UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                FORM 10-QSB

                 Quarterly Report Under Section 13 or 15(d)
                 of the Securities and Exchange Act of 1934

For the Quarter Ended:                              Commission File Number:
----------------------                              -----------------------
 March 31, 2001                                               0-27727

                              GENE-CELL, INC.
               ---------------------------------------------
               (Name of small business issuer in its chapter)

    Nevada                                                  91-1766174
(State or other jurisdiction of                  (I.R.S. Employer I.D. No.)
 incorporation or organization)

     1010 Hercules, Houston, Texas                                  77058
(Address of principal executive offices)                         (Zip Code)

     Issuer's telephone number, including area code        (281) 461-7996

Securities registered pursuant to section 12(b) of the Exchange Act: None

Check whether the Issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
report(s), and (2) has been subject to such filing requirements for the
past 90 days.  (1) Yes [X ]  No [  ]

State the number of shares outstanding of each of the registrants classes
of common equity, as of the latest practicable date:

As of May 14, 2001, issuer had 19,653,412 shares of its $.001 par value
common stock outstanding.





     This Form 10-QSB contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, which
act contains a safe harbor for forward looking statements.  The Company
believes that investors would be benefitted by the cautionary language
included in this paragraph.  For this purpose any statements contained in
this Form 10-QSB that are not statements of historical fact may be deemed
to be forward-looking statements.  Without limiting the foregoing, words
such as "may," "will," "expect," "believe," "anticipate," "estimate," or
"continue" or comparable terminology are intended to identify forward-
looking statements.  These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending
on a variety of factors, many of which are not within the Company's
control.  These factors include but are not limited to economic conditions
generally and in the industries in which the Company may participate;
competition within the Company's chosen industry, including competition
from much larger competitors; technological advances and failure by the
Company to successfully develop business relationships.

PART  I   FINANCIAL INFORMATION

Item 1    Financial Statements


                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                             -----------------




                  UNAUDITED CONDENSED FINANCIAL STATEMENTS
                 as of March 31, 2001 and December 31, 2000
          and for the three months ended March 31, 2001 and 2000,
           and for the period from inception, December 12, 1996,
                             to March 31, 2001
                                (Unaudited)

















                                    F-1


                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                             TABLE OF CONTENTS
                                 __________

                                                                      Page

Unaudited Condensed Financial Statements:

  Unaudited Condensed Balance Sheet as of
    March 31, 2001 and December 31, 2000                              F-3

  Unaudited Condensed Statement of Operations
    for the three months ended March 31, 2001
    and 2000, and for the period from inception,
    December 12, 1996, to March 31, 2001                              F-4

  Unaudited Condensed Statement of Stockholders'
    Equity for the three months ended March 31,
    2001                                                              F-5

  Unaudited Condensed Statement of Cash Flows
    for the three months ended March 31, 2001
    and 2000, and for the period from inception,
    December 12, 1996, to March 31, 2001                              F-6

Notes to Unaudited Condensed Financial Statements                     F-7























                                    F-2

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                          CONDENSED BALANCE SHEET
                    March 31, 2001 and December 31, 2000
                           ---------------------
<TABLE>
<CAPTION>
                                                     March 31, December 31,
                                                       2001         2000
     ASSETS                                        (Unaudited)    (Note)
     ------                                        -----------  -----------
<S>                                               <C>          <C>
Current assets:
  Cash and cash equivalents                        $  639,282   $1,142,083
                                                   -----------  -----------
    Total current assets                              639,282    1,142,083

Deposits                                               10,186       14,985

Equipment under capital leases, net                   283,839      199,701
                                                   -----------  -----------
      Total assets                                 $  933,307   $1,356,769
                                                   ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
  Note payable to a bank                           $      533   $   30,000
  Current portion of capital lease obligations         78,834       53,298
  Accounts payable and accrued liabilities             84,152      167,858
                                                   -----------  -----------
    Total current liabilities                         163,519      251,156

Capital lease obligations, net of current
  portion                                             139,626       70,300
                                                   -----------  -----------
      Total liabilities                               303,145      321,456
                                                   -----------  -----------
Commitment and contingencies

