U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-KSB

         (MARK ONE)


      |X|     Annual  Report  Pursuant  to  Section  13 or 15(d)  of  Securities
              Exchange Act of 1934

              (Fee Required)

                   For the fiscal year ended December 31, 1998

      |_|     Transition  Report  under  Section  13 or 15(d) of the  Securities
              Exchange Act of 1934

              (No Fee Required)

               For the transition period from _______ to _______.

                           Commission File No. 0-21739

                              GENETIC VECTORS, INC.
                 (Name of Small Business Issuer in Its Charter)

Florida                                                65-0324710
-------                                                ----------
(State or Other Jurisdiction of Incorporation          (I.R.S. Employer 
or Organization)                                       Identification No.)

5201 N.W. 77th Avenue, Suite 100, Miami, Florida       33166
------------------------------------------------       -----     
(Address of Principal Executive Offices)               (Zip Code)

                                 (305) 716-0000
                                 --------------
                   (Issuer's Telephone Number, Including Area Code)

        Securities registered under Section 12(b) of the Securities Act:

Title of Each Class                         Name of Exchange on which registered
-------------------                         ------------------------------------
None                                        None

        Securities registered under Section 12(g) of the Securities Act:

                          Common Stock, Par Value $.001
                          -----------------------------
                                (Title of Class)

         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,  and (2) has
been subject to such filing requirements for the past 90 days. Yes | | No |X|

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in the definitive proxy or
information statement  incorporated by reference in Part III of this Form 10-KSB
or amendment to Form 10-KSB. |X|

         The issuer generated  revenues of $47,172 during its most recent fiscal
year.

         The  aggregate  market  value of the  Company's  voting  stock  held by
non-affiliates as of April 26, 1999 was  approximately  $13,511,597 based on the
average closing bid and asked prices of such stock on that date as quoted on the
OTC Bulletin Board.  There were 2,349,843 shares of Common Stock  outstanding as
of April 26, 1999.


         Documents Incorporated by Reference: See Item 13


         This Form 10-KSB consists of 63 pages. The Exhibit Index begins on page
61.

<PAGE>

                                     PART I

Item 1.           DESCRIPTION OF BUSINESS.
------------------------------------------

INTRODUCTION

         Genetic Vectors, Inc. (the "Company" or "Genetic Vectors") had cash and
cash equivalents of $109,924 as of December 31, 1998 compared to $2.1 million as
of December 31, 1997.  The Company  projects  that such funds will be completely
exhausted  on or before the end of April  1999.  In the  absence  of  additional
capital, the  Company  will be required  to  significantly  curtail or cease its
business  activities.  The Company's ability to continue its business activities
is  completely  dependent on such  additional  capital and its failure to obtain
such capital will have a material  adverse  effect on the  Company's  ability to
continue its business activities.  The Company's description of its business and
other  information  contained in this Form 10-KSB and the  Company's  ability to
continue  its  business  as  described  herein is  completely  dependent  on the
Company's ability to obtain significant additional capital.

         On March 31,  1999,  Genetic  Vectors,  Inc.  (the  "Company")  filed a
Notification  of Late Filing on Form 12b-25 with respect to its Annual Report on
Form 10-KSB for the year ended  December 31,  1998.  At the time of this filing,
the Company intended to file its Annual Report on Form 10-KSB on or before April
15, 1999.  Subsequent to this filing,  the Company  learned from its independent
public  accountants  that they  could  after  additional  review  only  render a
disclaimer  of  opinion  in  connection  with the  Company's  audited  financial
statements.  The  Company's  auditors  have  advised the  company  that it would
re-evaluate  its  position if the Company  obtains a commitment  for  additional
financing.  The auditors  have not yet  completed  their audit of the  Company's
financial  statements and therefore the disclaimer of opinion cannot be obtained
without additional effort and expense.  The Company believes that the disclaimer
of opinion is solely  attributable  to the  Company's  cash  shortage and is not
attributable  to  any   discrepancies   in  its  financial   statements  or  any
disagreements  with its auditors.  To preserve  cash, the Company has decided to
include unaudited financial  statements in lieu of audited financial  statements
containing  the  disclaimer  of  opinion.  In the  opinion of the  Company,  the
unaudited  financial  statements included in Exhibit "A" include all adjustments
(consisting  of  normal  recurring  accruals)  which  are  necessary  for a fair
presentation of the results for the periods  presented  therein.  For additional
information  concerning the Company's current financial situation,  see "Certain
Business  Risk Factors - Future  Capital  Needs and  Uncertainty  of  Additional
Financing"; "Certain Business Risk Factors - Ability to Continue to Operate as a
Going Concern";  and "Management's Plan of Operation and Discussion and Analysis
- Additional Fund Raising Activities."

GENERAL INFORMATION

         The Company is a  biotechnology  company which intends to specialize in
the   development   of   diagnostic   and   quality   control   tools   for  the
biopharmaceutical, food and beverage industries. The Company was founded in 1991
by Dr. Mead McCabe (the  Chairman of the Board of  Directors of the Company) who
invented  a  new  nucleic  acid   labeling   and   detection   technology   (the
"Technology").  The  Technology  consists  of patents  and  patent  applications
originally  filed in the name of or for the benefit of the  University of Miami,
and  unpatented  confidential  and  non-confidential  know-how,  which is either
proprietary  or in the public domain.  Part of the  Technology  relates to a new

                                       2

<PAGE>

nucleic acid and method  described in University of Miami  Invention  Disclosure
UM90-16,  which  invention  was  made  under  a grant  from  the  United  States
Government.  Additional  nucleic acids and methods were described in the patents
and  patent  applications  filed  in the  name  of or  for  the  benefit  of the
University of Miami,  some of which were made using University  facilities.  The
antibody was described in University of Miami Invention  Disclosure  UM87-90 and
its  preparation  is the subject of a published  paper and an  abandoned  patent
application which is not available to the public.

         The Technology is the basis for the Company's initial product line, the
EpiDNA(TM),  which includes the Company's first product, the Picogram Assay (the
"Picogram  Assay").  A second proposed  product line,  EasyID(TM),  combines the
EpiDNA  technology  with gene probes in kits for the detection of yeasts.  These
kits are intended for quality control in the food and beverage  industry and for
identification of proprietary yeasts in the brewing and wine-making industry.

         After removing the Picogram Assay from the marketplace during the third
quarter of 1997, the Company has completed the refinement of the EpiDNA Picogram
Assay Kit (the  "Picogram  Assay  Kit").  During the  twelve-month  period ended
December  31,  1998,  the Company has not  generated  significant  revenues  and
remains  largely  a  development  stage  company.  In  July  1998,  the  Company
reintroduced the Picogram Assay Kit to the marketplace and is closely monitoring
its market  acceptance.  The  Company's  cash  shortage  limited  the  Company's
marketing efforts to support the reintroduction of the Picogram Assay. There can
be  no  assurances  that  the  Picogram  Assay  Kit  will  be  accepted  by  the
marketplace.

EPIDNA TECHNOLOGY

         DETECTION  OF  NUCLEIC  ACIDS.  The  EpiDNA  technology  is  a  broadly
applicable  method for labeling and detecting  nucleic acids,  particularly DNA.
The  importance of the ability to attach labels to nucleic acids arises from the
use of nucleic  acids as probes to  identify,  locate and isolate DNA  fragments
containing a single gene in a mixture of DNA fragments  containing  thousands of
different  genes.  DNA labeling  technology  is  analogous  to the  photographic
development  process.  The label makes the results of esoteric DNA hybridization
reactions  visible to the naked eye in the same sense that developing  solutions
render the latent  image in a  photograph  visible.  The visual  results of this
process are pictures of DNA hybrids or DNA fingerprints. Nucleic acid probes are
usually labeled with radioactivity so that the probe and the gene to which it is
bound can be located. The use of non-radioactive labels on probes is becoming an
increasingly  attractive  alternative  because of the  dangers  associated  with
radioactivity  and the expense of disposing  of  radioactive  waste.  The EpiDNA
technology can be used to make these types of  non-radioactive  labeled  nucleic
acid probes.


         The EpiDNA labeling  technology involves a versatile chemical procedure
for attaching labels to nucleic acids.  Genetic Vectors believes this process is
unique in its ability to attach a variety of labels to nucleic acids, regardless
of the size of the nucleic acid. The process is normally  completed within a few
hours,  and can be  accomplished  in a single  test tube with no loss of nucleic
acid.  The Company  believes that scaling the reaction up to  production  levels
(milligram  and gram  amounts of nucleic  acids) is  possible.  The core  EpiDNA
technology is suited for the  attachment  of any  detectable  molecule  (such as
biotin,  fluorescent  or  phosphorescent  compounds,  enzymes or  chelators)  to
nucleic acids.

                                       3

<PAGE>

         The EpiDNA technology is not restricted to the labeling of probes,  but
can also  provide  a method  to  accurately  measure  nucleic  acids at very low
concentrations. This characteristic of the Technology provides the basis for the
Picogram Assay which is targeted to process  development and monitoring,  and to
quality control and research laboratories.

         THE   EPIDNA    PICOGRAM    ASSAY.    Processes    for    manufacturing
biopharmaceuticals,  such as monoclonal  antibodies  and  recombinant  proteins,
result in potentially harmful  contamination with DNA, the material that carries
the  genetic  code and could  carry  cancer-causing  oncogenes.  FDA  guidelines
recommend that manufacturers monitor the content of DNA to assure that the level
of DNA does not exceed 100 picograms per injected  dose.  Under FDA  guidelines,
each biopharmaceutical manufacturer must devise its own in-house quality control
protocol to determine  the purity of each  product.  Companies are free to adapt
current technology, including commercially available assays, to this purpose.


         The Picogram Assay combines chemical and  immunochemical  procedures to
measure trace amounts of DNA. The assay is relatively easy to perform,  measures
DNA in a range of one to one hundred  picograms,  can detect small  fragments of
DNA, and is complete in about three hours.  As reported in the Company's  10-KSB
filed in April 1998, prior to its preliminary launch of the Program Assay in the
third quarter of 1997,  the Company had  eliminated a step in the Picogram Assay
which was  intended  to make the assay more user  friendly.  Subsequent  to this
preliminary  launch,  it was suspected that the  elimination of this step caused
the assay to lose some  reproducibility  in the  ultra-sensitive  lower limit of
measurability.  Accordingly,  management of the Company felt that it was prudent
to temporarily  remove the product from the market until the product's  original
reproducibility could be restored.  Accordingly,  the Picogram Assay was removed
from the  marketplace  in December,  1997.  However,  through the  redevelopment
process the Company  discovered that removal of this step did not cause the loss
of  sensitivity.  Instead,  the Company  discovered  that plastic  tubes holding
certain reagents caused the problem by adherence of a portion of the reagents to
the  inside  of the  tube.  Subsequently,  the  Company  changed  the  tubes and
reintroduced the Picogram Assay to the market in the third quarter of 1998.

         The use of the  Picogram  Assay does not require the  purchase of major
equipment, since the assay utilizes a standard microtiter plate reader, which is
routine in biopharmaceutical quality control laboratories. The assay is designed
for routine  application by technicians  and is intended for validation of final
product purity.

EASYID MICROBIAL IDENTIFICATION TECHNOLOGY

         Genetic  Vectors  is  developing  the EasyID  technology  for the rapid
identification of yeasts and other microbes of commercial and research interest.
The Company's  development  efforts have been affected by the Company's  working
capital  shortage.  EasyID  technology  is based on a series of small DNA chains
known as DNA probes. DNA probes are used in gene detection techniques to clearly
identify specific genes. DNA probes also have a common day-to-day application in
the  identification  of  microbes,   usually  in  health-  or   research-related
applications.  Basic EasyID kits will provide DNA probes that should allow clear
identification  of yeast species or strains by detecting a gene possessed solely
by that  species or strain.  The Company  intends to join its EpiDNA  technology
with its EasyID  technology to produce labeled probes.  Genetic Vectors believes
that its EasyID kits  should  give users a rapid means for yeast  identification
because  results  should  normally be  obtained in about two hours.  The Company
believes  that  these  assays can be  refined  to run in about  fifteen  minutes

                                       4

<PAGE>

similar to other DNA probe tests.  This is a major improvement over conventional
culture-based  identification techniques,  which often take days to complete and
are sometimes inaccurate.

         A  commercial  antibody-based  test for yeast is  available,  but costs
about $15 per test.  Genetic  Vectors  believes  that its  EasyID DNA probe will
allow accurate identification of yeast species and strains, at a lower cost than
existing products and much more rapidly than conventional techniques.

         One market for these probes is in quality control in the manufacture of
wines. Wineries depend on proprietary yeast strains for the production of a high
quality product. The Company believes that wine producers are not currently able
to specifically  identify wine yeast strains with  conventional  microbiological
techniques.  The Company  believes that its probes will provide the producers of
wine with a dependable and rapid means to identify their proprietary strains and
to detect  contaminating  yeast  during  the  fermentation  process  and  during
storage.

         Many food and beverage manufacturers have problems with spoilage caused
by yeast contamination of their products.  Conventional  culture-based detection
methods are not  well-suited to quality control in this area because of the time
required for results.  Genetic Vectors believes that the EasyID  technology will
allow the  development  of a series  of tests  that will  detect  yeast  strains
commonly  found as  contaminants  of foods and beverages.  The Company  believes
these assays can be used as a sensitive and rapid quality control mechanism.

