreClinical Toxicology &
                                 Pharmacology
Elmo Blubaugh, Jr., Ph.D  48     Manager, Biosensor Research
                                 and Development

James Reavis              66     Consultant Director of
                                 Marketing

DIRECTORS AND EXECUTIVE OFFICERS

Roger  A.  Ekbom has been Chairman of the Board of Directors  since
1990. Mr. Ekbom was Chief Executive Officer from 1991 to March 1998
and   has   extensive  experience  with  medical  device  companies
including  managing companies from startup through full development
and  subsequent  sales. He is the founder and former  President  of
Cardio  Vista Systems, Inc., and founder and Chairman of  Tronomed,
Inc. From 1976 until 1993, Mr. Ekbom was the Vice President of  and
a  major  stockholder  in Respiratory Support  Products,  Inc.  and
Tronomed  International, Inc. Mr. Ekbom was  formerly  the  general
manager of a division of Becton Dickinson, an international medical
device  company, and of Marion Scientific, a subsidiary  of  Marion
Laboratories. Mr. Ekbom graduated from the University of Minnesota.

Robert W. Nicora became the President, Chief Executive Officer  and
Director  on  March 1, 1998. Mr. Nicora has BS in  chemistry,  five
years  of graduate study in biochemistry and medical sciences,  and
over  30 years of experience in various laboratory, management  and
regulatory   positions  with  pharmaceutical  and  medical   device
companies. While at McGaw Laboratories, he was responsible for  the
development  and  FDA  approval of hetastarch,  a  synthetic  blood
expander,  now  marketed by DuPont Pharma. He  led  the  team  that
evaluated  a  joint partnership with Green Cross to  develop  their
perfluorocarbon blood substitute, Fluosol. From 1994 through  March
1998,  he  was director of scientific and regulatory services  with
Quintiles,   the  world's  largest  global  contact  pharmaceutical
company.  He has provided preclinical and clinical drug and  device
consulting  services  to a number of startup biomedical  companies,
including SBI.

Robert J. Larsen, Corporate Secretary and Director since 1990, is a
former  President  and  Chief Executive  Officer  of  Bay  Hospital
Medical Center, Chula Vista, California. Mr. Larsen has 25 years of
experience in the development and management of hospitals and other
related  enterprises  in California and Oregon.  Mr.  Larsen  is  a
former trustee of the California Hospital Association and the  past
president   of  the  San  Diego  Healthcare  Financial   Management
Association.  Mr. Larsen received his graduate degree  in  Hospital
Administration  from the University of California,  Santa  Barbara,
and his BA from the University of Washington.

Gerald  D.  Schlatter, Director and former President from  1990  to
1998  and  has  over 25 years experience in sales and marketing  of
medical  supplies and devices. He has served as sales manager  with
both American Hospital Supply and
Xerox  in  their medical products divisions. He is the founder  and
former  president  of  Delamesa Medical Equipment  Leasing  Co.  in
Irvine  California,  specializing in equipping  and  financing  new
start  up  medical,  dental, and optical health care  clinics.  Mr.
Schlatter obtained his BS degree in business finance and labor  law
from California State University of Fresno.

                                19
<PAGE>

David H. Johnson, CPA, is Chief Financial Officer. Mr. Johnson  has
over 25 years of financial and administrative management experience
in  a  diverse  range of industries including high technology.  His
most  recent  position was chief financial officer of Center  Court
Concierge,  an  information  service  start  up  company.  Previous
positions  included  vice  president, finance  and  administration,
Vista  Paint  Corporation, and a regional partner at McGladrey  and
Pullen,  a major public accounting firm. Mr. Johnson has  a  BA  in
accounting and is a certified public accountant.

Howard  Jones,  Ph.D., is a member of the board of  directors.  Dr.
Jones'  most recent position was president of the biopharmaceutical
business  unit of Curative Health Services where he was responsible
for  R&D,  licensing, and manufacturing of wound healing technology
that  incorporates growth factors from patient blood. He  has  more
than  30  years of experience in directing research and development
of  drugs  at Revlon, Bristol-Myers Squibb, Amylin Pharmaceuticals,
and Cypros Pharmaceuticals, a company he co-founded. He started his
career  at  Merck  where he discovered Clinoril,  a  drug  for  the
treatment  of  rheumatoid  arthritis  that  has  annual  sales   of
$400,000,000.  He  has  had more than 84  patents  issued  for  his
biopharmaceutical developments.

KEY EMPLOYEES

Richard  Kiral,  Ph.D., Vice President of Research and  Development
holds  a Ph.D. in analytical chemistry and has over of 20 years  of
experience in the pharmaceutical and medical device industries.  He
has  held  vice  president positions in R&D  at  Anthony  Products,
Ioptex  Research, Allergan, and McGaw Laboratories,  where  he  was
responsible for development of a nutritional fat emulsion.

Douglas   Kornbrust,   Ph.D.,  Consultant   Director,   Preclinical
Toxicology  and  Pharmacology  holds  a  Ph.D.  in  toxicology  and
currently  is  vice  president and scientific  director  at  Sierra
Biomedical,  a  leading contract primate testing facility  for  the
pharmaceutical  and  biotechnology industries. He  previously  held
senior  technical and management positions at ISIS Pharmaceuticals,
Rhone-Poulenc-Rorer, Merck, and Alliance Pharmaceuticals, where  he
was   responsible   for  the  development  and  implementation   of
preclinical  toxicology  programs for their perfluorocarbon  liquid
ventilation and blood substitute products.

Elmo  A.  Blubaugh, Jr., Ph.D., Manager of Biosensor  Research  and
Development  is  an  electrochemist specializing  in  the  chemical
modification  of  electrode surfaces with thin polymer  films.  Dr.
Blubaugh  previously  was  laboratory  research  manager   at   the
University of Cincinnati. He taught both graduate and undergraduate
courses  at  the  university and holds a patent  in  the  field  of
polymer-film  electrodes.  He  received  his  graduate  degree   in
analytical chemistry from the University of Cincinnati.

James H. Reavis, Consultant director of marketing received a BS  in
chemistry  and has a career of over 35 years in sales and marketing
of pharmaceutical products and biomedical devices. He has owned and
operated  full-service advertising agencies and, for the  last  ten
years,  has consulted with high technology healthcare clients.  His
client roster includes Abbott, Baxter Edwards, Allergan, Genentech,
Invacare, Kyocera, Advanced Cardiovascular Systems, IVAC, and IMED.
Mr.  Reavis  provides qualitative and quantitative market  research
services  to  help guide product development, product  positioning,
and partnering strategies.

ITEM 11 - EXECUTIVE COMPENSATION

The following table provides certain summary information concerning
compensation earned for services rendered in all capacities to  the
Company  for the fiscal years ended April 30, 2001, 2000 and  1999,
by  the  other  most highly compensated executive officers  of  the
Company  ("Named Executive Officers"). Mr. Nicora became  President
and Chief Executive Officer on the resignation of Mr. Schlatter  on
March 1, 1998. This information includes the dollar amount of  base
salaries,  bonus awards, stock options and all other  compensation,
if any, whether paid or deferred.