Stockholders' equity:
  Common stock, $.001 par value, 100,000,000
    shares authorized, 19,653,412 shares issued
    and outstanding                                    19,653       19,653
  Additional paid-in capital                        4,381,634    4,381,634
  Losses accumulated during the development
    stage                                          (3,771,125)  (3,365,974)
                                                   -----------  -----------
    Total stockholders' equity                        630,162    1,035,313
                                                   -----------  -----------
      Total liabilities and stockholders'
        equity                                     $  933,307   $1,356,769
                                                   ===========  ===========

</TABLE>

Note:  The balance sheet at December 31, 2000 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
                          See accompanying notes.
                                    F-3

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                UNAUDITED CONDENSED STATEMENT OF OPERATIONS
           for the three months ended March 31, 2001 and 2000 and
    for the period from inception, December 12, 1996, to March 31, 2001
                                 __________
<TABLE>
<CAPTION>
                                      Three MonthsThree Months    Inception
                                           Ended       Ended         to
                                         March 31,   March 31,    March 31,
                                          2001        2000         2001
                                       ----------- -----------  -----------
<S>                                   <C>         <C>          <C>
Operating, general and adminis-
  trative expenses                     $  121,455  $   44,071   $1,031,739
Research and development costs            286,508     116,431    2,648,238
                                       ----------- -----------  -----------
    Loss from operations                 (407,963)   (160,502)  (3,679,973)

Interest income                             8,093       1,258       40,316
Interest expense                           (5,281)     (2,804)    (131,464)
                                       ----------- -----------  -----------
Net loss                               $ (405,151) $ (162,048) $(3,771,125)
                                       =========== =========== ============

Weighted average shares
  outstanding                           19,653,412  17,778,412
                                       =========== ===========
Net loss per common share              $    (0.02) $    (0.01)
                                       =========== ===========


</TABLE>
                          See accompanying notes.
                                    F-4

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
           UNAUDITED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
                 for the three months ended March 31, 2001
                             ------------------
<TABLE>
<CAPTION>
                                                           Losses
                                                        Accumulated
                                          Common Stock   Additional  During the
                                   ---------------------    Paid-In Development
                            Shares  Amount     Capital        Stage       Total
                       ---------------------------------------------------------
<S>                   <C>         <C>        <C>       <C>           <C>
Balance at
December 31, 2000        19,653,412 $19,653  $4,381,634 $(3,365,974)  $1,035,313

Net loss                       -       -           -       (405,151)   (405,151)
                       ---------------------------------------------------------
Balance at
March 31, 2001           19,653,412 $19,653  $4,381,634 $(3,771,125)  $  630,162
                       =========================================================


</TABLE>

                          See accompanying notes.
                                    F-5

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
          for the three months ended March 31, 2001 and 2000, and
    for the period from inception, December 12, 1996, to March 31, 2001
                                 __________

<TABLE>
<CAPTION>
                                          Three       Three
                                         Months      Months
                                          Ended       Ended
                                          March       March      December
                                        31, 2001    31, 2000     31, 2000
                                       ----------- -----------  -----------
<S>                                   <C>         <C>         <C>
Cash flows from operating activities:
  Net loss                              $(405,151)  $(162,048) $(3,771,125)
  Adjustments to reconcile net loss
    to net cash used by operating
    activities                            (60,801)      7,862    1,074,078
                                       ----------- -----------  -----------
      Net cash used by operating
        activities                       (465,952)   (154,186)  (2,697,047)

Cash flows from financing activities:
  Proceeds from sale of common stock          -           -      2,062,800
  Proceeds from collection of
    subscription receivable                   -       300,000    1,500,000
  Payment of stock offering costs             -           -        (64,100)
  Proceeds from notes payable              13,764         -        344,651
  Payments on notes payable               (43,231)        -       (266,231)
  Payments on capital lease
    obligations                            (7,382)    (20,306)    (240,791)
                                       ----------- -----------  -----------
      Net cash provided (used) by
        financing activities              (36,849)    279,694    3,336,329
                                       ----------- -----------  -----------
Net increase (decrease) in cash and
  cash equivalents                       (502,801)    125,508      639,286

Cash and cash equivalents at beginning
  of period                             1,142,083      28,670          -
                                       ----------- -----------  -----------

Cash and cash equivalents at end of
  period                               $  639,282  $  154,178   $  639,282
                                       =========== ===========  ===========
</TABLE>