RESEARCH AND DEVELOPMENT

         The   Company   spent   approximately    $918,401   and   $805,711   on
Company-sponsored  research and development  activities during its 1998 and 1997
fiscal   years,   respectively.   The  Company  did  not  conduct  any  material
customer-sponsored  research and development  activities  during either of those
fiscal years.

MARKETING AND SALES

         The Company temporarily removed the Picogram Assay from the marketplace
in  December,  1997,  and  reintroduced  it in the third  quarter  of 1998.  The
Company's  marketing  activities in connection  with the  reintroduction  of the
Picogram  Assay  were  limited  by  the  Company's   working  capital  shortage.
Accordingly,  the Company remains  largely a development  stage company with the
Company's expenditures far exceeding its revenues.


         Genetic Vectors intends to use EpiDNA and EasyID  technology to fashion
diagnostic  tools for use in quality control and quality  assurance  programs in
the food and beverage  industry  but there can be no assurance  that this can be
accomplished successfully or at all.

         The  Company  has  received  conflicting   information   regarding  the
potential  market for its Picogram Assay.  Such  information  indicates that the
potential  annual  market for the  Picogram  Assay  ranges  from  $4,000,000  to
$20,000,000. If the actual market for this product is near the lower end of this
range,  the Company will have substantial  difficulty in generating  significant
sales.

                                       5

<PAGE>

REGULATION

         The Company's  operations  will be subject to federal,  state and local
regulations  to  which  business  operations  are  normally  subject,  including
occupational safety and health acts, workmen compensation statutes, unemployment
insurance,  and  income  tax  and  social  security  related  regulations.   The
biotechnology  industry is also subject to federal,  state and local regulations
with  regard  to the  construction,  maintenance,  containment  and  release  of
genetically engineered organisms and the manufacturing of diagnostic devices for
human  use.  The  Company  currently  has  no  plans  to  construct  or  release
genetically  altered organisms or to produce  diagnostic  devices for human use,
and  accordingly  the Company does not anticipate  that these  regulations  will
affect it or its operations.

         The Company's  operations  will be subject to applicable  environmental
laws and  regulations.  The  Company's  operations  will  entail the storage and
disposal of small amounts of biological and chemical hazardous wastes. The costs
that the  Company  has  incurred  to date in  connection  with  compliance  with
environmental  laws and  regulations  have not been  material,  and the  Company
anticipates  that such costs will not be  material  in the  foreseeable  future.
There can be no assurance, however, that this will be the case. The Company does
not anticipate that any significant capital  expenditures  related to compliance
with environmental laws will be required in the foreseeable future.

         Diagnostic and therapeutic  devices and tests that are intended for use
in humans generally require direct FDA approval.  Devices and tests not intended
for use in humans,  however,  are generally not required to obtain FDA approval.
The FDA can also set  industry-wide  required  tests and  approvals.  All of the
Company's  current and  proposed  products are  designed  either for  industrial
quality control or for research purposes and are, therefore,  not subject to FDA
approval.  For example,  the  Company's  EasyID  products are not subject to FDA
approval because they focus on the determination of particular species of yeasts
and fungi in connection with brewing industry applications.

MANUFACTURING

         The  Company's  research  and  development  and  executive  offices are
located at 5201 N.W. 77th Avenue,  Suite 100, Miami,  Florida. In addition,  the
Company relies on outside  vendors to  manufacture  all of the components of its
EpiDNA Picogram Assay.

         Certain key  components  of the  Company's  Picogram  Assay product are
currently  provided by a limited  number of  sources,  and many  components  are
provided by outside vendors.  One component is provided by a single source.  The
Company is utilizing  contract  manufacturers to manufacture  required reagents.
Two key components of the EpiDNA  Picogram  Assay Kit, the  "GeNuncTM"  reaction
modules and the  "MaxisorpTM"  immunomodules  are manufactured by NUNC (a Danish
entity), but can also be obtained from United States distributors such as Fisher
Scientific,  V.W.R. or Baxter Scientific.  The "AmpakTM" detection system, which
is also a key component of the Picogram  Assay,  is available only from a single
source  of  supply.   Additionally,   the  Company   contracts   with  Fujirebio
Diagnostics, Inc. for manufacturing of certain reagents, assembly and packaging.

                                       6

<PAGE>

STRATEGY FOR GROWTH

         In the event the Company is able to raise additional  capital,  Genetic
Vectors intends to expand its business opportunities through increased marketing
efforts (as  outlined in  "Marketing  and Sales") and by  expanding  its product
lines (as described in other  sections).  The Company intends to attempt to form
strategic  alliances with corporate  partners that can provide  distribution for
the  Company's  products or research and  development  support for its long term
research and development activities. The Company's labeling, detection and assay
kits may  provide an  attractive  means for a  strategic  partner to enhance its
existing product lines. The Company may also seek to license or sublicense those
applications  of the Technology that are either outside its product focus or for
which funding is inadequate.

         Additionally,  the Company  believes that there are favorable  business
acquisition  opportunities  that  would  enable it to expand its  business  more
rapidly.  To  date,  the  Company  has been  unsuccessful  in  consummating  any
acquisitions  and has expended  approximately  $152,000 in pursuing  acquisition
opportunities.  Management believes that the successful  consummation of several
of these  acquisition  opportunities  would  enable it to achieve  economies  of
scale, improve gross margins and increase revenues and/or market share. However,
the Company's  ability to pursue or  consummate  any  acquisition  is completely
dependent on its ability to obtain significant  additional  capital.  Generally,
shareholder approval will not be required in connection with such activities.

COMPETITION

         The  biotechnology  industry  is subject to  intense  competition.  The
Company's  competitors in the United States and internationally are numerous and
include,   among   others,   diagnostics,   health  care,   pharmaceutical   and
biotechnology  companies.   Additionally,   other  companies,   including  large
biotechnology  companies,  may  enter  the  Company's  business  in the  future.
Potential  competitors may be able to develop technologies that are as effective
as, or more  effective or easier to interpret than those offered by the Company,
which would render the Company's products noncompetitive or obsolete.  Moreover,
many of the Company's  existing and  potential  competitors  have  substantially
greater financial,  marketing,  sales,  distribution and technological resources
than the  Company.  Such  existing  and  potential  competitors  may also  enjoy
substantial  advantages  over the Company in terms of research  and  development
expertise,  experience in conducting  clinical trials,  experience in regulatory
matters,   manufacturing  efficiency,  name  recognition,  sales  and  marketing
expertise and distribution channels.  There can be no assurance that the Company
will be able to compete  successfully  against current or future  competitors or
that  competition  will not have a  material  adverse  effect  on the  Company's
business, financial condition and results of operations.

         Genetic  Vectors'  chosen area of  business  lies in the  labeling  and
detection  of  nucleic  acids  using the  Technology.  The  Company  has  chosen
specifically to market products that are not currently subject to regulation and
that can be marketed  without the  requirement  for  obtaining or licensing  any
additional  technology.  The market which the Company  intends to serve includes
tests for quality control of  biopharmaceutical  drug production and in food and
fermented beverages.  In addition, the Company intends to market its products to
the life science  research  community.  These widely diverse markets result in a
wide variety of competitive situations.

                                       7

<PAGE>

         DNA CONTAMINATION ASSAYS IN  BIOPHARMACEUTICALS.  Several companies are
currently  involved  in  making  or  selling  trace DNA  detection  reagents  or
equipment,  or  performing  assays.  In  this  market  there  are two  types  of
competitors:  (1)  instrument  and reagent  sellers and (2) specialty  reference
labs.  Genetic  Vectors  believes  that the largest  competitive  element in the
current market is specialty reference laboratories. These reference laboratories
offer DNA  assaying  at their  own  facilities  based on their own  individually
developed  assays.  While clearly  competitors,  the Company believes that these
facilities also represent potential customers for its products.

CUSTOMERS

         The   Company's   customers   to  date  have   been   biopharmaceutical
manufacturers.  To date,  the Company has not generated  significant  sales and,
therefore, is not dependent on any customers.

EMPLOYEES

         Genetic  Vectors  currently  has  seven  employees,  two of  which  are
executive officers and all of which are full-time  employees.  See "Management's
Plan of  Operation  and  Discussion  and  Analysis  - Changes  in the  Number of
Employees."  None  of  the  Company's  employees  are  covered  by a  collective
bargaining  agreement  and the  Company  believes  its  employee  relations  are
satisfactory.

INTELLECTUAL PROPERTY RIGHTS

         The Company has acquired rights to make, use and sell certain  products
under the  patents  and patent  applications  referred  to herein  pursuant to a
License Agreement dated September 7, 1990 between ProVec,  Inc.,  ("ProVec"),  a
company owned by Dr. Mead McCabe,  and the University of Miami and its School of
Medicine,  the owner of the patents and patent  applications.  The University of
Miami acquired the rights by virtue of an employee  agreement and the University
Patent Policy. Parts of the invention were made using funds of the United States
Government.  On January 20, 1992,  ProVec  assigned its rights under the License
Agreement  to EpiDNA,  Inc., a wholly owned  subsidiary  of the Company.  EpiDNA
merged into the Company on September 6, 1996.

         The  license  granted  under the License  Agreement  is  worldwide  and
exclusive  (except  for the  rights of the  Federal  Government)  providing  the
Company  with the right to  manufacture,  use and sell  products  utilizing  the
patents  and  patent  applications  referred  to  herein.  The  Company  has the
obligation, at its own expense, to prosecute and maintain patents in the name of
or on behalf of the  University of Miami.  Further,  the Company is obligated to
maintain product liability  insurance,  with the University of Miami being named
as an  additional  insured.  The  License  Agreement  provides  for payment of a
maintenance  fee of $500 and a running  royalty  of 4% of net sales of  products
using the  Technology.  The  maintenance  fee is  creditable  against  royalties
subsequently due in a given year. The term of the License  Agreement is the life
of the U.S. patent and/or its foreign counterpart patents. The License Agreement
can be terminated by the University of Miami,  at its  discretion,  for material
breaches  by the  Company.  Primary  among  such  breaches  are  failure to file
quarterly reports of sales, nonpayment of royalties, failure to develop and sell
products  based on the  Technology,  cessation  of sales  for a period  of three
months and bankruptcy or adjudication of insolvency.  A two-month cure period is

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<PAGE>

provided for correction of breaches.  If the License  Agreement is terminated by
the  University of Miami,  the ownership of the patents and patent  applications
and all rights to develop,  manufacture  and sell products under the patents and
patent  applications will revert to the University of Miami and the Company will
be unable to produce, market or sell products whose manufacture,  use or sale is
covered by the claims of the patents and patent applications referred to herein.
Thus,  the  Company  would  suffer a material  adverse  effect on its  business,
financial  condition and viability if the  University  of Miami  terminated  the
License Agreement.

         Since the patents and patent applications referred to herein were made,
in part,  using  federal  funds  provided  by a  federal  agency,  the  National
Institute of Health ("NIH") has a  nonexclusive,  nontransferable,  irrevocable,
paid-up  worldwide  license to practice the  invention  (35 U.S.C.  202 (c)(4)).
Under  this   nonexclusive   license,   the  NIH  can  use  the   Technology  in
federally-funded  projects  or it can,  if  provided  in a treaty or  agreement,
sublicense the Technology to a foreign government or international organization.
This nonexclusive license to the NIH did not terminate with the licensing of the
Technology  to the  Company.  The NIH also has  certain  rights (35 U.S.C.  203)
allowing  it to  grant  licenses  to  third  parties  if it is  determined  that
practical  application  of  the  invention  is  not  occurring,  even  exclusive
licenses,  as well as march-in  rights to meet unmet health or safety needs,  to
meet requirements for public use specified in federal regulations or for failure
to  manufacture  in the United States or to obtain a waiver of such  provisions.
The grant of an exclusive  license or the exercise of the march-in  rights would
cause the Company to suffer a material adverse effect on its business, financial
condition and viability.  As described herein, the Company has already developed
products based on the  Technology and intends to continue the  commercialization
of the Technology.

         The  Company  has  applied  for and  been  granted,  on  behalf  of the
University of Miami,  patent protection for part of the Technology in the United
States and other countries. Letters Patent Number 246228 has been issued for the
Technology in New Zealand.  Also, the University of Miami,  at Company  expense,
has filed for and was granted patents under the International Patent Cooperation
Treaty,  followed by national  stage filings in  Australia,  New Zealand and the
European  Patent  Office.  There are currently two United States patents for the
Technology.

CERTAIN BUSINESS RISK FACTORS

         The  Company  is subject  to  various  risks  which may have a material
adverse effect on its business,  financial  condition and results of operations.
Certain risks are discussed below.

         FUTURE CAPITAL NEEDS AND UNCERTAINTY OF ADDITIONAL FUNDING. The Company
had cash and cash  equivalents  of only $156,054 as of December 31, 1998.  Since
November 1998, the Company  borrowed a total of $438,500 from private  investors
in four  separate  transactions.  The Company  projects  that such funds will be
completely  exhausted  on or before  the end of April  1999.  In the  absence of
additional  capital,  the Company will be required to  significantly  curtail or
cease its business activities.  The Company has no commitment for any additional
capital and no  assurance  can be given that the Company will be  successful  in
obtaining any additional capital. The Company's ability to continue its business
activities is completely dependent on such additional capital and its failure to
obtain  such  capital  will have a  material  adverse  effect  on the  Company's
business,  financial  condition and results of operation and will jeopardize the
Company's ability to continue its business activities.