                                20
<PAGE>

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                         Long-tern
                                                       Compensation
                      Annual Compensation                  Awards          All
                                             Other       Securities       Other
                                            Awards       Underlying    Compensation
Name and Position     Year  Salary  Bonus Compensation   Options/SARS     (1)
<S>                   <C>  <C>       <C>     <C>           <C>           <C>

Robert Nicora(1)      2001 137,000    -       -              -            21,250
President             2000 126,000    -       -              -            12,600
                      1999 125,000    -       -              -            12,600

Richard Kiral         2001 132,000    -       -              -            12,100
Vice President of     2000 118,243    -       -              -                 -
Product Development   1999  97,830    -       -              -                 -
</TABLE>

(1)  Mr. Nicora and Mr. Kiral received a $6,600 car allowance  plus
medical premiums paid for by the Company.

OPTION GRANTS

In  April 1995, the Company's Board of Directors approved  a  stock
option  plan  providing for the granting of  options  to  officers,
directors,  consultants  and  key  employees  to  purchase  up   to
2,500,000 shares of the Company's common stock at prices  not  less
than  the fair market value of the stock at the date of grant.   No
shares  were  exercised or issued under this plan. The Company  has
since  determined that they never requested or received shareholder
approval  as  required to formally approve the plan.   The  Company
adopted a new plan in October 1999, which was ratified by a vote of
the shareholders during fiscal year ended April 30, 2001.

The  1999  plan  provides for the granting of  incentive  and  non-
qualified  options  to  officers, directors,  consultants  and  key
employees  to  purchase  up to 4,000,000 shares  of  the  Company's
common  stock at prices not less than the fair market value of  the
stock  at the date of grant for incentive options. The total number
of  options issued at April 30, 2001 were 4,201,472 with a weighted
average  exercise  price  of $0.21. This total  includes  1,020,000
options granted prior to the 1999 Plan. The Company must record  an
expense  equal  to  the intrinsic value (if  any)  of  the  options
multiplied  by the percent vested at the date the plan is  ratified
by the shareholders.  The option expiration dates are determined at
the date of grant, but may not exceed ten years.

The  following table summarizes certain information as of April 30,
2001  concerning  the  stock option grants to the  Company's  Chief
Executive Officer and the other Named Executive Officers  made  for
the fiscal year ended April 30, 2001. No stock appreciation rights,
restricted stock awards or long-term performance awards  have  been
granted as of the date hereof and no options have been exercised.

                 Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>

                     Number     % of Total                               Potential Realizable
                       of        Options                                Value at Assumed Annual
                   Securities   Granted to  Exercise                      Rates of Stock Price
                   Underlying   Employees   or Base                       Appreciate of Option
                     Options    in Fiscal  Price Per     Expiration           Terms (1)
                     Granted      Year       Share          Date            5%         10%
<S>                  <C>         <C>         <C>          <C>          <C>         <C>
Robert W. Nicora     300,000     35.0%       $0.62        May 2010      $ 116,974  $ 296,436
                     150,000     18.5%       $0.205       April 2011       19,339     49,008
Total                450,000     55.5%                                  $ 136,313  $ 345,444

Richard Kiral        250,000     30.9%       $0.205       April 2011    $  32,231  $  81,679
</TABLE>
                                 21

<PAGE>

(1)   Each option listed in the table above was fully vested as  of
  the  date of grant and exercisable over a three-year period.  The
  potential realizable value is calculated based on the ten-year tern
  of  the  option at the time of grant.  It is calculated based  on
  assumed  annualized  rates of stock price appreciation  from  the
  exercise  price  at the date of grant of 5% and  10%  (compounded
  annually)  over  the  full  term of the grant  with  appreciation
  determined as of the expiration date.  The 5% and 10% assumed rates
  of  appreciation  are  mandated by the  Securities  and  Exchange
  Commission  and  do  not  represent  the  Company's  estimate  or
  projection of future common stock prices.  Actual gains on, if any,
  on stock options exercised are dependent on the future performance
  of  the  common  stock and overall stock market conditions.   The
  amounts reflected in the table may not be achieved.


Aggregate Options Exercised in Last Fiscal Year and Year End Option
  Values

                                     Number of
                                     Securities         Value of
                                     Underlying     Unexercised In-
                                    Unexercised    the-Money Options
                                     Options At   at Fiscal year End
                Shares             Fiscal Year End    Exercisable/
             Acquired On   Value    Exerciseable/    Unexercisable
               Exercise   Realized  Unexercisable        (1)

Robert Nicora     None      None     200,000 /             $50,000 /
                                     750,000              $187,500
Richard Kiral     None      None      91,666 /             $22,917 /
                                     400,000              $100,000

(1)   Based on the closing sale price on the OTC Bulletin Board  on
  the  last  day of the 2001 fiscal year, less the option  exercise
  price payable per share.


DEFINED BENEFIT AND ACTUARIAL PLANS

The  Company has not supplied Defined Benefits, or similar Pension,
Benefit or Actuarial Plan Benefits to its Executive Officers.

COMPENSATION OF DIRECTORS

During  the  fiscal year ended April 30, 2001, three  of  the  four
outside   directors  received  compensation  of  $6,000   in   cash
compensation  and  one outside director received  $12,000  in  cash
compensation.  In  addition,  each of the  four  outside  directors
received options to purchase 10,000 shares of common stock at $0.80
per  share, 80% of the market value at the date these options  were
issued.

EMPLOYMENT CONTRACTS

On  March  1,  1998  the Board of Directors approved  a  three-year
employment contract with Robert W. Nicora, as President  and  Chief
Executive Officer. Mr. Nicora's base annual salary is $145,000  per
year  and  includes  an automobile allowance,  medical  and  dental
coverage, participation in the Executive Bonus Plan, $200,000  life
insurance  payable by the corporation and payable to a  beneficiary
named  by  the  insured, and participation in the  Company's  stock
option  plan  with  the grant of an option for  300,000  shares  at
signing and 150,000 shares to be granted annually.  At the  end  of
the  contract,  Mr.  Nicora's  contract  will  renew  automatically
annually   unless  terminated  by  either  party.    Mr.   Nicora's
employment agreement provides that he may, at his election, receive
a  severance payment equal to 299% of his average annual salary and
bonuses received during the prior two-year period in the event of a
change in control as defined. As of May 18, 1998 Mr. Nicora assumed
the title of Chief Executive Officer.