                          See accompanying notes.
                                    F-6

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
             NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
                              ---------------

1.   Organization
     ------------
     Gene-Cell, Inc. (the "Company") is a Nevada Corporation involved in
biopharmaceutical research.  The Company's research is directed at
developing gene-based therapies for treatment of a wide variety of genetic
diseases and disorders using its proprietary technology for microinjecting
DNA and proteins into living cells.  The Company was originally
incorporated as Becniel and subsequently adopted name changes to Tzaar
Corporation and, finally, to Gene-Cell, Inc.  The Company is considered a
development stage enterprise because it has not yet generated revenue from
sale of its products.  Since its inception, the Company has devoted
substantially all of its efforts to research and development and the search
for sources of capital to fund its efforts.


2.   Interim Financial Statements
     ----------------------------

     The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-B.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.  Operating
results for the three-month periods ended March 31, 2001 and 2000 are not
necessarily indicative of the results that may be expected for the
respective full years.

     A summary of the Company's significant accounting policies and other
information necessary to understand these consolidated interim financial
statements is presented in the Company's audited financial statements for
the years ended December 31, 2000 and 1999.  Accordingly, the Company's
audited financial statements should be read in connection with these
financial statements.










                                 Continued
                                    F-7

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
        NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS, Continued
                                 __________

3.   Comprehensive Income
     --------------------

     The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income, which requires a company
to display an amount representing comprehensive income as part of the
Company's basic financial statements.  Comprehensive income includes such
items as unrealized gains or losses on certain investment securities and
certain foreign currency translation adjustments.  The Company's financial
statements include none of the additional elements that affect
comprehensive income.  Accordingly, comprehensive income and net income are
identical.


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


5.   Income Tax
     ----------
     The difference between the Federal statutory income tax rate and the
Company's effective income tax rate is primarily attributable to increases
in valuation allowances for deferred tax assets relating to net operating
losses.


6.   Non-Cash Investing and Financing Activities
     -------------------------------------------
     During the three months ended March 31, 2001, the Company acquired
property and equipment under capital lease obligations of $102,244.












                                    F-8

Item 2    Plan of Operation

     For a complete understanding, this Plan of Operations should be read
in conjunction with Part I- Item 1. Financial Statements to this Form 10-
QSB.

     Gene-Cell, Inc.(the "Company"), is a Nevada corporation involved in
biopharmaceutical research. The Company is considered a development stage
enterprise because it has not yet generated revenue from sale of its
products.  Since its inception, the Company has devoted substantially all
of its efforts to research and development and the search for sources of
capital to fund its efforts.

Business of the Company
-----------------------
     The Company operates in the biotechnology sector of the pharmaceutical
industry sometimes referred to as the biopharmaceutical or life science
industry.  The mission of the Company is to become a global leader in stem
cell gene therapy by using the Company's non-viral technologies to repair
and/or compensate for mutations in defective genes.  A change in the DNA
sequence or code of a gene is called a mutation.  Often mutations are
harmless; however, some mutations lead to serious disease.  There are about
4,000 diseases that have been traced to gene disorders or mutations
including Sickle Cell Disease and Muscular Dystrophy.

     The Company's approach differs from conventional medical treatment of
genetic diseases.  Rather than treating the symptoms, the gene therapy
proposed by the Company focuses on the cause of disease at the origin, the
DNA. To further the Company's efforts in gene therapy research it currently
employs a delivery technique called microinjection.  Microinjection
involves injecting cells with minute amounts of material using very small
glass needles.  To utilize this technique the Company developed new needles
because commercially available needles were too large and would cause
physical damage to the cell being injected.

     In addition to the development of a smaller needle, the system
developed by the Company requires that a cell be immobilized (attached to a
plastic dish or surface) to perform microinjection.  The Company has made
major advances in this area by developing a novel proprietary method for
immobilizing cells without losing cell function.   The development of this
immobilization technology was critical to the success of the Company and it
has filed for a patent on this technology.