                                       9

<PAGE>

         ABILITY TO REPAY SECURED INDEBTEDNESS.  In order to fund its operations
since  November  1998,  the  Company  was forced to borrow  money  from  private
investors  in five  separate  transactions.  See "Plan of Operation - Additional
Fund  Raising   Activities."   Three  of  these   transactions  are  secured  by
substantially  all of the Company's  assets.  The Company's ability to repay all
such loans is completely  dependent on the Company's ability to raise additional
capital from external  sources.  The Company's  failure to raise such capital by
the repayment date of these loans may result in the foreclosure on the Company's
assets.  This would have a material  adverse  effect on the Company's  business,
financial condition and results of operations and would jeopardize the Company's
ability to continue its business activities.

         LIMITED OPERATING HISTORY AND EXPECTATION OF FUTURE LOSSES. The Company
was organized in 1991 and since inception has been in the development  stage. To
date,  the Company has  generated  very  limited  revenues  from the sale of its
product.  Further,  the  Company  has  devoted  most of its  efforts  to various
organizational   activities,   including   research  and   development  and  the
development  of a business  strategy.  From its inception  through  December 31,
1998, the Company has incurred  cumulative losses of approximately $6.1 million.
The Company expects to incur substantial  losses for the foreseeable future due,
in part, to research and  development,  distributing  and marketing its product.
There can be no assurance that the Company will not encounter substantial delays
and  unexpected  expenses  related  to  research,  development,  production  and
marketing or other unforeseen difficulties, which may cause additional losses.

         UNCERTAIN  MARKET  ACCEPTANCE  AND  DEPENDENCE  ON A LIMITED  NUMBER OF
PRODUCTS. The Company currently has one product, the Picogram Assay, and another
product line under development, the EasyID product line. As such, the Company is
highly  dependent on a limited  number of products and the  Company's  long-term
success may depend on the market acceptance of these products. Market acceptance
of the  Company's  products will depend,  in part,  on the Company's  ability to
demonstrate the superiority of its products with respect to existing techniques,
including   the   products'   accuracy,    ease   of   use,    reliability   and
cost-effectiveness  and on the effectiveness of the Company's marketing efforts.
These  efforts have been  adversely  affected by the Company's  working  capital
shortage. No assurance can be given that the Company will gain market acceptance
for its products.  Failure to gain market acceptance for either of these product
lines will have a material adverse effect on the Company's  business,  financial
condition and results of operations.

         TECHNOLOGICAL  UNCERTAINTY AND EARLY STAGE OF PRODUCT DEVELOPMENT.  The
science and  technology  of the Program  Assay and EasyID are rapidly  evolving.
Although the Company has  conducted  limited  marketing of its initial  product,
other proposed products are in the early development  stage. These products will
require significant further research, development and testing and are subject to
the risks of failure inherent in the development of products based on innovative
technologies.  These  risks  include  the  possibility  that  any  or all of the
proposed  products are found to be  ineffective,  unsafe,  or otherwise  fail to
receive necessary  regulatory  clearances,  if any, that the proposed  products,
though  effective,   are  uneconomical  to  market,   that  third  parties  hold
proprietary  rights that preclude the Company from marketing them, or that third
parties  market a superior or equivalent  product.  Accordingly,  the Company is
unable to predict whether its research and development activities will result in
any commercially viable products.

                                       10

<PAGE>

         LIMITED   MANUFACTURING   AND  MARKETING   CAPABILITY.   The  Company's
experience in manufacturing  has been limited to the production of small amounts
of kits of its initial  product for use in research  and  development  and early
commercialization  of its initial  product.  No assurance  can be given that the
Company will  ultimately be able to obtain or produce  sufficient  quantities of
such product at commercially reasonable costs.

         The Company  has limited  experience  in  marketing  its product and no
assurance exists that the Company can market its product in an effective manner.
The Company intends to market its product in the United States,  Europe and Asia
through a network of independent distributors supported by a direct sales force,
but no sales force is yet in place,  and no  distribution  agreements  have been
entered into. The Company's ability to market its product in Europe and Asia and
other areas will depend on the Company's ability to fund such efforts as well as
the Company's  ability to develop strategic  alliances with marketing  partners.
There can be no assurance  that the Company will enter into such  alliances with
other companies on favorable terms or at all.

         RISK OF PRODUCT LIABILITY CLAIMS.  The nature of the Company's business
exposes it to risk from product liability claims.  The Company maintains product
liability  insurance for its products  with limits of $1 million per  occurrence
and $2 million in the aggregate per year.  Such insurance  coverage is, however,
becoming increasingly expensive and there can be no assurance that the Company's
insurance will be adequate to cover future product liability claims, or that the
Company will be successful in maintaining  adequate product liability  insurance
at acceptable rates. In addition, due to the Company's working capital shortage,
there can be no assurance that the Company will be able to fund the premiums for
its  existing  insurance.  Any losses  that the  Company  may suffer from future
liability claims,  and any adverse publicity from product liability  litigation,
may  have a  material  adverse  effect  on  the  Company's  business,  financial
condition and results of operations.

         UNCERTAINTY  REGARDING  PATENTS AND PROPRIETARY  RIGHTS.  The Company's
success  will  depend in part on its  ability  to  obtain  and  maintain  patent
protection  for its products,  preserve its trade secrets,  and operate  without
infringing the proprietary  rights of other parties.  Because of the substantial
length  of time and  expense  associated  with  bringing  new  products  through
development to the marketplace,  the biotechnology  industry places considerable
importance on obtaining and maintaining  patent and trade secret  protection for
new technologies,  products and processes. Legal standards relating to the scope
of claims and the validity of patents in the  biotechnology  field are uncertain
and evolving.  There can be no assurance that patent  applications  to which the
Company  holds rights will result in the  issuance of patents,  that any patents
issued or licensed to the Company will not be challenged and held to be invalid,
or that any such patents will provide commercially significant protection to the
Company's  technology,  products and  processes.  In  addition,  there can be no
assurance that others will not independently  develop  substantially  equivalent
proprietary  information  not covered by patents to which the Company has rights
or obtain  access to the  Company's  know-how  or that others will not be issued
patents which may prevent the sale of one or more of the Company's products,  or
require  licensing  and the  payment of  significant  fees or  royalties  by the
Company to third parties in order to enable the Company to conduct its business.
Defense and  prosecution  of patent claims can be expensive and time  consuming,
regardless of whether the outcome is favorable to the Company, and can result in
the diversion of substantial financial, management, and other resources from the
Company's  other  activities.  An adverse  outcome  could subject the Company to

                                       11

<PAGE>

significant  liability to third parties,  require the Company to obtain licenses
from third  parties,  or require the Company to cease any related  research  and
development  activities  or  product  sales.  In  addition,  the laws of certain
countries may not protect the Company's  intellectual property. No assurance can
be given  that any  licenses  required  under any such  third-party  patents  or
proprietary rights would be made available on commercially  reasonable terms, if
at all. In addition, due to the Company's working capital shortage, there can be
no  assurance  that the Company  will be able to continue  its  existing  patent
applications.

         The Company's success is also dependent upon the skills, knowledge, and
experience  of its  scientific  and  technical  personnel.  To help  protect its
rights, the Company plans to require all of its employees, consultants, advisors
and  collaborators  to enter into  confidentiality  agreements that prohibit the
disclosure of confidential information to anyone outside the Company and require
disclosure  and  in  most  cases  assignment  to the  Company  of  their  ideas,
developments,  discoveries and inventions.  There can be no assurance,  however,
that these agreements will provide  adequate  protection for the Company's trade
secrets,  know-how  or  other  proprietary  information  in  the  event  of  any
unauthorized use or disclosure.

         DEPENDENCE ON KEY PERSONNEL;  INEXPERIENCE OF MANAGEMENT. The Company's
ability  to  successfully  manage its growth  will  substantially  depend on its
ability to attract and retain additional qualified management personnel. Because
of the  Company's  cash  shortage,  its  ability to attract or retain  qualified
personnel  has been  hindered.  This cash shortage has caused the Company to pay
only  one-half of its  employees'  salaries  during  portions of December  1998,
January 1999, February 1999, April 1999, and for all of March 1999. On April 23,
1998,  the Company  paid the  unpaid  salary for some if its  employees  for the
period from  December  1998  through  April 16, 1999.  On December 9, 1998,  the
Company issued the employees options to purchase an aggregate of 4,393 shares of
Common Stock at an exercise price of $5.00 per share or approximately $2.25 less
than the closing  price on that date.  The Company  recently  repurchased  1,171
options  from its  employees  for an  aggregate  purchase  price of $2,635.  The
Company is currently  accruing one-half of its employees  salaries which it will
pay when and if  additional  capital is  received.  The Company  also intends to
issue additional stock options to its non-executive  employees for March 1999 at
a price to be determined.  Currently, none of the Company's administrative staff
has any experience in running a large company or a company whose  securities are
publicly  held,  apart  from the  Company.  There can be no  assurance  that the
demands  placed on Company  personnel by the cash  shortage or the growth of the
Company's business and the need for close monitoring of the Company's operations
and financial  performance through  appropriate and reliable  administrative and
accounting  procedures  and  controls  will be met,  or that  the  Company  will
otherwise  manage its  growth  successfully;  the  failure to do so could have a
material  adverse  affect on the Company's  business,  results of operations and
financial condition.  There is significant  competition for qualified personnel,
and there can be no assurance that the Company will be successful in recruiting,
retaining or training  the  management  personnel  it requires.  The Company has
designated Mead M. McCabe, Jr. as its interim principal  financial officer.  The
Company  currently has no officer with  experience in managing the financial and
accounting functions of a publicly-held company.

ITEM 2.           DESCRIPTION OF PROPERTY.
------------------------------------------

         The Company currently leases approximately 14,000 square feet of office
space located at 5201 N.W. 77th Avenue,  Suite 100, Miami,  Florida 33166.  This
lease,  which was  entered  into on June 12,  1997,  has a ten-year  term.  This
property is in good condition.

                                       12

<PAGE>

ITEM 3.           LEGAL PROCEEDINGS.
------------------------------------

         The  Company  is not  aware  of any  legal  proceedings  involving  the
Company.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------------------------

         None.

                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
---------------------------------------------------------------------------

MARKET INFORMATION

         The Company's  shares of common stock,  par value $0.001 per share (the
"Common Stock"), is traded in the  over-the-counter  market and is quoted on the
Over-the-Counter  Bulletin  Board (the "OTC  Bulletin  Board")  under the symbol
"GVEC."  The  following  table  shows the high and low bid prices for the Common
Stock for each  quarter  within  the last two  fiscal  years(1).  The  Company's
closing price as of April 25, 1999 was $6.00.


                                              BID PRICE PER SHARE(2)
                                              ----------------------
                                    HIGH                                  LOW
                                    ----                                  ---

First Quarter 1997                $13.875                                $3.00
Second Quarter 1997               $10.375                                $6.00
Third Quarter 1997                 $9.25                                 $5.375
Fourth Quarter 1997                $9.875                                $6.00

                                              BID PRICE PER SHARE(2)
                                              ----------------------
                                    HIGH                                  LOW
                                    ----                                  ---

First Quarter 1998                 $8.75                                 $7.00
Second Quarter 1998                $9.875                                $8.75
Third Quarter 1998                 $9.9375                               $7.50
Fourth Quarter 1998                $8.50                                 $3.50



-------------------------------

(1)  This information was obtained from the OTC Bulletin Board.

(2)  The Company believes that these  quotations  reflect  inter-dealer  prices,
     without  retail  mark-up,  mark-down or  commission,  and may not represent
     actual transactions.

HOLDERS OF COMMON STOCK

         As of April 25, 1998, there were  approximately 38 holders of record of
the Common  Stock.  The Company  believes it has in excess of 528  non-objecting
beneficial owners of its Common Stock.

                                       13

<PAGE>

DIVIDENDS

         The Company has not paid any dividends on its Common Stock at any time.
Section 607.06401 of Florida Statutes  prohibits the payment of dividends by any
corporation  which after taking into account such dividend  would not be able to
pay its debts as they  become due or which  would  result in such  corporation's
total assets being less than its total liabilities.  This provision may prohibit
the Company from paying  dividends  unless the Company  obtains  significant new
capital. Other than the foregoing,  the Company is not aware of any restrictions
on its  ability  to pay  dividends  on  its  Common  Stock,  but  the  Company's
management does not anticipate paying any dividends for the foreseeable future.

SALES OF UNREGISTERED SECURITIES

         In June and August of 1998,  the  Company  issued an  aggregate  of 709
shares in  exchange  for  consulting  services  valued by the Company at $6,000,
based on the closing  price on the date of grant.  This Offering was exempt from
registration  pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Act").

         On September 8, 1998, the Company  granted  warrants to purchase 50,000
shares of Common Stock of the Company at an exercise price of $6.00 per share to
a  consultant  (the  "Consultant")  to assist the  Company to obtain  additional
financing. These warrants are immediately exercisable.  The closing price of the
Company's Common Stock on September 8, 1998 was $9.125. This offering was exempt
from registration pursuant to Section 4(2) of the Act.

         On November 2, 1998,  the Company  borrowed  $150,000  from two private
investors  ("Loan  No.  1").  The  terms of Loan No. 1  provided  for an  annual
interest  rate of 12% which will  increase 1% for each month that any portion of
Loan No. 1 remains  unpaid after April 1, 1999, up to the maximum rate permitted
by law.  Accrued  interest is payable  monthly  beginning on April 1, 1999.  The
outstanding  principal  must be repaid by  November 2, 1999.  The  Company  also
issued to the private  investors  warrants to purchase  15,000  shares of Common
Stock at an exercise  price of $6.00 per share.  These warrants may be exercised
at any time before  November 2, 2003.  The closing  price of the Common Stock on
November  2, 1998 was $7.00.  The  Company  is  obligated  to grant the  private
investors  warrants to purchase an additional 1,250 shares of Common Stock at an
exercise  price of $6.00 per share on April 1,  1999 and each  month  thereafter
through  October 1, 1999 until the loans are repaid in full. On November 1, 1999
and each  month  thereafter  that the  loans are  outstanding,  the  Company  is
obligated  to grant the private  investors  warrants  to purchase an  additional
2,500  shares of Common  Stock at an exercise  price of $6.00.  The  proceeds of
these  loans have been used by the Company to fund its  working  capital  needs.
This offering was exempt from  registration  pursuant to Section 4(2) of the Act
and Rule 506 promulgated thereunder.