On  February  1,  2000 the Board of Directors approved  a  two-year
employment  contract  with  Richard Kiral,  as  Vice  President  of
Product Development. Mr. Kiral's base annual salary is $140,000 per
year  and  includes  an automobile allowance,  medical  and  dental
coverage, participation in the Executive Bonus Plan, $200,000  life
insurance  payable by the corporation and payable to a  beneficiary
named  by  the  insured, and participation in the  Company's  stock
option plan

                                22
<PAGE>
with  the  grant  of  an option for 100,000 shares  annually.   Mr.
Kiral's  employment  agreement provides that he  is  to  a  minimum
severance payment equal to 9 months of his annual salary period  in
the event of a change in control as defined.

COMPENSATION  COMMITTEE  INTERLOCKS AND  INSIDER  PARTICIPATION  IN
COMPENSATION DECISIONS

The Company does not presently have a Compensation Committee of the
Board of Directors, or other Board Committees performing equivalent
functions, and did not at any time during the last four years.  The
Executive  Committee of the Board of Directors  presently  performs
these  functions.  Roger Ekbom and Gerald Schlatter, directors  and
former  officers, and Robert Larsen, a director and current officer
of  the  Company,  participated in deliberations of  the  Board  of
Directors concerning executive officer compensation during the last
fiscal year.  None of the Company's executive officers serves as  a
member  of the board of directors or compensation committee of  any
entity that has one or more of its executive officers serving as  a
member   of  the  Company's  Board  of  Directors  or  Compensation
Committee.

ITEM  12  -  SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL  OWNERS  AND
MANAGEMENT

The  following  tables sets forth as of April 30,  2001  the  stock
ownership of all persons who, to the registrants knowledge, own  of
record  and  beneficially  five  (5%)  per  cent  or  more  of  its
outstanding Common Stock, and for the officers and directors  as  a
group.

MANAGEMENT OWNERS

                                          Amount &
                Name of                  Nature of   Percent
Title of      Beneficial                Beneficial  of Class
  Class          Owner                   Ownership
Common Stock   Roger A. Ekbom (1)       2,101,778     2.36%
Common Stock   Robert W. Nicora (2)       592,858      .67%
Common Stock   Gerald D. Schlatter (3)  1,272,929     1.43%
Common Stock   Robert J. Larsen (4)     1,652,553     1.86%
Common Stock   Howard  Jones (5)          115,000      .03%
Common Stock   David Johnson (6)           66,666      .01%
Common Stock   Richard Kiral (7)           91,666      .01%

All Directors                           5,893,450     6.63%
 and  Officers as a group  -
        7 persons)

(1)  Includes options to purchase 515,000 shares of common stock
currently exercisable or exercisable within 60 days of July 31,
2001.
(2)  Includes options to purchase 200,000 shares of common stock
currently exercisable or exercisable within 60 days of July 31,
2001.
(3)  Includes options to purchase 490,000 shares of common stock
currently exercisable or exercisable within 60 days of July 31,
2001.
(4)  Includes options to purchase 530,000 shares of common stock
currently exercisable or exercisable within 60 days of July 31,
2001 and also includes shares beneficially owned by virtue of Mr.
Larsen's control of Peso, Inc. and Jada, Inc.
(5)  Includes options to purchase 115,000 shares of common stock
currently exercisable or exercisable within 60 days of July 31,
2001.
(6)  Includes options to purchase 66,666 shares of common stock
currently exercisable or exercisable within 60 days of July 31,
2001.
(7)  Includes options to purchase 91,666 shares of common stock
currently exercisable or exercisable within 60 days of July 31,
2001.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During  the  fiscal year ended April 30, 2001 the Company  recorded
expenses of $12,400 for services rendered by Peso, Inc., a  company
controlled by Robert Larsen, a Director and Officer of the Company.

                                23
<PAGE>

During  the  fiscal  year ended April 31, 2001 the  Company  issued
options to purchase common stock to the following Officers  of  the
Company under the 1999 Plan:

Robert Nicora, President and CEO    300,000 options at $0.62
                                    per share expiring May 15, 2010
                                    150,000 options at $0.205 per  share
                                    expiring April 20, 2011
Richard  Kiral, Vice President      250,000 options at  $0.205
                                    per share expiring April 20, 2011

During  fiscal  2001, the Company issued each of the  four  outside
directors  received  options to purchase 10,000  shares  of  common
stock at $0.80 per share, 80% of fair market value at the date  the
options were issued

During  fiscal  2001 the Company loaned $30,000 to Roger  Ekbom,  a
Director of the Company under the terms of a Promissory Note.   The
Note is interest free and is due September 1, 2001.

ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
S-K

Response to Item 8.

A.   Documents Filed as a Part of This Report:

(1)  FINANCIAL STATEMENTS

     (a)  Reports of Independent Certified Public Accountants.

     (b)  Balance Sheets as of April 30, 2001 and 2000.

     (c) Statements of operations for each of the three years
          in the period ended April 30, 2001.

     (d) Statements of Stockholders' Equity for each of the three
          years in the period ended April 30, 2001.

     (e) Statements of Cash Flows for the three years
          in the period ended April 30, 2001.

     (f) Notes to the Financial Statements.

                         INDEX TO EXHIBITS

                                               Exhibits
        Exhibits Required by Item 601 of          to       Exhibits to
        Regulation S-K                          Prior         This
                                                Reports       Year
   3(a)(i)  Registrants Amended Articles of                    X
            Incorporation
   3(a)     Registrants Amended Articles of           X
            Incorporation
   3(b)     Specimen Form of Common Stock             X
            Certificate
   4(a)     Stock Option Agreement between Robert              X
            Skalnik, January 12, 2001
   4(b)     Stock Option Agreement between Robert              X
            Skalnik, December 29, 2000
   4(c)     Stock Option Agreement between Robert              X
            Skalnik, December 29, 2000
   4(d)     Stock Option Agreement between Robert              X
            Skalnik, December 29, 2000
   4(e)     Stock Option Agreement between James               X
            Reavis, December 29, 2000
   4(f)     Stock Option Agreement between James               X
            Reavis, January 12, 2001
   4(g)     Stock Option Agreement between James               X
            Reavis, December 29, 2000
   4(h)     Stock Option Agreement between James               X
            Reavis, December 29, 2000
   4(i)     Stock Option Agreement between Joan                X
            Mahan, May 26, 2000
   4(j)     Stock Option Agreement between Lane                X
            Martin, July 13, 2000
   10(a)    Agreement between the Registrant and      X
            Leland C. Clark, Jr., Ph.D. dated
            October 1, 1991 with amendments, Re:
            Assignment of Intellectual Property
            and Trade Secrets
   10(b)    Agreement between the Registrant and      X
            Keith R. Watson, Ph.D., Re:
            Assignment of Invention

                                24
<PAGE>

   10(c)    Promissory Note from Roger Ekbom                   X
   10(d)    1999 Employee Stock Plan                           X
   10(e)    Children's Hospital Research                       X
            Foundation License Agreement

Pursuant  to  the requirements of Section 13 of the Securities  and
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereto duly authorized.