     A unique aspect of the Company's non-viral process is that it is
performed on a patient's stem cells outside the body or ex vivo, thus the
patient does not need to be present for the gene modification.  Stem cells
are special cells in the body that are basic or building block cells.
These cells have the ability to continually create large numbers of more
specialized cells.  The Company's technology allows for attaching or
immobilizing human stem cells.  These cells can then be microinjected with
properly encoded, healthy DNA.  Following this process, the DNA treated
stem cells can be reintroduced into the patient's body where they can re-
populate.  It is anticipated that these DNA treated and/or corrected cells
will produce millions of cell offspring transmitting the desired effects.
The Company has selected to initially focus on blood stem cells for gene
therapy.   Blood stem cells are referred to as "mother" blood cells and are
found in bone marrow and umbilical cord blood.  These "mother" blood cells
have the capacity to give rise to all the cells that make up the blood,
including white and red blood cells.  Through microinjection of blood stem
cells, the probability of delivering DNA to cells that will create cell
offspring with the desired effect may be enhanced.

                                     11
     The Company's technology may also be beneficial to the pharmaceutical
industry for studying the function(s) of individual genes and the possible
contribution of these genes to various diseases.

     On March 27, 2001, the Company entered an agreement with Technobotics,
Inc. ("TI"), a Texas corporation, in which it will combine efforts with TI
to research and develop an Automated Microinjection Workstation ("AMW") for
clinical applications.  The Company will share both costs and benefits of
such research and development efforts.  In addition, TI may be granted
options to purchase restricted common stock of the Company at some point in
the research and development  process.  TI brings expertise in automation
and computer vision processing that are vital to the successful development
of an AMW.

     The Company employs acceptable scientific methods of research, and
their technology has been verified through test results and review both at
the Company and at the University of Texas Medical Branch.  This work has
been presented in university lectures, at gene therapy conferences, and was
recently published in Blood (Blood 95: 437-444, 2000), the Journal of the
American Society of Hematology.  In order to protect its technology, the
Company has filed initial patent applications on the related technology and
has filed continuation-in-part patent applications during the first quarter
of fiscal 2001.

Source of Funds
---------------

     The Company believes it has secured sufficient funding through July,
2001, from  private investors.  The Company is actively seeking bridge
financing and additional funding.  It is customary for biotech companies at
a certain stage of research to actively pursue partnerships and/or
licensing agreements with large biopharmaceutical companies.  The Company
is currently seeking similar relationships with  two companies and has
entered a collaborative agreement with Athersys, a Delaware corporation.
The two relationships referred to are in the early stages of development
and there can be no assurance that any relationship will ever fully develop
with either company.  Future partnership(s)/investment(s) with a
pharmaceutical/large biotechnology company may be centered on one
particular disease or a group of related diseases in which said company has
clinical and financial interests.  Such an arrangement would provide the
Company with revenue to further develop the technology required for a
particular program, additional scientific and legal expertise, and
assistance and guidance through the regulatory processes required prior to
beginning clinical trials.

     In addition, licensing agreements and/or partnerships with various
pharmaceutical firms relating to gene function studies would result in
revenues over the next few years.  When possible, royalties could be
generated from the sale of pharmaceuticals developed using information
gained from the Company's gene modified cells.

Results of Operations
---------------------

     During the period from inception, December 12, 1996, to March 31,
2001, the Company has not generated any revenue from sales of clinical
products and does not expect to generate any material revenue from sales of
clinical products for at least two to three years because during such time
period management will use substantially all Company resources for further
development of its technology, including microinjection tools.


                                     12

     As of March 31, 2001, the Company had an accumulated deficit of
($3,771,125) funded by paid-in capital.  During the quarter ended March 31,
2001, the Company had losses from operations of ($405,151) compared to
losses in the same quarter of 2000 of ($162,048).  The increase is do to an
increased research and development efforts such as the hiring of additional
employees. The Company does not expect to make any major capital
expenditures in the foreseeable future, (other than a steady increase in
research and development expenditures), but expects that operating losses
will continue until such time as product sales generate sufficient revenues
to fund its continuing operations, as to which there can be no assurance.

     The Company has financed its operations mainly through the sale of its
common stock and has been entirely dependent on outside sources of
financing for continuation of operations.  In October 2000, the Company
received $1,500,000 through sale of units comprised of common stock and
warrants.