         In  addition  and on  November  2,  1998,  the  Company  issued  to the
Consultant  warrants to purchase  15,000  shares of Common  Stock at an exercise
price of $6.00 per share. These warrants are immediately exercisable.
This offering was exempt from registration pursuant to Section 4(2) of the Act.


         On January 19,  1999,  the  Company  borrowed  $163,500  from a private
investor ("Loan No. 2"). The terms of Loan No. 2 provided for an annual interest
rate of 12% which will  increase  1% for each month that any portion of the loan

                                       14

<PAGE>

remains  unpaid after January 19, 2000, up to the maximum rate permitted by law.
Accrued interest is payable monthly beginning on April 19, 1999. The outstanding
principal  balance  must be repaid by January 19,  2000.  The loan is secured by
substantially all of the Company's  assets. In addition,  the Company issued the
private  investor  warrants  to  purchase  50,000  shares of Common  Stock at an
exercise price of $0.01 per share.  These warrants are immediately  exercisable.
The  closing  price of the Common  Stock on January  19,  1999 was  $5.125.  The
Company is obligated to grant the private investor  warrants to purchase 150,000
shares at an exercise price of $5.50 per share upon the repayment of the loan or
the  closing  on the  sale of  Company  securities  in an  aggregate  amount  of
$1,500,000. Such additional warrants become exercisable on the fifth anniversary
of the grant.  The  proceeds  of this loan have  already  been  expended  by the
Company to fund its  working  capital  needs.  This  offering  was  exempt  form
registration  pursuant  to  Section  4(2) of the Act and  Rule  506  promulgated
thereunder.

         On March 9, 1999, the Company  borrowed an additional  $125,000  ("Loan
No. 3") from the same private  investor  which had made Loan No. 2. The terms of
Loan No. 3 provided for an annual  interest  rate of 12% which will  increase 1%
for each month that any portion of the loan  remains  unpaid  after  January 19,
2000,  up to the maximum  rate  permitted  by law.  Accrued  interest is payable
monthly  beginning on April 19, 1999. The outstanding  principal balance must be
repaid by January  19,  2000.  The loan is secured by  substantially  all of the
Company's assets. In addition,  the Company issued the private investor warrants
to purchase  50,000  shares of Common  Stock at an  exercise  price of $0.01 per
share.  These  warrants are  immediately  exercisable.  The closing price of the
Common Stock on March 9, 1999 was $7.875.  Substantially  all of the proceeds of
this loan have been expended by the Company to fund its working  capital  needs.
This offering was exempt from  registration  pursuant to Section 4(2) of the Act
and Rule 506 promulgated thereunder.

         In  connection  with  Loan No. 2 and Loan No.  3, the  Company  granted
warrants  to  purchase  16,350  shares of Common  Stock on January  19, 1999 and
12,500 shares of Common Stock on March 9, 1999 at an exercise price of $5.50 per
share to the Consultant  for helping the Company to locate the financing.  These
warrants are immediately exercisable.  The closing price of the Common Stock was
$5.125 and  $7.875 on January  19,  1999 and March 9, 1999,  respectively.  This
offering was exempt from registration pursuant to Section 4(2) of the Act.

         On April 19, 1999, the Company  borrowed an additional  $100,000 ("Loan
No. 4") from a private  investor.  This loan has an annual interest rate of 12%.
Accrued interest is payable  quarterly,  commencing on June 1, 1999. The loan is
secured by substantially all of the Company's  assets. In addition,  the Company
issued the private  investor  warrants to purchase 25,000 shares of Common Stock
at an  exercise  price  of $3.50  per  share.  These  warrants  are  immediately
exercisable.  The closing price of the Common Stock on April 19, 1999 was $6.00.
The Company  intends to use these proceeds on unpaid  salaries for its employees
and for other working capital purposes. The Company believes that these proceeds
will last for less than one month.  This  offering was exempt from  registration
pursuant to Section 4(2) of the Act and Rule 506 promulgated thereunder.


USE OF PROCEEDS



          1. Effective  date  of  registration  statement:  December  20,  1996;
             Commission File Number 333-5530-A.

          2. The Offering commenced on December 20, 1996.

          3. The Offering did not terminate before any securities were sold.

             (i)    The  Offering  did  not  terminate  before  the  sale of all
                    securities registered.

             (ii)   The managing underwriter was Shamrock Partners, Ltd.

             (iii)  Securities registered:

                                       15

<PAGE>

                    (a)  Common Stock ($0.001 par value).

                    (b)  Underwriter warrants to purchase an aggregate of 50,000
                         shares of Common  Stock.  Those  warrants  will  become
                         exercisable on December 21, 1997 and expire on December
                         19, 2001.

             (iv)   Securities sold (all sold for account of the issuer):


                                             AGGREGATE      
                                              OFFERING            
                                              PRICE OF                 AGGREGATE
                                   AMOUNT       AMOUNT   AMOUNT   OFFERING PRICE
TITLE                          REGISTERED   REGISTERED     SOLD   OF AMOUNT SOLD
--------------------------------------------------------------------------------

1.  Common Stock                575,000     $5,750,000   $575,000    $5,750,000
2.  Common Stock pursuant to
    Underwriter Warrants         50,000       $750,000      - 0 -         - 0 -
3.  Underwriter Warrants         50,000            500     50,000           500


             (v)    Underwriting Discounts and Commissions:            $517,500

                    Finder's Fees:                                        - 0 -

                    Expenses Paid for Underwriters:                     217,139

                    Other Expenses:                                     445,610

                          Total Expenses:                            $1,180,249

             (vi)   Net Proceeds of Offering Before Refunds:         $4,569,751

                    Refund of Offering Costs:                            19,257

                    Net Proceeds of Offering:                         4,589,008

             (vii)  Uses of Net Proceeds:

<TABLE>
<CAPTION>

                                      Direct  or   indirect   payments   to
                                      directors, officers, general partners
                                      of the issuer or their associates; to
                                      persons owning ten percent or more of
                                      any class of equity securities of the             
                                      issuer;  and to affiliates              Direct or indirect
                                      of the issuer                           payment to others
                                      -------------------------------------   ------------------
<S>                                                  <C>                               <C>
Construction of plant, building                                                              $0
     and facilities:

                                       16

<PAGE>

                                      Direct  or   indirect   payments   to
                                      directors, officers, general partners
                                      of the issuer or their associates; to
                                      persons owning ten percent or more of
                                      any class of equity securities of the             
                                      issuer;  and to affiliates              Direct or indirect
                                      of the issuer                           payment to others
                                      -------------------------------------   ------------------

Purchase and installation of 
     machinery and equipment:                                                            503,421

Purchase of real estate:                                                                     -0-

Acquisition of other business(es):                                                           -0-

Repayment of indebtedness:                                                                   -0-

Working capital:                                      30,000                             976,894

TEMPORARY INVESTMENTS (SPECIFY)
-------------------------------

Certificates of Deposit:                                                                 131,130

OTHER PURPOSES (SPECIFY)

Research and Development and Patent Protection                                         1,644,763
     Expenditures:

Expansion of Research/Manufacturing Facilities:      109,000                             365,173

Sales and Marketing Capabilities:                                                        170,715

Management Salaries:                                 561,730

Investor Relations:                                                                       96,182

TOTAL:                                               700,730                           3,888,278
</TABLE>

ITEM 6.           MANAGEMENT'S PLAN OF OPERATION AND DISCUSSION AND ANALYSIS.
-----------------------------------------------------------------------------

INTRODUCTORY STATEMENTS


         FORWARD-LOOKING  STATEMENTS  AND ASSOCIATED  RISKS.  This Annual Report
contains forward-looking statements, including statements regarding, among other
things,  (a) the Company's  growth  strategies,  (b)  anticipated  trends in the
Company's  industry and (c) the Company's  future  financing plans. In addition,
when used in this Annual Report, the words "believes," "anticipates," "intends,"
"in  anticipation  of," and  similar  words are  intended  to  identify  certain
forward-looking  statements.  These forward-looking statements are based largely

                                       17

<PAGE>

on the  Company's  expectations  and  are  subject  to a  number  of  risks  and
uncertainties,  many of which are beyond the Company's  control.  Actual results
could differ  materially  from these  forward-looking  statements as a result of
changes in trends in the economy and the Company's  industry,  reductions in the
availability  of  financing  and  other  factors.  In light of these  risks  and
uncertainties,  there can be no assurance  that the  forward-looking  statements
contained  in this  Annual  Report  will in fact  occur.  The  Company  does not
undertake  any  obligation  to publicly  release the results of any revisions to
these  forward-looking  statements that may be made to reflect any future events
or circumstances.

         The Company temporarily removed the Picogram Assay from the marketplace
in December,  1997 and subsequently  re-launched it in the third quarter of 1998
but has not generated  significant sales revenue.  The Company remains largely a
development  stage company,  with the Company's  expenditures  far exceeding its
revenues.  Because the  Company  has not  generated  significant  revenues,  the
Company intends to continue to report its plan of operation.

PLAN OF OPERATION

         ADDITIONAL  FUND  RAISING   ACTIVITIES.   The  Company  had  originally
projected  that the funds  raised in its initial  public  offering  (the "IPO"),
which was closed on December 26,  1996,  would last for  approximately  eighteen
months after the date of the Offering. As previously reported in its Form 10-QSB
for the three-month period ended September 30, 1998, the Company needed to raise
additional capital to continue operations beyond November 1998. In order to fund
its operations since November 1998, the Company had to borrow money from several
private  investors in four separate  transactions.  These loan transactions were
intended to provide short-term financing to the Company. The aggregate amount of
these loans (excluding payments of commissions and other expenses) was $438,500.
The Company  anticipates that these loan proceeds will be completely expended by
the end of April  1999.  Thereafter,  the  Company's  ability  to  continue  its
business  activities  will be completely  dependent on its ability to obtain new
capital.  The  Company  has no  commitment  for any  additional  capital  and no
assurances  can be given that the Company will be  successful in raising any new
capital. A summary of these loan transactions is contained in "Market for Common
Equity and Related Stockholder  Matters - Sales of Unregistered  Securities." In
the absence of additional capital, the Company will be required to significantly
curtail or cease its business activities.

         The plan of operation  described in this Annual Report assumes that the
Company will be successful in raising  significant  additional  capital,  but no
assurances  can be given that the  Company  will be  successful  in raising  any
additional  capital.  The failure to raise additional  capital will, among other
things,  cause  significant  deviations from the plan of operation  described in
this Annual  Report,  and will have a material  adverse  effect on the Company's
business, financial condition and results of operations. It will also jeopardize
the Company's ability to continue its business activities.

         SUMMARY OF ANTICIPATED  PRODUCT RESEARCH AND  DEVELOPMENT.  The Company
intends to  continue  its  product  research  and  development  and  continue to
implement  what  the  Company  believes  to  be  a  feasible  plan  for  product
development.  The Company has modified its feasibility  plan since the filing of
its Quarterly  Report on Form 10-QSB for the three-month  period ended September
30,  1998.  The Company  expects to employ its  resources  in the  research  and

                                       18

<PAGE>

development of potential  applications of its nucleic acid labeling  technology.
The major components of the plan of operation as revised from the last reporting
period are as follows:

1999     o     Continued development of applications of Genetic Vectors' nucleic
               acid labeling technology.


         o     Development of EasyID DNA probe products for quality assurance in
               the food and beverage industry.

2000     o     Development of EasyID probe products for quality assurance in the
               food and beverage industry.

         o     Continued development of applications of Genetic Vectors' nucleic
               acid labeling technology.

         SIGNIFICANT  PLANT OR  EQUIPMENT  PURCHASES.  The  Company  anticipates
purchasing or leasing  equipment valued at approximately  $250,000 in 1999 to be
used in connection with the foregoing development plan.

         CHANGES IN THE NUMBER OF  EMPLOYEES.  The Company  currently  has seven
employees.  As shown in the  following  chart,  the Company  anticipates  hiring
additional  personnel  during 1999 and 2000 in connection  with its research and
development  and  product  development  plan.  The Company  believes  that these
personnel will be adequate to accomplish the tasks set forth in its plan.

PROPOSED ADDITIONAL PERSONNEL                         1999                  2000
-----------------------------                    ---------             ---------
Executive Personnel                                     2                      0
Administrative Personnel                                2                      0
Director - Sales and Marketing                          1                      0
Salespersons                                            5                      4
Technical Info/Inside Sales                             3                      0
Scientific Supervisors                                  1                      0
Technicians                                             2                      0
                                                ---------              ---------

TOTAL PROPOSED NEW EMPLOYEES                           16                      4
                                                =========              =========

TOTAL EMPLOYEES AT END OF YEAR                         23                     27
                                                =========              =========

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

         The Company  generated  revenues  of $11,275  during  1998,  which were
attributable  to the launch of the  Picogram  Assay.  In  addition,  the Company
recognized  $35,897 in grant revenue  during 1998.  During 1997, the Company was
awarded  a grant for  $99,897  from the  National  Institute  of Health  and the

                                       19

<PAGE>

National Institute of Allergy and Infectious  Diseases for rapid  identification
of fungal species.  In this  connection,  the Company  recognized  grant revenue
aggregating  $35,897  and  $64,000  in 1998 and  1997,  respectively.  The award
terminated on February 27, 1998.