                SYNTHETIC BLOOD INTERNATIONAL, INC.




       Robert W. Nicora, President & Chief Executive Officer

                      By: /S/ ROBERT W. NICORA


             David H. Johnson, Chief Financial Officer

                      By: /S/ DAVID H. JOHNSON


Dated: 6/29/01

Pursuant  to the requirements of Instruction D to Form  10-K  under
the  Securities  and  Exchange Act of 1934, this  report  has  been
signed  below by the following persons on behalf of the  Registrant
and  in  the  capacities and on the dates indicated. The  following
represent  at  least a majority of the Board of  Directors  of  the
Registrant.


Date         Name & Title

6/29/01      Roger A. Ekbom
             Chairman of the
             Board of Directors
             By: /S/ ROGER A. EKBOM

6/29/01      Robert W. Nicora
             President & Director
             By: /S/ ROBERT W. NICORA

6/29/01      Robert J. Larsen
             Corporate Secretary
             By: /S/ ROBERT LARSEN

6/29/01      Gerald D. Schlatter
             Director
             By: /S/ GERALD SCHLATTER


6/29/01      Howard Jones
             Director
             By: /S/ HOWARD JONES

                                25
<PAGE>
        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors
Synthetic Blood International, Inc.

We  have audited the accompanying balance sheets of Synthetic Blood
International,  Inc.  (a Company in the development  stage)  as  of
April  30, 2001 and 2000, and the related statements of operations,
stockholders' equity (deficit) and cash flows for each of the three
years  in  the period ended April 30, 2001 and for the period  from
inception  (May  26,  1967)  to April 30,  2001.   These  financial
statements are the responsibility of the Company's management.  Our
responsibility  is  to  express  an  opinion  on  these   financial
statements based on our audits.

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

In  our opinion, the financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position  of
Synthetic Blood International, Inc. as of April 30, 2001 and  2000,
and  the  results of its operations and its cash flows for each  of
the  three  years in the period ended April 30, 2001  and  for  the
period  from  inception  (May  26, 1967)  to  April  30,  2001,  in
conformity  with  accounting principles generally accepted  in  the
United States of America.


GRANT THORNTON LLP

Irvine, California
June 1, 2001

                                26
<PAGE>

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

                                BALANCE SHEETS
                           April 30, 2001 and 2000

						ASSETS
                                                     2001      2000
CURRENT ASSETS:
      Cash  and  cash  equivalents              $4,250,898   $5,466,391
      Common stock subscription receivable               -      400,000
       Note receivable from director                30,000            -
      Prepaid expenses and other current assets     83,373       71,065

          Total current assets                   4,364,271    5,937,456

PROPERTY AND EQUIPMENT
     Laboratory equipment                          263,123       47,290
     Furniture and fixtures                         49,022       28,435
     Leasehold improvements                          3,825            -
                                                   315,970       75,725
      Less accumulated depreciation                (72,066)     (43,994)

      Property and equipment, net                  243,904       31,731

PATENTS, net                                       234,121      230,464

                                                $4,842,296   $6,199,651
The accompanying notes are an integral pare of these
 financial statements
                                     27
<PAGE>
                      SYNTHETIC BLOOD INTERNATIONAL, INC.
                      (A Development Stage Enterprise)

                          BALANCE SHEETS- CONTINUED
                           April 30, 2001 and 2000


                   LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                          2001           2000
<S>                                                <C>             <C>
CURRENT LIABILITIES
      Notes  payable                               $     177,358   $     44,534
     Accounts payable                                     87,256        211,460
     Accrued payroll                                      79,454         89,446

            Total current liabilities                    344,068        345,440

COMMITMENTS AND CONTINGENCIES                                  -              -

STOCKHOLDERS' EQUITY:
Common stock, par value $0.01 per share; authorized
 100,000,000 shares; 84,474,547 and 80,907,298 shares
 issued and outstanding at April 30, 2001 and 2000,
 respectively                                            844,745        809,073
Stock subscription receivable                                  -       (600,000)
Deposits on common stock                                  94,231      2,535,471
Additional paid-in capital                            16,544,832     14,423,005
Deficit accumulated during the development stage     (12,985,580)   (11,313,338)

   Total  stockholders' equity                         4,498,228      5,854,211
                                                    $  4,842,296   $  6,199,651
</TABLE>
 The accompanying notes are an integral part of these financial statements

                                     28
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

                          STATEMENTS OF OPERATIONS
   For Each of the Three Years ended April 30, 2001 and For the Period
           May 26, 1967 (Date of Incorporation) to April 30, 2001



<TABLE>
<CAPTION>
                                    Period from
                                    May 26, 1967
                                 (incorporation) to
                                   April 30, 2001       2001           2000           1999
<S>                                <C>             <C>             <C>            <C>
EXPENSES
 Research and development          $  4,170,286    $    782,339    $   224,023    $  170,058
 General  and  administrative         9,071,274       1,219,852        687,575       667,376
 Interest                               166,544           1,070         15,882        20,395

   Total  expenses                   13,408,104       2,003,261        927,480       857,829

OTHER INCOME (primarily interest)      (422,524)       (331,019)       (16,141)      (23,994)

NET LOSS                           $(12,985,580)   $ (1,672,242)   $  (911,339)   $ (833,835)

NET LOSS PER SHARE -
      Basic  and  diluted                                ($0.02)        ($0.01)       ($0.02)

WEIGHTED AVERAGE NUMBER
 OF COMMON SHARES
 OUTSTANDING-Basic and diluted                       86,401,830     65,365,438    51,388,471
</TABLE>

The accompanying notes are an integral part of these financial statements

                                          29
<PAGE>

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

                STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
   For Each of the Three Years ended April 30, 2001 and For the Period
           May 26, 1967 (Date of Incorporation) to April 30, 2001

<TABLE>
<CAPTION>

                                                     Common Stock
                                                                           Additional
                                              Number of                     paid-in
                                                Shares         Amount        capital
<S>                                            <C>           <C>           <C>
BALANCES, May 26, 1967                                  -    $        -    $        -

Issuance of common stock                       36,292,293       362,923     5,809,831

Issuance of common stock upon
      conversion of debentures                  1,401,399        14,014       818,234

Issuance of common stock to employees
     and compensatory options                     218,800         2,188        81,312

Issuance of common stock for
      services rendered                           324,175         3,242        49,350

Issuance of common stock to officers
      to retire shareholder loans               1,044,450        10,444       177,556

Common stock issued in conjunction with
      funding agreements and services rendered  5,376,365        53,764       883,160

Common stock issued upon conversion
     of notes payable                           4,766,820        47,668       637,607

Issuance of warrants                                    -             -       190,406

Exercise of warrants                            1,305,000        13,050       117,450

Contributions of capital for cash and
       services rendered                                -             -        65,700

Contribution of capital by shareholders                 -             -       581,818

Net loss                                                -             -             -