     For the remainder of fiscal 2001, the Company expects monthly
expenditures to increase to approximately $160,000 due to the addition of
more scientific and administration personnel and the leasing of additional
laboratory equipment. Beyond the new employees already added to the
Company's workforce as of April 1, 2001, the Company does not plan to hire
additional personnel during fiscal year 2001 unless new collaborations with
cash or additional investment requires and allows for additional employees.
 The Company will be required to raise additional funding sometime in the
third quarter in order to continue operations. There is no assurance that
the Company will be successful in obtaining additional funding on
attractive terms or at all.

     The Company's capital requirements will depend on numerous factors,
including the progress of its research and development programs; the time
and cost involved in obtaining regulatory approvals; the cost of filing,
prosecuting, defending and enforcing any patent claims and other
intellectual property rights; the economic impact of competing
technologies; developments and changes arising from the Company's
continuing research; and the terms of any new collaborative, licensing and
other arrangements that the Company may establish.

     The Company's ability to achieve profitability will depend, in part,
on its ability to successfully develop clinical applications and obtain
regulatory approvals for its products and to develop the capacity to
manufacture and market such products on a wide scale.  There is no
assurance that the Company will be able to successfully make the transition
from research and development to manufacturing and selling commercial
microinjection therapy products on a broad basis.  While attempting to make
this transition, the Company will be subject to all risks inherent in a
growing venture, including the need to produce reliable and effective
products and to develop marketing expertise and an effective sales force.

     Further, the Company's success may depend, in part, on revenues
derived from the sale of the microinjection therapy products in the health
care market.  In the event a market for the products the Company intends to
produce does not develop as anticipated, the Company's business, financial
condition and results of operations will be adversely affected.
Additionally, cost containment measures instituted by health care providers
as a result of regulatory reform or otherwise could result in greater
selectivity in the allocation of capital funds, and such, selectivity could
have a material adverse effect on the Company's ability to sell its
microinjection therapy and services.


                                     13

     The report from the Company's independent accountants includes an
explanatory paragraph that describes substantial doubt concerning the
ability of the Company to continue as a going concern, without continuing
additional contributions to capital.  The Company may incur losses for the
foreseeable future due to the significant costs associated with research
and development activities which will be necessary for further development
of applications for the Company's microinjection therapy.  See "Financial
Statements - Report of Independent Accountants".

                                  PART II    OTHER INFORMATION

Item 1         Legal Proceedings
          None.

Item 2         Changes in Securities


Recent Sales of unregistered securities.

     No instruments defining the rights of the holders of any class of
registered securities have been materially modified, limited or qualified.

     The following securities, which were not registered under the
Securities Act of 1933 were issued during the last three fiscal years:

     Employee Stock Option Grants
     ----------------------------
     Each Employee Stock Option Grant listed below vest at 33.3% per year
after the grant date and become fully vested after three years from the
grant date.  All options listed below are exercisable, upon vesting, at a
price of $1.00 for a period of ten years beginning at the grant date.

     Judith Yannariello Brown, an employee of the Company and wife of David
Brown a director of the Company, received options to purchase up to 4,500
shares of common stock on June 25, 1998, up to 4,500 shares of common stock
on June 25,1999, and up to 4,200 shares of common stock on June 25, 2000.

     Nicole Prokopishyn, an employee of the Company, received options to
purchase up to 2,409 shares of common stock on July 30, 1998, up to 2,411
shares of common stock on September 3, 1999 and up to 2,940 shares of
common stock on June 23, 2000.

     Gina Barron, an employee of the Company, received options to purchase
up to1,235 shares of common stock on July 31, 1998 and up to 1,242 shares
of common stock on September 7, 1999.

     Barbara Chow, an employee of the Company, received an option to
purchase up to 1,260 shares of common stock on June 19, 2000.

Item 3         Defaults Upon Senior Securities
          None.

Item 4         Submission of Matters to a Vote of Security Holders
          None.

Item 5         Other Information
           None.

Item 6         Exhibits and Reports on Form 8-k

     (a) Exhibits - None.

     (b) Reports on Form 8-k - No reports on Form 8-k were filed during the
quarter.
                                     14
                                 Signatures

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


                                     Gene-Cell, Inc.

Date: May 14, 2001                   By: /s/ Brian R. Davis
                                     -------------------------
                                     President


Date: May 14, 2001                   By: /s/ David Brown
                                     --------------------------
                                     Secretary



























                                     15