         The sales  generated  by the Company  during 1998 were  preliminary  in
nature, and represented the purchase of product samples primarily for evaluation
purposes.  The Company  reintroduced  the Picogram Assay in the third quarter of
1998;  however,  the Company  remains  largely a development  stage company with
expenditures far exceeding revenues.

         Research and development  expenses for 1998 increased by $179,226.  The
increase was largely  attributable to accelerated product improvement efforts on
EpiDNA  Picogram  Assay  kits  and  development  efforts  on the  core  labeling
technology. In addition, the Company created a new research and development cost
center  which the  Company  believes  resulted  in better  tracking  of  certain
research and  development  expenses.  Some of these  expenses had not previously
been  classified  as research  and  development  expenses,  including  certain
salaries.  This  reclassification  resulted in greater  research and development
expenses in 1998 compared to 1997.

         Operating  expenses  for 1998 were  approximately  the same as in 1997,
increasing only $584.

         Interest income for 1998 decreased by $136,970  because the Company had
less cash invested during 1998 than in 1997. Interest income was attributable to
interest  earned on  certificates  of deposit and money  market  accounts  which
represented the investment of the net proceeds of the Company's IPO and proceeds
from the issuance of debentures.

         LIQUIDITY AND CAPITAL RESOURCES. The Company had net cash of $2,102,467
at the beginning of 1998,  consisting  primarily of the net proceeds received by
the Company in the IPO. The net cash used by the Company in operating activities
aggregated $2,125,437. This was largely attributable to research and development
and  general  and  administrative  expenses.  The  Company's  net  cash  used in
investing  activities  aggregated  $64,606  during  1998,  consisting  mainly of
purchases of laboratory and office equipment.

         As of December 31, 1998, the Company had total stockholders'  equity of
$563,575 and had short-term  debt of $150,000.  The Company had $109,924 in cash
and cash  equivalents as of December 31, 1998. This  represents,  in large part,
the  proceeds  from  Loan No. 1. The  Company  anticipates  that such  proceeds,
together  with  the net  proceeds  from  Loan No.  2 and  Loan  No.  3,  will be
completely  expended by the end of April 1999.  Thereafter,  the Company will be
required  to  significantly  curtail  or cease  its  business  activities  until
additional  capital  can be  obtained,  if at  all.  See  "Plan  of  Operation."
Additional  financing  is  necessary  for the Company to continue  its  business
activities. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Going Concern Opinion."

         As discussed throughout this Annual Report, the Company has experienced
extreme cash  shortages  since the end of November 1998 through the date of this
Annual Report. See "Plan of Operation - Additional Fund Raising  Activities." As
a result of these cash  shortages,  the Company was  required to pay one-half of
its  employees'  salaries in cash and one-half in stock options for a portion of
December  1998 and January  1999.  On December 9, 1998,  the Company  issued the
employees options to purchase an aggregate of 4,393 shares of Common Stock at an
exercise price of $5.00 per share or  approximately  $2.25 less than the closing
price on that date.  In addition,  the Company was required to pay only one-half
of its  employees'  salaries  in cash for all of March 1999 in order to preserve
cash.  The Company is currently  accruing  one-half of its  employees'  salaries
which it will pay when and if additional capital is received.  In addition,  the

                                       20

<PAGE>

Company will issue additional stock options to its non-executive  employees at a
price to be determined.

         YEAR 2000 COMPUTER ISSUES. Computer programs have typically abbreviated
dates by eliminating  the first two digits of the year under the assumption that
these two digits would be 19. As the year 2000 approaches, these systems may not
be able to recognize  current dates which may cause  computer  system failure or
miscalculations by computer  programs.  The Company does not believe it will not
be  materially  affected by the Year 2000 problem.  The Company's  conclusion is
based on a survey of the computer equipment currently in use by the Company. All
such  equipment  was  acquired by the Company  within the last two years and was
Year-2000-compliant  when  acquired.  The  Company  has not  expended a material
amount of costs in this  assessment.  Moreover,  the Company  remains  largely a
research and  development  company and  therefore  its exposure to the Year 2000
problems of its  customers  and  suppliers is minimal.  However,  the Company is
exposed to the risk that one or more of its suppliers could experience Year 2000
problems  that may impact their ability to supply  materials to the Company.  To
date,  the Company is not aware of any Year 2000 problems of its suppliers  that
would have a material adverse impact on the Company's  operations.  Nonetheless,
the inability of suppliers to convert their  computer  systems to avoid any Year
2000  problems  could  jeopardize  the supply of  materials  to the  Company and
therefore have a material adverse effect on the Company's operations. The effect
of  non-compliance  by suppliers is not determinable at this time. The Company's
Year 2000 risks are considered  minimal and no contingency plans are believed to
be necessary.  As a result,  the Company believes the potential  consequences of
Year-2000 problems will not have a material effect on the Company.

         IMPACT OF INFLATION.  Although inflation has slowed in recent years, it
is still a factor in the United States economy and the Company continues to seek
ways to mitigate its impact. To the extent permitted by competition, the Company
intends to pass increased  costs on to its customers by increasing  sales prices
over time. In addition,  the Company places all of its major supplier  purchases
out to bid.

         NEW  FASB  PRONOUNCEMENTS.  In  June  1998,  the  Financial  Accounting
Standards  Board issued SFAS 133,  "Accounting  for Derivative  Instruments  and
Hedging  Activities."  SFAS 133 requires  companies to recognize all derivatives
contracts as either  assets or  liabilities  in the balance sheet and to measure
them at  fair  value.  If  certain  conditions  are  met,  a  derivative  may be
specifically  designated  as a hedge,  the  objective  of which is to match  the
timing  of  gain  or  loss  recognition  on  the  hedging  derivative  with  the
recognition  of (i) the  changes  in the  fair  value  of the  hedged  asset  or
liability that are  attributable  to the hedged risk or (ii) the earnings effect
of the hedged  forecasted  transaction.  For a derivative  not  designated  as a
hedging  instrument,  the gain or loss is recognized in operations in the period
of  change.  SFAS 133 is  effective  for all  fiscal  quarters  of fiscal  years
beginning after June 15, 1999.

         Historically,  the Company has not entered into  derivatives  contracts
either to hedge existing risks or for  speculative  purposes.  Accordingly,  the
Company  does not  expect  adoption  of the new  standard  on January 1, 2000 to
affect its financial statements.

                                       21

<PAGE>

ITEM 7.           FINANCIAL STATEMENTS.
---------------------------------------


                                                GENETIC VECTORS, INC.
                                                 (A DEVELOPMENT STAGE 
                                                             COMPANY)







                                                            Financial Statements
                                           Year Ended December 31, 1998 and 1997
                                                                     (Unaudited)


                                       22
<PAGE>


--------------------------------------------------------------------------------
                                                GENETIC VECTORS, INC.
                                                 (A DEVELOPMENT STAGE 
                                                             COMPANY)

                                                             CONTENTS
                                                          (UNAUDITED)

--------------------------------------------------------------------------------


                                                                            Page
                                                                            ----

          Balance  sheet  (unaudited)                                         24

          Statements of Operations (unaudited)                                25

          Statements  of  Stockholders'  Equity  (Deficit)  (unaudited)     26-7

          Statements of Cash Flows (unaudited)                                28

          Notes to Financial Statements (unaudited)                        29-47





                                       23
<PAGE>


--------------------------------------------------------------------------------
                                                         GENETIC  VECTORS,  INC.
                                                  (A DEVELOPMENT  STAGE COMPANY)


                                                                   BALANCE SHEET
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                                                                     <C>

DECEMBER 31,                                                                           1998
---------------------------------------------------------------------------------------------

ASSETS (Notes 4 and 11)


CURRENT
     Cash and cash equivalents                                                   $  109,924
     Accounts receivable                                                              3,620
     Inventory                                                                       13,500
     Prepaid expenses                                                                22,852
     Deferred loan costs (net of $18,525 of accumulated amortization) (Note 4)       92,625
---------------------------------------------------------------------------------------------

Total current assets                                                                242,521

Equipment and improvements, net (Note 3)                                            403,355
Patents and license agreement, net of $25,245 of accumulated
     amortization (Note 9(a))                                                       221,719
Restricted cash equivalents (Note 5)                                                 46,130
---------------------------------------------------------------------------------------------

                                                                                 $  913,725
---------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable and accrued liabilities                                    $  200,150
     Notes payable (Note 4)                                                         150,000

---------------------------------------------------------------------------------------------

Total liabilities                                                                   350,150
---------------------------------------------------------------------------------------------

Commitments and contingencies (Notes 2 and 8)
---------------------------------------------------------------------------------------------

Stockholders' Equity (Note 8)
     Common stock, $.001 par value, 10,000,000 shares authorized,
         2,349,843 shares issued and outstanding                                      2,350
     Additional paid-in capital                                                   6,674,670
     Deficit accumulated during the development stage                            (6,113,445)
---------------------------------------------------------------------------------------------

Total stockholders' equity                                                          563,575
---------------------------------------------------------------------------------------------

                                                                                 $  913,725
---------------------------------------------------------------------------------------------
</TABLE>


                 See accompanying notes to financial statements.


                                       24
<PAGE>


--------------------------------------------------------------------------------
                                                         GENETIC  VECTORS,  INC.
                                                  (A DEVELOPMENT  STAGE COMPANY)

                                                        STATEMENTS OF OPERATIONS
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
<S>                                     <C>                     <C>                  <C>

                                        CUMULATIVE FROM
                                        JANUARY 1, 1992
                                            (INCEPTION)              FOR THE              FOR THE
                                                THROUGH           YEAR ENDED           YEAR ENDED
                                           DECEMBER 31,         DECEMBER 31,         DECEMBER 31,
                                                   1998                 1998                 1997
--------------------------------------------------------------------------------------------------

REVENUE:
     Sales                              $        50,535      $        11,275         $     39,260
     Grant revenue                              149,147               35,897               64,000

--------------------------------------------------------------------------------------------------

Total revenue                                   199,682               47,172              103,260
--------------------------------------------------------------------------------------------------

COSTS AND EXPENSES:
     Selling, general and administrative      3,855,641            1,574,082            1,573,534
     Research and development                 2,538,098              984,937              805,711
     Depreciation and amortization              187,867              125,427               55,505
--------------------------------------------------------------------------------------------------

Total expenses                                6,581,606            2,684,446            2,434,750
--------------------------------------------------------------------------------------------------

INTEREST                                        268,479               61,807              198,776
--------------------------------------------------------------------------------------------------


Net loss                                $    (6,113,445)     $    (2,575,467)        $ (2,132,714)
--------------------------------------------------------------------------------------------------

Weighted average common shares
     outstanding (Note 8)                                          2,344,696            2,339,634
--------------------------------------------------------------------------------------------------

Net loss per common share - basic and
diluted                                                      $         (1.10)        $       (.91)

--------------------------------------------------------------------------------------------------
</TABLE>


                                       25
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                    STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                            <C>         <C>           <C>               <C>                    <C>

                                                                                                     DEFICIT
                                                                            ADDITIONAL           ACCUMULATED
                                                                               PAID-IN            DURING THE
                                                  SHARES      AMOUNT           CAPITAL     DEVELOPMENT STAGE            TOTAL
-------------------------------------------------------------------------------------------------------------------------------

Initial capitalization for cash at $0.0000625
per share (Note 8(a))                          1,600,000   $   1,600     $      (1,500)    $               -      $       100

Capital contribution (Note 8(b))                       -           -           500,000                     -          500,000

Net loss                                               -           -                 -              (260,484)        (260,484)
-------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1992                   1,600,000       1,600           498,500              (260,484)         239,616

Net loss                                               -           -                 -              (205,753)        (205,753)
-------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1993                   1,600,000       1,600           498,500              (466,237)          33,863

Net loss                                               -           -                 -              (318,927)        (318,927)
-------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1994                   1,600,000       1,600           498,500              (785,164)        (285,064)

Net loss                                               -           -                 -              (226,666)        (226,666)
-------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1995                   1,600,000       1,600           498,500            (1,011,830)        (511,730)

Issuance of common stock for cash, at
   $5.00 per share, net of offering costs
   of 70,000 (Note 8(c))                         110,000         110           479,990                     -          480,100

Conversion of $413,518 due to parent in
   exchange for 41,352 shares of common
   stock (Note 8(f))                              41,352          42           413,476                     -          413,518

Conversion of $132,822 of accrued payroll
   and consulting to the president and
   chairman of the Board for 13,282 shares
   of common stock (Note 8(f))                    13,282          13           132,809                     -          132,822

Issuance of common stock at $10.00 per
share,   net of offering costs of
$1,180,249 (Note 8(g))                           575,000         575         4,569,176                     -        4,569,751

Stock options granted for services                     -           -            56,250                     -           56,250
(Note 8(c))
Net loss                                               -           -                 -              (393,434)        (393,434)
-------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1996                   2,339,634   $   2,340     $   6,150,201     $      (1,405,264)     $ 4,747,277