Balances at April 30, 1998                     50,729,302       507,293     9,412,424

Issuance of common stock                        4,265,022        42,650       262,500

Issuance of common stock for services-
      rendered                                    320,000         3,200        53,725

Stock options granted                                   -             -         1,560

Net loss                                                -             -             -

Balances at April 30, 1999                     55,314,324       553,143     9,730,209
 </TABLE>

<TABLE>
<CAPTION>
                                                                             Deficit
                                                                           accumulated      Total
                                                 Total Stock    Deposits    during the   stockholders'
                                                 subscription   on common   development      equity
                                                 receivable      stock        stage        (deficit)
<S>                                               <C>          <C>         <C>             <C>
BALANCES, May 26, 1967                             $     -      $    -      $      -    $         -

Issuance of common stock                                 -         -               -      6,172,754

Issuance of common stock upon
      conversion of debentures                           -         -               -        832,248

Issuance of common stock to employees
     and compensatory options                            -         -               -         83,500

Issuance of common stock for
      services rendered                                  -         -               -         52,592

Issuance of common stock to officers
      to retire shareholder loans                        -         -               -        188,000

Common stock issued in conjunction with
      funding agreements and services rendered           -         -               -        936,924

Common stock issued upon conversion
     of notes payable                                    -         -               -        685,275

Issuance of warrants                                     -         -               -        190,406

Exercise of warrants                                     -         -               -        130,500

Contributions of capital for cash and
       services rendered                                 -         -               -         65,700

Contribution of capital by shareholders                  -         -               -        581,818

Net loss                                                 -         -      (9,568,164)    (9,568,164)

Balances at April 30, 1998                               -         -      (9,568,164)       351,553

Issuance of common stock                                 -         -               -        305,150

Issuance of common stock for services-
      rendered                                           -         -               -         56,925

Stock options granted                                    -         -               -          1,560

Net loss                                                 -         -        (833,835)      (833,835)

Balances at April 30, 1999                               -         -     (10,401,999)      (118,647)
</TABLE>

The accompanying notes are an integral part of these financial statements

                                       30
<PAGE>

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

           STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)- CONTINUED
   For Each of the Three Years ended April 30, 2001 and For the Period
           May 26, 1967 (Date of Incorporation) to April 30, 2001

<TABLE>
<CAPTION>

                                             Common Stock
                                                                      Additional     Stock
                                        Number of                      paid-in     subscription
                                         shares         Amount         capital      receivable
<S>                                   <C>            <C>            <C>            <C>
Balances at April 30, 1999             55,314,324    $   553,143    $  9,730,209    $       -

Issuance  of  common stock             17,882,974        178,830       3,705,283            -

Issuance of common stock for services
      rendered                            200,000          2,000          20,400            -

Issuance of common stock for payable
      settlement                           10,000            100          13,500            -

Issuance of common stock for
     promissory note                    7,500,000         75,000         925,000     (600,000)

Options issued for services                     -              -          28,613            -

Deposits received for common stock
      not  issued                               -              -               -            -

Net loss                                        -              -               -            -

Balances at April 30, 2000             80,907,298        809,073      14,423,005     (600,000)

Issuance of common stock for services
    rendered                              244,819          2,448         118,920            -

Exercise of stock warrants              1,172,978         11,730          95,027            -

Options issued for services                     -              -          12,401            -

Issuance of common stock for deposit
     received                           6,649,452         66,494       2,374,746            -

Cancellation of note for common stock
     previously issued                 (4,500,000)       (45,000)       (555,000)     600,000

Compensation on options and
       warrants issued                          -              -          75,733            -

Net loss                                        -              -               -            -

Balances at April 30, 2001             84,474,547     $  844,745    $ 16,544,832    $       -
</TABLE>

<TABLE>
<CAPTION>
                                                         Deficit
                                                       accumulated         Total
                                         Deposits      during the      stockholders'
                                        on common      development        equity
                                         stock           stage           (deficit)
<S>                                    <C>           <C>              <C>
Balances at April 30, 1999              $        -    $ (10,401,999)   $   (118,647)

Issuance  of  common stock                       -                -       3,884,113

Issuance of common stock for services
      rendered                                   -                -          22,400

Issuance of common stock for payable
      settlement                                 -                -          13,600

Issuance of common stock for
     promissory note                             -                -         400,000

Options issued for services                      -                -          28,613

Deposits received for common stock
      not  issued                        2,535,471                -       2,535,471

Net loss                                         -         (911,339)       (911,339)

Balances at April 30, 2000               2,535,471      (11,313,338)      5,854,211

Issuance of common stock for services
    rendered                                     -                -         121,368

Exercise of stock warrants                       -                -         106,757

Options issued for services                      -                -          12,401

Issuance of common stock for deposit
     received                           (2,441,240)               -               -

Cancellation of note for common stock
     previously issued                           -                -               -

Compensation on options and
       warrants issued                           -                -          75,733

Net loss                                         -       (1,672,242)     (1,672,242)

Balances at April 30, 2001           $      94,231    $ (12,985,580)   $  4,498,228
</TABLE>

The accompanying notes are an integral part of these financial statements

                                     31
<PAGE>

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

                          STATEMENTS OF CASH FLOWS
   For Each of the Three Years ended April 30, 2001 and For the Period
           May 26, 1967 (Date of Incorporation) to April 30, 2001

<TABLE>
<CAPTION>
                                                  Period from
                                                  May 26, 1967
                                              (incorporation) to
                                                April 30, 2001       2001             2000           1999
<S>                                              <C>             <C>             <C>            <C>
Cash flows from operating activities:
Net  loss                                        $(12,985,580)   $ (1,672,242)   $  (911,339)   $  (833,835)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation  and  amortization                    487,178           71,627         53,992         54,412
  Loss  on  disposal of property  and  equipment      15,284                -         12,874              -
  Disposal and write-down of other assets            126,800                -              -              -
  Issuance of compensatory stock
   options/warrants                                  367,213           88,134         28,613          1,560
  Issuance of stock below fair market value          695,248                -              -              -
  Issuance of stock for services rendered          1,190,209          121,368         22,400         56,925
  Contribution of capital through services
   rendered by stockholders                          216,851                -              -              -
  Changes  in  operating  assets  and  liabilities:
     Prepaid expenses and other current assets       (83,373)         (12,308)       (10,191)       (41,349)
     Accounts payable and accrued expenses           343,303         (134,196)      (109,650)       (32,212)
     Net cash used in operating activities        (9,626,867)      (1,537,617)      (913,301)      (794,499)
Cash flows from investing activities:
 Purchase of property and equipment                 (543,107)        (240,246)       (17,664)       (13,795)
 Proceeds from sale of property and equipment         15,457                -              -              -
 Purchase of other assets                           (557,299)         (77,212)       (34,377)       (91,462)
 Net cash used in investing activities            (1,084,949)        (317,458)       (52,041)      (105,257)
</TABLE>
The accompanying notes are an integral part of these financial statements