Offering cost refund (Note 8(g))                       -           -            25,500                     -           25,500
Offering costs (Note 8(g))                             -           -            (6,243)                    -           (6,243)
Net loss                                               -           -                 -            (2,132,714)      (2,132,714)
-------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1997                   2,339,634   $   2,340     $   6,169,458     $      (3,537,978)     $ 2,633,820
-------------------------------------------------------------------------------------------------------------------------------


                                                                 26
<PAGE>
--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                    STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------



<S>                                            <C>         <C>           <C>               <C>                    <C>
                                                                                                     DEFICIT
                                                                            ADDITIONAL           ACCUMULATED
                                                                               PAID-IN            DURING THE
                                                  SHARES      AMOUNT           CAPITAL     DEVELOPMENT STAGE            TOTAL
-------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1997                   2,339,634   $  2,340      $   6,169,458     $      (3,537,978)     $ 2,633,820

Issuance of common stock for services
   (Note 8(j))                                       709          1              5,999                     -            6,000

Issuance for common stock for cash, at $5.00
   per share (Note 8(k))                           9,500          9             47,491                     -           47,500

Warrants granted for consulting services
   (Note 9(f))                                         -          -            332,500                     -          332,500

Warrants granted for loan financing costs
   (Note 4)                                            -          -            111,150                     -          111,150

Options granted for services rendered
   (Note 8(m))                                         -          -              8,072                     -            8,072

Net loss                                               -          -                  -            (2,575,467)      (2,575,467)
-------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 1998                   2,349,843   $  2,350      $   6,674,670     $      (6,113,445 )    $   563,575
-------------------------------------------------------------------------------------------------------------------------------
                                           See accompanying notes to financial statements.
</TABLE>


                                                                 27
<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                        STATEMENTS OF CASH FLOWS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>                                                            <C>                        <C>                <C>

                                                                   Cumulative from
                                                                   January 1, 1992             For the            For the
                                                               (inception) through          year ended         year ended
                                                                      December 31,        December 31,       December 31,
                                                                              1998                1998               1997
----------------------------------------------------------------------------------------------------------------------------
Operating Activities:
   Net loss                                                  $          (6,113,445)      $  (2,575,467)     $  (2,132,714)
   Adjustments to reconcile net loss to
    net cash used in operating activities:
       Depreciation and amortization                                       187,867             125,427             55,505
       Amortization of loan costs                                           18,525              18,525                  -
       Write-off  of acquired technology                                    71,250                   -             15,000
       Consulting services provided for common stock                         6,000               6,000                  -
       Stock options and warrants granted for services                     340,572             340,572                  -
       (Increase) in accounts receivable                                    (3,620)             (3,620)                 -
       (Increase) in inventory                                             (13,500)            (13,500)                 -
       (Increase) in prepaid expenses                                      (22,852)            (22,852)                 -
       (Increase) in restricted cash equivalents                           (46,130)            (46,130)                 -
       Increase (decrease) in accounts payable
         and accrued liabilities                                           332,973             (45,608)            19,015
----------------------------------------------------------------------------------------------------------------------------

Total adjustments                                                          871,085             450,030             89,520
----------------------------------------------------------------------------------------------------------------------------

Net cash used in operating activities                                   (5,242,360)         (2,125,437)        (2,043,194)
----------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
   Purchase of equipment and improvements                                 (565,977)            (63,240)          (478,557)
   Patent costs and license agreement                                     (261,964)             (1,366)          (105,247)
----------------------------------------------------------------------------------------------------------------------------

Net cash used in investing activities                                     (827,941)            (64,606)          (583,804)
----------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
   Increase due to parent                                                  413,518                   -                  -
   Proceeds from note payable                                              185,000             150,000                  -
   Payment on notes payable                                                (35,000)                 -              (35,000)
   Net proceeds from issuance of common stock                            5,097,450              47,500                  -
   Capital contribution                                                    500,000                   -                  -
   Offering refund                                                          25,500                   -             25,500
   Offering costs                                                           (6,243)                 -              (6,243)
----------------------------------------------------------------------------------------------------------------------------

Net cash provided by (used in) financing activities                      6,180,225             197,500            (15,743)
----------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                       109,924          (1,992,543)        (2,642,741)
Cash and cash equivalents at beginning of period                                 -           2,102,467          4,745,208
----------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                   $             109,924       $     109,924      $   2,102,467
----------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURES:
   Conversion of due to parent in exchange for stock         $             413,518       $           -      $           -
   Conversion of accrued wages for stock                     $             132,822       $           -      $           -
   Cash paid for interest                                    $                   -       $           -      $           -
   Cash paid for taxes                                       $                   -       $           -      $           -
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 See accompanying notes to financial statements.

                                                                 28
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------


1.      SUMMARY OF            Organization and Business
        SIGNIFICANT
        ACCOUNTING            Genetic Vectors,  Inc.  (the  "Company"), formerly
        POLICIES              a subsidiary of Nyer Medical Group, Inc. ("Nyer"),
                              was incorporated on December 28, 1991. The Company
                              was organized to supply genetic  engineering tools
                              and  analytical  kits  to  the  biotechnology  and
                              molecular biology markets.  The Company's products
                              are intended to allow biopharmaceutical  companies
                              to test for  biopharmaceutical  product  purity in
                              compliance with regulatory standards.  The Company
                              is in the development  stage and its operations to
                              date have  largely  consisted  of the research and
                              development  of its  products.  The Company had no
                              financial  activities  from  December  28, 1991 to
                              December  31, 1991.  Accordingly,  January 1, 1992
                              has  been  used as the  inception  date  of  these
                              financial statements.

                              These    financial    statements    include    the
                              specifically  identifiable expenses of the Company
                              incurred by Nyer on behalf of the Company.

                              Nyer,   which   previously   owned  74.9%  of  the
                              Company's   common  stock,   distributed   to  its
                              shareholders  512,000 shares,  representing 32% of
                              the  outstanding  shares of the  Company's  common
                              stock as of May 31, 1996.

                              Preparation of Financial Statements
                              -----------------------------------

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


                                       29

<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------


                              Cash and Cash Equivalents
                              -------------------------

                              The   Company    considers   all   highly   liquid
                              investments  with an  initial  maturity  of  three
                              months   or  less  when   purchased   to  be  cash
                              equivalents.

                              Research and Development Costs
                              ------------------------------

                              Expenditures  relating  to the  Company's  product
                              research,  development and testing are expensed as
                              incurred.


                              Deferred Loan Costs
                              -------------------

                              Deferred  loan  costs  are  carried  at cost  less
                              accumulated amortization. Amortization is computed
                              using the  straight-line  method  over the life of
                              the notes payable of one year.

                              Equipment and Improvements and Depreciation
                              -------------------------------------------

                              Equipment and  improvements  are recorded at cost.
                              Depreciation is provided over the estimated useful
                              life of the assets  which  range from three to ten
                              years.

                              Patents and License Agreement
                              -----------------------------

                              Patents and the license  agreement  are carried at
                              cost less accumulated  amortization.  Amortization
                              is computed  using the  straight  line method over
                              the  estimated  useful life of the  patents  which
                              range from 15.5 to 17 years.

                              The Company  continually  evaluates  the  carrying
                              value  of  its  patents  and  license   agreement.
                              Impairments   are  recognized  when  the  expected


                                       30
<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

                              future  operating  cash flows to be  derived  from
                              such   intangible   assets  are  less  than  their
                              carrying values.



                              Revenue
                              -------

                              The  Company  recognizes  revenue  from sales upon
                              delivery of the product to a customer.

                              During  1997 the  Company  was awarded a grant for
                              $99,897 from the National  Institute of Health and
                              the National  Institute of Allergy and  Infectious
                              Diseases  for  rapid   identification   of  fungal
                              species.  The award  terminated  on  February  27,
                              1998. In this connection,  the Company  recognized
                              grant revenue  aggregating $35,897 and $64,000 for
                              1998 and 1997, respectively.

                              Income Taxes
                              ------------

                              Income taxes are accounted for using the liability
                              approach  under the  provisions  of  Statement  of
                              Financial    Accounting    Standards    No.   109,
                              "Accounting for Income Taxes."

                              The Company filed a consolidated income tax return
                              with  its   parent   through   March   25,   1996.
                              Thereafter, it filed on a separate company basis.

                              Net Loss Per Common Share
                              -------------------------

                              Net loss per common share is calculated  according
                              to Statement of Financial Accounting Standards No.
                              128, "Earnings Per Share" which requires companies
                              to present  basic and diluted  earnings per share.
                              Net loss per common  share - Basic is based on the
                              weighted   average   number   of   common   shares
                              outstanding  during the year.  Net loss per common
                              share - Diluted is based on the  weighted  average
                              number of common  shares  and  dilutive  potential



                                       31
<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

                              common shares outstanding during the year.

                              The Company's  potential issuable shares of common
                              stock  pursuant  to  outstanding   stock  purchase
                              options  and  warrants   are  excluded   from  the
                              Company's  diluted  computation  as  their  effect
                              would be antidilutive to the Company's net loss.

                              Fair Value of Financial Instruments
                              -----------------------------------

                              The  Company's   financial   instruments   consist
                              principally   of  cash   and   cash   equivalents,
                              receivables,  accounts  payable and notes payable.
                              The carrying amounts of such financial instruments
                              as  reflected  in the  balance  sheet  approximate
                              their  estimated  fair  value as of  December  31,
                              1998. The estimated fair value is not  necessarily
                              indicative   of  the  amounts  the  Company  could
                              realize in a current market  exchange or of future
                              earnings or cash flows.

                              Comprehensive Income
                              --------------------

                              During  1998,  the  Company  adopted  SFAS No. 130
                              "Reporting  Comprehensive  Income."  SFAS No.  130
                              establishes standards for reporting and display of
                              comprehensive    income,    its   components   and
                              accumulated  balances.   Comprehensive  income  is
                              defined to include  all  changes in equity  except
                              those  resulting  from  investments  by owners and
                              distributions to owners.  Among other disclosures,
                              SFAS No.  130  requires  that all  items  that are
                              required to be recognized under current accounting
                              standards as components of comprehensive income be
                              reported   in  a  financial   statement   that  is
                              displayed  with  the  same   prominence  as  other
                              financial statements.

                              The  adoption  of SFAS  No.  130 did not  have any
                              effect on the Company's  financial  statements for
                              the year ended December 31, 1998.


                                       32

<PAGE>
--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

                              SEGMENT REPORTING

                              During  1998,  the  Company  adopted  SFAS No. 131
                              "Disclosures  about  Segments of an Enterprise and
                              Related Information." SFAS No. 131 supersedes SFAS
                              No. 14,  "Financial  Reporting  for  Segments of a
                              Business  Enterprise,"  and establishes  standards
                              for the way public  companies  report  information
                              about  operating   segments  in  annual  financial
                              statements  and  requires  reporting  of  selected
                              information  about  operating  segments in interim
                              financial statements issued to the public. It also
                              establishes  standards for  disclosures  regarding
                              products and services,  geographic areas and major
                              customers. SFAS No. 131 defines operating segments
                              as components  of a company  about which  separate
                              financial   information   is  available   that  is
                              evaluated   regularly   by  the  chief   operating
                              decision   maker  in  deciding   how  to  allocate
                              resources and in assessing performance.

                              The  Company  currently  operates  solely  in  one
                              segment,  the  biopharmaceutical   industry,   and
                              therefore  the  adoption  of SFAS No.  131 did not
                              have  any  effect  on  the   Company's   financial
                              statements for the year ended December 31, 1998.

                              Recent Accounting Pronouncements
                              --------------------------------

                              In June 1998, the Financial  Accounting  Standards
                              Board issued SFAS 133,  "Accounting for Derivative
                              Instruments  and  Hedging  Activities."  SFAS  133
                              requires  companies to recognize  all  derivatives
                              contracts as either assets or  liabilities  in the
                              balance  sheet and to measure  them at fair value.
                              If certain conditions are met, a derivative may be
                              specifically  designated as a hedge, the objective
                              of which is to match  the  timing  of gain or loss
                              recognition  on the  hedging  derivative  with the
                              recognition  of (i) the  changes in the fair value
                              of  the  hedged  asset  or   liability   that  are
                              attributable  to  the  hedged  risk  or  (ii)  the
                              earnings   effect   of   the   hedged   forecasted
                              transaction.  For a derivative not designated as a
                              hedging instrument, the gain or loss is recognized


                                       33
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------



                              in operations in the period of change. SFAS 133 is
                              effective for all fiscal  quarters of fiscal years
                              beginning after June 15, 1999.

                              Historically,  the Company  has not  entered  into
                              derivatives  contracts  either  to hedge  existing
                              risks or for  speculative  purposes.  Accordingly,
                              the  Company  does not expect  adoption of the new
                              standard   on   January  1,  2000  to  affect  its
                              financial statements.

2.      LIQUIDITY             The  accompanying  financial  statements have been
                              prepared  assuming the Company will  continue as a
                              going   concern.    This   basis   of   accounting
                              contemplates  the recovery of the Company's assets
                              and the  satisfaction  of its  liabilities  in the
                              normal course of operations.  Since inception, the
                              Company  has been  involved  in the  research  and
                              design  of  its  product,  the  development  of an
                              organizational infrastructure, and the performance
                              of   preliminary    marketing   and    promotional
                              activities.  The  Company's  ultimate  ability  to
                              attain  profitable  operations  is dependent  upon
                              obtaining   additional   financing   adequate   to
                              complete  its  development   activities,   and  to
                              achieve a level of sales  adequate  to support its
                              cost  structure.  Through  December 31, 1998,  the
                              Company incurred losses totaling $6,113,445,  used
                              cash from  operating  activities  in the amount of
                              $5,242,360  and  has  been  unable  to  develop  a
                              customer   base  for  its  product   which  raises
                              substantial  doubt about the Company's  ability to
                              continue as a going concern.

                              Subsequent  to  December  31,  1998,  the  Company
                              obtained  $288,500 in  financing  (Note 11).  This
                              amount   has  been   substantially   used  in  the
                              operations  of the Company.  If the Company is not
                              successful  in  obtaining   additional  funds,  it
                              intends  to  cease  operations.  There  can  be no
                              assurance  that the Company will be  successful in
                              consummating  its plans,  or that such  plans,  if
                              consummated,  will  enable  the  Company to attain
                              profitable  operations  or  continue  as  a  going
                              concern.


                                       34
<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

3.     EQUIPMENT AND          The Company's equipment is summarized as follows:
       IMPROVEMENTS

                              DECEMBER 31,                                  1998
                              --------------------------------------------------

                              Laboratory equipment                $      385,765
                              Computers                                   49,862
                              Phone equipment                             58,245
                              Leasehold improvements                      36,077
                              Office furniture                            22,520
                              Manufacturing equipment                      5,947
                              Software                                     7,561
                              --------------------------------------------------

                                                                         565,977
                              Less accumulated depreciation            (162,622)
                              --------------------------------------------------

                                                                  $     403,355
                              --------------------------------------------------


4.      NOTES PAYABLE         In  November  1998, the Company obtained financing
                              from  two  private   investors   of  $100,000  and
                              $50,000,   respectively.   These  unsecured  notes
                              payable,   which expire at the earlier of November
                              1999  or  the  closing  of  a  public  or  private
                              placement of equity securities with gross proceeds
                              to the Company of $3,000,000, bear simple interest
                              at 12% annually, payable quarterly beginning April
                              1,  1999,  with 1%  increases  per  month for each
                              month  that  any  portion  of  the  note   remains
                              outstanding after April 1, 1999. In the event that
                              the Company does not make the  principal  payments
                              as stated, the holder is entitled to receive 1,250
                              warrants to purchase shares of common stock of the
                              Company  at $6.00 per  share,  for each month that
                              the  amounts due remains  unpaid  through  October
                              1999 and 2,500 warrants per month thereafter.  The
                              Company  was in  compliance  with  the  terms  and
                              covenants of the notes at December 31, 1998.

                              In connection with these notes  payables,  10,000,
                              5,000 and 15,000  warrants to  purchase  shares of
                              common  stock of the  Company  at $6.00  per share


                                       35
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

                              were issued to the two lenders and  consultant  in
                              connection    with    obtaining   the   financing,
                              respectively.  The  fair  value  of such  warrants
                              amounting  to  $111,150  was  estimated  using the
                              Black Scholes option pricing model,  and are shown
                              in the balance sheet as deferred  loan costs,  net
                              of  accumulated   amortization   of  $18,525.   In
                              addition,   the  consultant  was  paid  a  $12,000
                              success fee for obtaining the financing.

5.      RESTRICTED CASH       Restricted    cash    equivalents   represents   a
        EQUIVALENTS           certificate  of    deposit  of  $46,130   held  as
                              security  on  a  letter  of  credit  tied  to  the
                              Company's facility lease.

6.      DEPENDENCE ON         Certain  key components of the  Company's products
        LIMITED NUMBER        are   currently    provided  by   a limited number
        OF SUPPLIERS          of sources, and  one component is  provided  by  a
                              single source.

7.      INCOME TAXES          At December 31, 1998, the Company  had federal net
                              operating    losses    (NOL)   of    approximately
                              $5,843,000.  The  NOL  expires  during  the  years
                              2007-2013.  In the event of a change in  ownership
                              of  the  Company,   the  utilization  of  the  NOL
                              carryforward  will be subject to limitation  under
                              certain provisions of the Internal Revenue Code.

                              Realization  of any  portion  of  the  approximate
                              $2,200,000  deferred  tax  asset at  December  31,
                              1998,  resulting from the  utilization of the NOL,
                              is not likely;  accordingly, a valuation allowance
                              has been  established  for the full amount of such
                              asset.

                              Net operating loss carryforward       $ 2,200,000
                              Less:  Valuation allowance             (2,200,000)
                              --------------------------------------------------

                              Net deferred tax asset                $         -

                              --------------------------------------------------

                              There are no significant temporary differences.


                                       36

<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

8.     STOCKHOLDERS'       a) During  1992,  the  Company  issued  100 shares of
       EQUITY (DEFICIT)       common   stock   for   $100   as   the     initial
                              capitalization  of the Company.  In June 1996, the
                              Company  issued a stock  dividend in the form of a
                              15,999  for  1  stock  split.  The  components  of
                              stockholders' equity (deficit), all shares and per
                              share amounts have been retroactively  adjusted to
                              reflect  the  stock   split.   The  Company   also
                              recapitalized   its  common  stock  to  10,000,000
                              shares, $.001 par value.

                           b) During  1992,  the  Company  received  $500,000 in
                              additional  capital contributions.

                           c) In  June  1996,  in  connection  with  a   private
                              placement,  the Company  issued  110,000 shares of
                              common  stock,  at  $5.00  per  share  for cash of
                              $480,100 net of offering costs of $70,000.

                              In addition, during June 1996, the Company granted
                              non-plan  stock options to purchase  75,000 shares
                              of common stock at an exercise  price of $5.00 per
                              share  (estimated  fair value based upon the price
                              of common stock sold in the private  placement) to
                              a consultant who became a director in August 1996.
                              Options to  purchase  25,000 of such  shares  were
                              exercisable   immediately.   Options  to  purchase
                              25,000 of such shares became  exercisable July 24,
                              1996  upon  the   execution   of  the   employment
                              agreement  with  the  Company's   Chief  Executive
                              Officer.  The  remaining  25,000  of  such  shares
                              became   exercisable   upon  the  closing  of  the
                              Company's initial public offering.  The fair value
                              of such  options  amounting to $56,250 was charged
                              to operations during the period ended December 31,
                              1996. During 1997,  approximately $30,000 was paid
                              to this director for consulting services.

                           d) In July 1996, the  Company  granted ten year stock
                              options to purchase  75,000 shares of common stock


                                       37
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

                              at 120% of the initial  public  offering  price to
                              the President.  Options to purchase
                              25,000,  25,000  and  25,000 of such  shares  vest
                              immediately,  six months after the  completion  of
                              the initial  public  offering,  and one year after
                              the  completion  of the initial  public  offering,
                              respectively.

                           e) In  August  1996,  the  Company  granted  ten year
                              options,  which  vested  one year  after the grant
                              date,  to  purchase  5,000  shares  each of common
                              stock at 120% of the initial public offering price
                              to two directors of the Company.

                           f) In  August  1996, the  Company  converted the then
                              outstanding  $413,518  due  to  parent  (Nyer)  in
                              exchange for 41,352 shares of common stock and the
                              then  outstanding  $132,822 of accrued payroll and
                              consulting  fees to the  President and Chairman of
                              the Board in exchange for 13,282  shares of common
                              stock. The conversion price was $10.00 per share.

                           g) In December  1996,  the  Company  completed    its
                              initial public offering. The offering consisted of
                              575,000  shares of common  stock which  raised net
                              proceeds  of   approximately   $4,570,000   (gross
                              proceeds   of   approximately    $5,750,000   less
                              underwriting  discounts,   commissions  and  other
                              expenses of the  offering  totaling  approximately
                              $1,180,249).  During  1997,  the Company  incurred
                              additional offering costs of $6,243 and received a
                              refund of  $25,500  for  overpayment  of  expenses
                              relating to this transaction.

                           h) In  February  1997,  the  Company granted ten year
                              options, which vest one year after the grant date,
                              to purchase  5,000  shares each of common stock at
                              120% of the initial  public  offering price to two
                              directors of the Company.

                           i) In  March  1998,  the  Company  granted  two  year
                              options  to six of its  employees  under  the 1996
                              Incentive  Plan  (Note  10),  which  vest one year
                              after the grant date, to purchase 13,848 shares of


                                       38
<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

                              common stock at $8.00 per share.

                           j) In  June  and  August of 1998, the  Company issued
                              383 and 326 shares, respectively,  of common stock
                              at  market  with a  total  value  of  $6,000  to a
                              consultant in connection with services rendered.

                           k) In June, July and August  of 1998, a board  member
                              exercised  options  of  5,000,  2,000  and  2,500,
                              respectively, at $5.00 per share.

                           l) In July 1998, the Company granted two year options
                              to five of its employees  under the 1996 Incentive
                              Plan  (Note  10),  which  vest one year  after the
                              grant  date,  to purchase  3,367  shares of common
                              stock at $10.375 per share.

                           m) In December of 1998, the Company granted five year
                              options,  which  vest two  months  after the grant
                              date, to purchase  4,393 shares of common stock at
                              $5.00 per share to seven  employees of the Company
                              in lieu of 50% pay for two pay  periods.  The fair
                              value of such options  relating to 1998  amounting
                              to $8,072  was  charged to  operations  during the
                              period ended  December  31, 1998.  The Company has
                              repurchased  1,171 options for a purchase price of
                              $2,635.  The  Company  intends to  repurchase  the
                              remaining options by the end of April.

                           n) The  following  reconciles  the  components of the
                              earnings per share (EPS) computation:

<TABLE>
<CAPTION>
<S>                                <C>                 <C>        <C>          <C>           <C>              <C>

FOR THE YEARS ENDED DECEMBER 31,                                       1998                                     1997
-----------------------------------------------------------------------------------------------------------------------
                                                                       PER-                                     PER-
                                            LOSS          SHARES      SHARE           LOSS           SHARE     SHARE
                                     (NUMERATOR)   (DENOMINATOR)     AMOUNT    (NUMERATOR)   (DENOMINATOR)    AMOUNT
-----------------------------------------------------------------------------------------------------------------------

Loss per common share - basic:     $  (2,575,467)      2,344,696  $   (1.10)  $ (2,132,714)      2,339,634    $ (.91)

Effect of Dilutive Securities
   Options                                     -               -          -              -               -         -
   Warrants                                    -               -          -              -               -         -
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


                                                                 39
<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                <C>                 <C>        <C>         <C>                <C>          <C>

Loss per common share - assuming
   dilution:                       $  (2,575,467)      2,344,696  $   (1.10)  $ (2,132,714)      2,339,634    $ (.91)
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


                              Options to purchase 282,108 shares of common stock
                              at prices  ranging from $5.00 to $12.00 per share,
                              were not included in the  computation  of loss per
                              share  assuming  dilution for 1998 and for 1997 as
                              they would have an  antidilutive  effect.  282,108
                              options  which  expire  through  2008,  are  still
                              outstanding  at  December  31,  1998.  Warrants to
                              purchase  130,000 shares of common stock at prices
                              ranging  from  $6.00 to $15.00  per share were not
                              included  in the  computation  of loss per  common
                              share  assuming  dilution for 1998 and for 1997 as
                              they would have an  antidilutive  effect.  130,000
                              warrants which expire through 2003 are outstanding
                              at December 31, 1998.

9.      COMMITMENTS        a) The  Company has acquired  rights to a new nucleic
        AND                   acid   labeling   and   detection  technology (the
        CONTINGENCIES         "Technology")  pursuant  to  a  license  agreement
                              between  ProVec,  Inc. and the University of Miami
                              and its School of Medicine  which was  assigned to
                              the Company on January 20, 1992. ProVec, Inc., was
                              owned  by the  Company's  Chairman  of the  Board.
                              These rights were acquired  under certain  patents
                              and patent  applications  pursuant  to the license
                              agreement and include the  manufacture of products
                              utilizing  the  Technology  and the  marketing and
                              sale  of  such  products.  The  license  agreement
                              provides  for a  royalty  equal to 4% of net sales
                              and  can  expire  or be  terminated  prior  to the
                              Company's   development   of  products  using  the
                              Technology.

                              In addition,  certain of the Company's patents and
                              patent  applications  were  made,  in part,  using
                              federal  funds  provided  by  a  federal   agency,
                              National  Institute of Health  (NIH),  which has a
                              nonexclusive,     nontransferable,     irrevocable
                              license.  Under this nonexclusive license, NIH can
                              use the Technology in federally-funded projects or
                              it can,  if  provided  in a treaty  or  agreement,
                              sublicense  the  Technology.   This   nonexclusive
                              license did not  terminate  with the  licensing of


                                       40
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

                              the  Technology  to  the  Company.  NIH  also  has
                              certain  rights  allowing it to grant  licenses to
                              third parties,  even exclusive licenses,  if it is
                              determined  that  practical   application  of  the
                              invention  is not  occurring,  as well as march-in
                              rights to meet unmet health or safety  needs.  The
                              grant of an exclusive license,  or the exercise of
                              march-in rights, would cause the Company to suffer
                              a  material   adverse   effect  on  its  business,
                              financial condition and viability.

                           b) In  1994, the  Company  entered  into an agreement
                              with an  investment  firm  whereby the  investment
                              firm assisted the Company in obtaining $135,000 in
                              funding through its parent.  In consideration  for
                              these  services,  the  Company  will  pay  to  the
                              investment  firm 5% of sales until five years from
                              the  date  of the  agreement  have  passed  or the
                              cumulative   payments  total  $50,000,   whichever
                              occurs  first.  During  1997,  the  agreement  was
                              assigned to a firm  affiliated  with the Company's
                              underwriter.   No  payments   were  made   through
                              December 31, 1998.