                                   32
<PAGE>

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

                   STATEMENTS OF CASH FLOWS- CONTINUED
   For Each of the Three Years ended April 30, 2001 and For the Period
           May 26, 1967 (Date of Incorporation) to April 30, 2001

<TABLE>
<CAPTION>
                                              Period from
                                              May 26, 1967
                                           (incorporation) to
                                             April 30, 2001       2001             2000           1999
<S>                                          <C>              <C>            <C>            <C>
Cash flows from financing activities:
 Proceeds from stockholder debt               $    977,692    $         -    $          -    $    61,900
 Repayments of amounts due to stockholders        (121,517)             -               -              -
 Proceeds from issuance of notes payable           275,248        135,000               -        140,248
 Proceeds from issuance of convertible
   debentures                                      811,000              -               -              -
 Payments on short-term notes payable              (58,812)        (2,175)        (56,637)             -
 Payments on long-term debt                       (238,971)             -         (84,227)      (154,744)
 Payments on capital lease obligation              (52,338)             -               -              -
 Proceeds from exercise of stock options           106,757        106,757               -              -
 Proceeds from common stock not
  issued  at  year-end                              94,231              -       2,535,471              -
 Contribution of capital from stockholders          40,700              -               -              -
 Proceeds from issuance of common stock         13,128,724        400,000       3,844,113        305,150
     Net cash provided by financing activities  14,962,714        639,582       6,238,720        352,554
     Net increase (decrease) in cash and
       cash   equivalents                       4,250,898      (1,215,493)      5,273,378       (547,202)
Cash and cash equivalents, beginning of period          -       5,466,391         193,013        740,215
Cash and cash equivalents, end of period      $ 4,250,898      $4,250,898     $ 5,466,391     $  193,013
Cash paid for:
      Interest                                $   127,030      $    1,070         $15,882     $   20,395
       Taxes                                  $     8,740      $      800     $     1,250     $      800
</TABLE>
The accompanying notes are an integral part of these financial statements

                                       33
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

                   STATEMENTS OF CASH FLOWS-CONTINUED
   For Each of the Three Years ended April 30, 2001 and For the Period
           May 26, 1967 (Date of Incorporation) to April 30, 2001

Supplemental information:
During fiscal 2000:
  Exchange  of  $1,200,000 stock subscription  receivable  for
  common  stock  subscription of 9,000,000  shares,  of  which
  4,500,000 shares ($600,000) were not issued and paid  as  of
  April 30, 2000.

  The  Company  issued  10,000  shares  of  common  stock   in
  satisfaction  of a interest expense liability in  which  the
  Company recognized an expense of $13,600.

  The  Company  permitted the exercise of 400,000  options  of
  unregistered  common  stock at a  $0.10  exercise  price  in
  satisfaction of $40,000 in related party notes payable.  The
  company  paid  an  unrelated third party for  services  with
  200,000  shares of common stock, recognizing an  expense  of
  $22,400.

During fiscal 2001:
  The  Company cancelled the balance of the stock subscription
  receivable of $600,000 and the related 4,500,000  shares  of
  common stock due to nonpayment.

The Company issued 6,649,452 shares of its common stock for
deposits received in fiscal 2000.

The accompanying notes are an integral part of these financial statements.
                                      34
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

                      NOTES TO FINANCIAL STATEMENTS
                       April 30, 2001 and 2000

NOTE A - GENERAL

  The  Company was incorporated on May 26, 1967 and was  inactive
  through  September  1990, when it began  conducting  operations
  for  the  purpose of developing a synthetic blood  emulsion  to
  act  as  a  human  blood substitute, and a method  of  using  a
  perfluorocarbon  compound  to facilitate  oxygen  exchange  for
  individuals with respiratory distress syndrome.  Shortly  after
  commencing  these operations, the Company changed its  name  to
  Synthetic  Blood  International,  Inc.   The  Company  is  also
  developing   an   implantable,   continuous   reading   glucose
  biosensor  to  be used primarily by individuals with  diabetes.
  All  of the Company's products are currently in the preclinical
  trial  stage.  This stage requires a sufficient level of animal
  testing  to  be performed in order to file certain applications
  with  the  United  States Food and Drug  Administration  (FDA),
  which  is  necessary  to obtain FDA approval  to  proceed  with
  human   testing  and,  ultimately,  approval  to   market   the
  products.   No  assurances can be given  that  such  approvals,
  once  applied  for,  will  be granted.   The  Company  has  not
  generated any revenues since inception.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Development  Stage - The Company has not commenced its  planned
principal  operations,  and  there  have  been  no  significant
revenues,  therefore  it  is considered  a  "Development  Stage
Enterprise".

Cash  and  Cash  Equivalents  - The Company  considers  highly-
liquid investments with original maturities of three months  or
less to be cash equivalents.

Property  and  Equipment - Property and equipment are  recorded
at  cost.  Depreciation and amortization are computed using the
straight-line  method over the shorter of the estimated  useful
lives  of the related assets, ranging from three to ten  years,
or the lease term, if applicable.

Patents - Patent costs are being amortized over the lesser of the
remaining life of the patent or the estimated useful life of the
related product, ranging from eight to ten years.  Patent costs
totaled $234,121 and $230,464, net of accumulated amortization of
$138,370 and $94,815, at April 30, 2001 and 2000, respectively.
The Company evaluates recoverability of patents on at least an
annual basis by comparing the estimated resale value of the
patents to the remaining carrying values.  An adjustment to the
carrying value of the patent rights would be made if the
estimated resale value of the patents is determined to be
insufficient to recover such value.

                                      35
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

                NOTES TO FINANCIAL STATEMENTS-CONTINUED
                       April 30, 2001 and 2000


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

  Pricing of Common Stock and Options to Purchase Common Stock  -
  The  Company's Board of Directors determines the issuance price
  of  its  common  stock  and the exercise price  of  options  to
  purchase common stock, based on a good faith estimate  of  fair
  value,  which is derived from recent issuances of common  stock
  to   unrelated   parties  and/or  from  common   stock   market
  quotations,  after  giving effect to the restricted  nature  of
  the  stock  issued.  In the event that stock  is  issued  at  a
  price  below  fair  market  value  for  services  rendered,  an
  expense  is  recorded  for the difference between  fair  market
  value  and  the issuance price and is included in  general  and
  administrative expenses.

  Loss  Per  Share  -  Basic loss per share,  which  includes  no
  dilutive securities, is computed by dividing loss available  to
  common  shareholders by the weighted-average number  of  common
  shares  outstanding for that particular period.   In  contrast,
  diluted  loss  per share considers the potential dilution  that
  could   occur  from  other  financial  instruments  that  would
  increase  the  total  number of outstanding  shares  of  common
  stock.   Potentially  dilutive securities,  however,  have  not
  been  included  in  the  diluted  loss  per  share  computation
  because their effect is antidilutive.

  Income  Taxes  -  Deferred  tax  assets  and  liabilities   are
  recorded  for  differences between the financial statement  and
  tax  basis  of the assets and liabilities that will  result  in
  taxable  or  deductible amounts in the future based on  enacted
  tax  laws  and  rates applicable to the periods  in  which  the
  differences  are expected to affect taxable income.   Valuation
  allowances  are  established when necessary to reduce  deferred
  tax  assets to the amount expected to be realized.  Income  tax
  expense  is  recorded for the amount of income tax  payable  or
  refundable for the period increased or decreased by the  change
  in deferred tax assets and liabilities during the period.

  Reclassifications  -  Certain amounts  as  previously  reported
  have been reclassified to conform with the 2001 presentation.

  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  at  the
  date  of  the financial statements and the reported amounts  of
  other   income  and  expenses  during  the  reporting  periods.
  Actual results could differ from those estimates.

                                      36
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

                NOTES TO FINANCIAL STATEMENTS-CONTINUED
                       April 30, 2001 and 2000

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

  Fair  Value  of  Financial Instruments - The Company's  balance
  sheet  includes the following financial instruments:  cash  and
  cash  equivalents, accounts payable, accrued expenses,  amounts
  due  to stockholders, and notes payable.  The Company considers
  the carrying amount in the financial statements
  to  approximate  fair  value  for these  financial  instruments
  because   of  the  relatively  short  period  of  time  between
  origination  of the instruments and their expected realization.
  The  Company considers the carrying value of its notes  payable
  to  approximate fair market value based on the borrowing  rates
  currently available to the Company for bank loans with  similar
  terms and maturities.

  Stock-Based  Compensation  - The Company  accounts  for  stock-
  based  employee compensation as prescribed by APB  Opinion  No.
  25,  "Accounting  for  Stock  Issued  to  Employees,"  and  has
  adopted  the  disclosure provisions of Statement  of  Financial
  Accounting   Standards   123,   "Accounting   for   Stock-based
  Compensation"   ("SFAS  123").  SFAS  123   requires   proforma
  disclosures of net loss and net loss per share as if  the  fair
  value  based  method of accounting for stock-based  awards  had
  been  applied. Under the fair value based method,  compensation
  cost  is recorded based on the value of the award at the  grant
  date and is recognized over the service period.

NOTE C - COMMITMENTS AND CONTINGENCIES

  Litigation  -  The  Company is subject  to  litigation  in  the
  normal  course  of business, none of which management  believes
  will  have a material adverse effect on the Company's financial
  statements.

NOTE D - NOTES PAYABLE

Notes payable consist of the following at April 30:
                                           2001          2000
Installment contract payable, secured by
 unearned insurance premiums, payable in
 monthly installments of $10,700 through
 September 2001                            $  42,358     $  44,534

Promissory note bearing interest at 8% per
 annum, payable in monthly principal and
 interest installments of $11,745 through
 April 19, 2002                              135,000             -
                                           $ 177,358     $  44,534

                                      37
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

               NOTES TO FINANCIAL STATEMENTS-CONTINUED
                       April 30, 2001 and 2000

NOTE E - STOCKHOLDERS' EQUITY

During  fiscal  1999,  the  Company issued  125,000  shares  in
satisfaction  of  a  $26,250 liability for rent  on  a  Company
research facility.  An additional 25,000 shares were issued  to
a  consultant for services rendered.  The Company recognized an
expense  of $2,625 representing the fair value of the stock  at
the date of issuance.

During  fiscal  1999, the Company issued 170,000  shares  to  a
director/officer  in  exchange  for  services  rendered.    The
Company recognized an expense of $28,050 representing the  fair
value of the stock at the date of issuance.

During  fiscal  1999,  the Company issued 4,265,022  shares  of
unregistered  common  stock  for $305,150;  these  shares  were
issued at a share price ranging from $0.07 to $0.11.

During fiscal 1999, the Company issued 125,000 shares in satisfaction
of a $26,250 liability for rent on a Company research facility.
An additional 25,000 shares were issued to  a consultant  for
services  rendered. The  Company  recognized  an expense of $2,625
representing the fair value of the stock at the date  of  issuance.

During fiscal 2000, the Company issued 200,000 shares  of
unregistered, restricted common stock to an unrelated party
for services rendered.  The Company recognized an  expense
of  $22,400 representing the fair value of the stock at the
date of issuance.

During fiscal 2000, the Company issued 10,000 shares of
unregistered, restricted common stock in satisfaction  of  an
interest expense liability. The Company recognized an expense  of
$13,600  representing the fair value of the stock at the date  of
issuance.

During fiscal 2000, the Company issued 12,676,714 shares
of  unregistered  common  stock  to  third  party  investors  for
$3,045,837 at share prices ranging from $0.06 to $0.75 and 75,000
shares  of  unregistered  common stock  to  related  parties  for
$6,000; these shares were issued at a share price of $0.08.   The
Company issued 5,457,871 options with the sale of the above stock
with  exercise  prices ranging from $0.11 to $1.00.

During  fiscal 2000, the Company issued 2,831,260 shares of
unregistered commonstock to third party investors in connection
with the exercise of options for $551,970 with a range of exercise
prices from  $0.07 to $0.14.  The Company also issued 400,000
shares of unregistered common  stock to related parties in connection
with the  exercise of options for $40,000, at an exercise price of
$0.10.

                                      38
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

               NOTES TO FINANCIAL STATEMENTS-CONTINUED
                       April 30, 2001 and 2000

NOTE E-  STOCKHOLDERS' EQUITY - Continued

  During  fiscal  2000, 400,000 options were exercised into
  unregistered common stock  in satisfaction  of  $40,000 in related
  party  notes  payable.   The options  had an exercise price of
  $0.10.

  During fiscal  2000,  the  Company sold 9,000,000 shares of common
  stock at $0.13 per  share in  exchange  for a promissory note of
  $1,200,000 payable  in  12 equal monthly installments of $100,000,
  commencing in April 2000.The note has been recorded as a stock
  subscription receivable and  has  been  presented in the
  stockholders' equity section  of  the accompanying Balance Sheet
  for amounts not received prior to  the filing  of  this report.

  During fiscal 2000, the Company  received $2,500,000  in  deposits
  for 6,500,000  shares  of  unregistered common stock that were
  committed to be issued at April 30,  2000, of which 1,900,000
  shares were issued subsequent to year-end at a share price of $.385.
  The Company received an additional $35,471 in  deposits  for the
  exercise of 394,452 shares of  unregistered common  stock that were
  committed to be issued at April 30, 2000 and were issued subsequent
  to year-end at share prices ranging from $0.07 to $0.14.

  During fiscal  2001, the Company issued 244,819  shares of unregistered
  common stock to unrelated parties for  services  rendered.  The Company
  recognized  an  expense  of $121,368 representing the fair value of the
  stock at the date of issuance.

  During fiscal 2001, the Company issued 6,649,452  shares
  of unregistered common stock in satisfaction of deposits received
  prior to April 30, 2000. The shares were issued at prices ranging
  from  $0.07  to  $0.3846.

  During fiscal 2001, the  Company  issued 1,172,978  shares of
  unregistered common stock to third  party investors in connection
  with the exercise of stock options for $106,757 with a range of
  exercise  prices  from $0.07 to $0.14.

  During  fiscal  2001,  the  Company  cancelled  its   stock
  subscription receivable of $600,000 and the related  4.5  million
  common shares of stock.
                                  39
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

               NOTES TO FINANCIAL STATEMENTS-CONTINUED
                       April 30, 2001 and 2000

NOTE F - STOCK OPTIONS AND WARRANTS

  In  September 1999, the Company's Board of Directors approved the
  1999 Stock Plan ("the 1999 Plan") which provides for the granting
  of   incentive  and  nonstatutory  stock  options  to  employees,
  directors  and consultants to purchase up to 4,000,000 shares  of
  the  Company's  common  stock. The  1999  Plan  was  approved  by
  shareholders on October 10, 2000. Options granted under the  1999
  Plan  are exercisable at various dates up to four years and  have
  expiration  periods of generally ten years.  At  April  30,  2001
  there   were  4,131,472  stock  options  outstanding,  of   which
  2,445,000 stock options had been issued under the 1999 Plan.

  The following table summarizes certain information related to the
  Company's stock options as of April 30:

                              2001                  2000
                                 Exercise                Exercise
Outstanding,           Options    Price     Options       Price
 beginning of year   3,165,000    $  0.13    900,000    $  0.13
Granted              1,105,666       0.32  2,265,000       0.13
Exercised             (139,194)      0.08          -          -
Outstanding
  end of year        4,131,472    $  0.18  3,165,000    $  0.13

  The  following  table summarizes information about stock  options
  outstanding at April 30, 2001.

Options Outstanding
                             Weighted    Weighted
   Range of                   Average     Average
   Exercise       Number     Remaining    Exercise
   Prices       Outstanding     Life       Price

  $0.01- $0.80    4,131,472    8.57       $  0.18

                                  40
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

               NOTES TO FINANCIAL STATEMENTS-CONTINUED
                       April 30, 2001 and 2000

NOTE  F  -  STOCK OPTIONS AND WARRANTS -

  Continued At  April  30, 2001,approximately 2,129,167 stock
  options were  exercisable. As  permitted  under SFAS No. 123,
  Accounting  for  Stock-Based Compensation,  the Company accounts
  for its stock  option  plan
  in  accordance  with  the provisions of  APB  Opinion  No.  25,
  Accounting  for  Stock  Issued to Employees.  During  the  year
  ended  April  30,  2001,  the Company issued  options  to  non-
  employees  at  exercise prices below the fair market  value  of
  the   Company's   common  stock.  The  Company   has   recorded
  compensation  expense  based on the  intrinsic  value  of  such
  options  at  the date of grant. Had compensation cost  for  the
  stock  option plan been determined based on the fair  value  at
  the  grant date consistent with the method of SFAS No. 123, the
  Company's net loss and net loss per share would have  been  the
  pro forma amounts indicated below:

                                      Years ended April 30,
                                2001            2000          1999

Actual net loss           $ (1,672,242)   $  (911,339)   $ (833,835)
Pro forma net loss        $ (2,120,000)   $  (937,906)   $ (882,635)

Actual net loss per share       $(0.02)        $(0.01)       $(0.02)
Pro forma net loss per share    $(0.02)        $(0.01)       $(0.02)

  The  fair value of each option grant was estimated at the grant
  date  using  the Black-Scholes option-pricing model  using  the
  following  assumptions: a risk-free interest rate of 5.39%  for
  2001,  6.12% for 2000, and 6.00% for 1999; volatility  of  162%
  for  2001, 152% for 2000, and 90% for 1999; zero dividend yield
  for  all  years;  and  expected lives of 1  to  10  years.
  The Black-Scholes option valuation model was developed for use in
  estimating the fair value of traded options and warrants  which
  have  no  vesting restrictions and are fully transferable.   In
  addition,  option valuation models require the input of  highly
  subjective  assumptions,  including the  expected  stock  price
  volatility.   Because the Company's employee stock options  and
  warrants  have  characteristics  significantly  different  from
  those  of traded options, and because changes in the subjective
  input   assumptions  can  materially  affect  the  fair   value
  estimate, in management's opinion, the existing models  do  not
  necessarily  provide  a reliable single  measure  of  the  fair
  value of its employee stock options.

NOTE  F  -  STOCK OPTIONS AND WARRANTS - Continued

  During  fiscal 2000,  the  Company issued approximately 5,450,000
  warrants  in  connection  with  the

                                 41
<PAGE>
                    SYNTHETIC BLOOD INTERNATIONAL, INC.
                     (A Development Stage Enterprise)

               NOTES TO FINANCIAL STATEMENTS-CONTINUED
                       April 30, 2001 and 2000

  sale of stock, with  a  weighted  average
  exercise  price of $0.45. Also during fiscal 2000, the  Company
  issued   1,240,000  warrants  to  certain  directors  with   an
  exercise price of 80% of fair market value.

  The  following table summarizes certain information related  to
the Company's stock warrants:

                                                       Exercise Price
                                           Shares        per Share
Warrants outstanding at April 30, 1999    2,619,827     $     0.28
  Granted                                 7,004,343           0.39
  Exercised                              (3,631,260)          0.17
  Terminated                                (60,000)          0.20

Warrants outstanding at April 30, 2000    5,932,910           0.41
  Exercised                              (1,033,784)          0.09
  Terminated                             (2,150,000)          0.90

Warrants outstanding at April 30, 2001    2,749,126     $     0.14


NOTE  G  -  INCOME TAXES

  No provision for federal and state income
  taxes  has  been  recorded  as the  Company  has  incurred  net
  operating  losses through April 30, 2001.  At April  30,  2001,
  the  Company has net operating loss carryforwards available  to
  offset  future  taxable  income for  federal  tax  purposes  of
  approximately  $12  million;  such  carryforwards   expire   in
  various   years   through  2021.   Deferred   tax   assets   of
  approximately  $4.5  million  at April  30,  2001  include  the
  effects   of  these  net  operating  loss  carryforwards,   and
  research  and  development credit carryforwards.   The  Company
  has  provided a valuation allowance to offset all deferred  tax
  assets due to the uncertainty of realization.

NOTE  H  - RELATED PARTIES

  During fiscal 2001, 2000 and 1999, the Company recorded expenses
  of approximately $12,400, $5,800  and $70,500,  respectively,
  for services provided by a company in which an officer of the
  Company has a controlling interest.

                                   42
<PAGE>