                           c) In   August  1996,  the   Company  entered  into a
                              three year employment  agreement with the Chairman
                              of  the  Board  for a  base  salary  of  $125,000.
                              Pursuant to the agreement, the Company granted ten
                              year  options  vesting  over a three year  period,
                              exercisable  during the period of  employment,  to
                              purchase  100,000  shares  of  common  stock at an
                              exercise price equal to 120% of the initial public
                              offering price per share of common stock.

                          d)  The  Company  entered  into  a  new  lease  during
                              June 1997 for office  and  laboratory  space.  The
                              facility is leased for a ten year term with annual
                              rental  payments  of  approximately  $192,000  and
                              annual  increases of 3%. In December of 1998,  the
                              Company  renegotiated  the lease  reducing  annual
                              rental  payments  to  approximately  $164,000  and
                              annual  increases of 3%. Rent expense for 1998 and
                              1997   aggregated   approximately   $192,300   and


                                       41
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

                              $90,900, respectively.

                           e) Minimum guaranteed lease payments under this lease
                              are as follows:


                                       42
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------




                              YEAR ENDED DECEMBER 31,                  AMOUNT
                              --------------------------------------------------
  
                                     1999                    $         164,000
                                     2000                              169,000
                                     2001                              174,000
                                     2002                              179,000
                                     2003                              184,000
                                     Thereafter                        690,000
                              --------------------------------------------------
                                                             $       1,560,000
                              --------------------------------------------------

                              After  five  years the  Company  has the option to
                              cancel its lease agreement for a cancellation  fee
                              equal to three months of the then monthly rent.

                              In  1997,   a  director   received   approximately
                              $109,000  for  consulting  services in  connection
                              with   the   identification   of   the   facility,
                              negotiation  of the lease and design,  engineering
                              and construction management services.

                           f) In September 1998, in connection  with the signing
                              of   the    consulting    agreement    to   obtain
                              approximately  $3,000,000  in  financing  for  the
                              Company,  a  consultant  to the Company was issued
                              50,000   warrants  to   purchase   shares  of  the
                              Company's  common  stock at $6.00 per  share.  The
                              Company  estimated  the fair value of the warrants
                              at the  grant  date  by  using  the  Black-Scholes
                              option    pricing   model   with   the   following
                              weighted-average  assumptions:  no dividend  yield
                              percent;  expected  volatility  of 0.488 risk free
                              interest rate of 5.03%,  and an estimated  life of
                              10 years.  The fair value of  services  related to
                              1998 of $332,500 was charged to operations  during
                              the period ended December 31, 1998.

10.     STOCK BASED           At  December 31, 1998, the  Company  has  a  fixed
        COMPENSATION          stock  option  plan  and  non-plan  options  which
                              are described below. The Company applies APB


                                       43
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

                              Opinion  25,   Accounting   for  Stock  Issued  to
                              Employees,    and   related   Interpretations   in
                              accounting  for the plan.  Under APB  Opinion  25,
                              because  the  exercise   price  of  the  Company's
                              employee  stock  options  equals  or  exceeds  the
                              market price of the  underlying  stock on the date
                              of grant, no compensation cost is recognized.

                              In August 1996,  the Company  adopted an Incentive
                              Plan (the "Plan")  under which  300,000  shares of
                              common  stock  are  reserved   for issuance   upon
                              exercise   of  stock   based   awards   including,
                              non-qualified   stock  options,   incentive  stock
                              options, stock appreciation rights or for issuance
                              of  restricted  shares  of  common  stock or other
                              stock-based awards. The Plan is also authorized to
                              issue short-term cash incentive  awards.  The Plan
                              is currently  administered by a plan administrator
                              which consists of the Board of Directors,  but may
                              consist  of  such   committees,   officers  and/or
                              employees  of  the  Company  as the  Board  may so
                              designate.  The  purchase  price of each  share of
                              common stock purchased upon exercise of any option
                              granted is as follows:  i) Incentive stock options
                              shall be equal to or greater  than the fair market
                              value of the common  stock on the date of grant as
                              required under Section 422 of the Internal Revenue
                              Code,  ii)  Options  granted  to 10%  holders  and
                              designated by the Plan  Administrator as Incentive
                              Stock  Options  shall be equal to or greater  than
                              110% of the fair market  value of the common stock
                              on the date of grant as required under Section 422
                              of the Internal Revenue Code,  (iii)  Non-employee
                              director options shall be equal to or greater than
                              the fair market  value of the common  stock on the
                              date of the grant.

                              FASB  Statement 123,  Accounting  for  Stock-Based
                              Compensation,  requires the Company to provide pro
                              forma information  regarding net income (loss) and
                              net  income  (loss)  per share as if  compensation
                              cost for the Company's  stock option plan had been
                              determined in accordance with the fair value based
                              method  prescribed  in  FASB  Statement  123.  The
                              Company  estimates  the fair  value of each  stock
                              option   at  the   grant   date   by   using   the


                                       44
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

                              Black-Scholes   option-pricing   model   with  the
                              following  weighted-average  assumptions  used for
                              grants  in  1998  and  1997:  no  dividend   yield
                              percent;  expected  volatility  of .500 - .568 and
                              0.465;  risk-free interest rates of 4.4 - 5.4% and
                              6.5%,  and expected  lives  ranging from 1.5 to 10
                              years for the Plan and non-plan options.

                              Under the accounting  provisions of FASB Statement
                              123, the Company's net loss and net loss per share
                              would  have  increased  to the pro  forma  amounts
                              indicated below:

                                                     1998                1997
                              --------------------------------------------------
                              Net loss
                              As reported      $ (2,575,467)     $ (2,132,714)
                               Pro forma         (2,842,480)       (2,400,514)

                              Net loss per common share
                               As reported     $      (1.10)     $      (.91)
                               Pro forma              (1.21)           (1.03)

                              A summary  of the  status of the  Company's  fixed
                              stock  option  plan  and  non-plan  options  as of
                              December 31, 1998 and 1997 and changes  during the
                              years ended is presented below:

<TABLE>
<CAPTION>
                              <S>                                  <C>        <C>            <C>          <C>

                                                                              DECEMBER 31,                 DECEMBER
                                                                                      1998                 31, 1997
                                                                                      ----                 --------
                                                                                 WEIGHTED-                WEIGHTED-
                                                                                   AVERAGE                  AVERAGE
                                                                                  EXERCISE                 EXERCISE
                                                                   SHARES            PRICE   SHARES           PRICE
                              ---------------------------------------------------------------------------------------

                              Outstanding at beginning of year   345,000     $    10.48   335,000     $     10.43
                              Granted                             21,608           7.76    10,000           12.00
                              Exercised                           (9,500)          5.00         -               -
                              Forfeited                          (75,000)         12.00         -               -
                              ---------------------------------------------------------------------------------------

                              Outstanding at end of year         282,108          10.05   345,000           10.48
                                                            ---------------------------------------------------------

                              Options exercisable at year-end    202,160           9.73   218,333            9.60
                              Weighted-average fair value of
                               options granted during the year    21,608     $     2.78    10,000      $     6.00
                              ---------------------------------------------------------------------------------------

</TABLE>


                                                                 45
<PAGE>


--------------------------------------------------------------------------------

                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>


                              The following table summarizes information about fixed stock options and non-plan
                              options outstanding at December 31, 1998:
                              <S>              <C>           <C>            <C>          <C>            <C>

                                                  Options Outstanding                        Options Exercisable
                              ----------------------------------------------------------  ----------------------------
                                                               Weighted-
                                                    Number       Average    Weighted-         Number    Weighted-
                              Range of         Outstanding     Remaining      Average    Exercisable      Average
                              Exercise                  at   Contractual     Exercise             at     Exercise
                              Prices              12/31/98          Life        Price       12/31/98        Price
                              ----------------------------------------------------------  ----------------------------

                                 $5.00 - $12.00        282,108        7.21       $10.05        202,166        $9.73

</TABLE>


11.     SUBSEQUENT            In January 1999, the Company  obtained  additional
        EVENTS                financing from a private investor in the amount of
                              $163,500.  This note payable, which is due on  the
                              earlier  of one year or the  closing  of a private
                              placement of equity  securities  with net proceeds
                              to the Company of  $1,500,000,  bears  interest at
                              12%,  payable  quarterly  in arrears  beginning on
                              April 19, 1999,  with 1%  increases  per month for
                              each  month that any  portion of the note  remains
                              outstanding   after  January  19,  2000,   and  is
                              collateralized  by substantially all of the assets
                              of the  Company.  In  connection  with  this  note
                              payable,  50,000 non-expiring warrants to purchase
                              common  shares  at  $0.01  per  share  and  16,350
                              non-expiring warrants to purchase common shares at
                              $5.50 per share  were  issued  to the  lender  and
                              consultant    in    obtaining    the    financing,
                              respectively.  In addition,  a $13,000 success fee
                              was  paid to the  consultant  in  connection  with
                              obtaining the financing.

                              In March 1999,  the private  investor  noted above
                              provided the Company with additional  financing in
                              the amount of $125,000.  This note payable,  which
                              expires at the  earlier of one year or the closing
                              of a private  placement of equity  securities with
                              net proceeds to the Company of  $1,500,000,  bears
                              interest  at 12%,  payable  quarterly  in  arrears
                              beginning  April 1999, with 1% increases per month
                              for  each  month  that  any  portion  of the  note
                              remains  outstanding  after January 19, 2000.  The
                              


                                       46
<PAGE>


--------------------------------------------------------------------------------
                                                           GENETIC VECTORS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                   NOTES TO FINANCIAL STATEMENTS
                                                                     (UNAUDITED)

--------------------------------------------------------------------------------

                              note  is  collateralized  with  a  first  security
                              interest to substantially all of the assets of the
                              Company.  In connection  with this notes  payable,
                              50,000  non-expiring  warrants to purchase  common
                              shares at $0.01 per share and 12,500  non-expiring
                              warrants  to purchase  common  shares at $5.50 per
                              share were issued to the lender and  consultant in
                              obtaining   the   financing,    respectively.   In
                              addition,  a $10,000  success  fee was paid to the
                              consultant  in  connection   with   obtaining  the
                              financing.

                              In April 1999, the Company borrowed  $100,000 from
                              a  private  investor.  The  note is due  upon  the
                              earlier  of one year or the  closing  of a private
                              placement of securities  with gross  proceeds from
                              the  Company  of  $2 million.   The  note  accrues
                              interest at 12% per year. Accrued interest is paid
                              quarterly, commencing on June 1, 1999. The note is
                              secured by substantially all the Company's assets.
                              The private investor received warrants to purchase
                              25,000 shares of Common Stock from the Company.


                                       47
<PAGE>


ITEM 8.           CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE.
--------------------------------------------------------------------------------

         None.

                                    PART III

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

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The Company's present directors and executive officers are as follows:

Name                              Age      Position
----                              ---      --------
Mead M. McCabe, Sr., Ph.D.        61       Chairman of the Board of Directors
Mead M. McCabe, Jr.               33       President and Secretary; Director
Mark E. Burroughs                 42       Director
Jack W. Fell, Ph.D.               66       Director
Michael C. Foley                  55       Director


         MEAD M.  MCCABE,  SR.,  PH.D.  is the  founder of the  Company  and the
inventor of the EpiDNA  technology.  Dr.  McCabe is the Chairman of the Board of
Directors of the Company.  He holds a B.S. in Zoology  from  Pennsylvania  State
University and a Ph.D. in Biology from the  University of Miami.  Since 1972, he
has been on the  faculty of the  University  of Miami  School of  Medicine,  and
currently is on the faculty of the Department of  Microbiology  and  Immunology.
From  November  1995 to July 1996 he served as a consultant  in  chromatographic
process development for Viragen,  Inc. Dr. McCabe's research interests center on
the molecular  mechanisms of microbial diseases and he has taught  undergraduate
courses in  molecular  pathogenesis.  Dr.  McCabe  served four years on the Oral
Biology and Medicine  Study Section at the National  Institute of Health and has
consulted  for the NIH on  numerous  other  occasions  since  1976.  He has been
awarded NIH research  grants,  including a recent  S.B.I.R.  Phase I grant.  Dr.
McCabe has been a director of the Company since its inception. Dr. McCabe is the
father of Mead M. McCabe, Jr. and the brother-in-law of Mr. Foley.

         MEAD M. MCCABE,  JR. is the  President and Secretary of the Company and
is responsible for the Company's corporate development, sales and marketing. Mr.
McCabe serves as the Company's  interim Chief  Financial  Officer and as such is
responsible for the Company's financial and accounting matters. Mr. McCabe has a
B.S. in  International  Business from Auburn  University  and an M.B.A.  in both
Finance and  International  Business from the  University  of Miami.  Mr. McCabe
joined  Genetic  Vectors in  September  1993.  Prior to that,  Mr.  McCabe was a
financial  consultant with Merrill Lynch for two years. Mr. McCabe is the son of
Dr.  McCabe and the nephew of Mr.  Foley.  Mr.  McCabe  became a director of the
Company on October 16, 1993.

         MARK E. BURROUGHS has served as a director of the Company since March
1995.  He is  currently a principal  of  Burroughs  Properties,  L.L.C.,  a full
service real estate development,  brokerage and asset management concern. He has


                                       48
<PAGE>


been   the   Managing    Partner/Broker-In-Charge    of   Diversified   Holdings
International,  Inc.,  an  investment  and  venture  capital  firm with  primary
holdings in real  estate,  management  consulting,  computer  software  and wine
making since 1984.  From 1988 to 1991,  Mr.  Burroughs also  represented  Stiles
Corporation/Tribune  Company  Joint  Venture  as  Owner's  Representative/Senior
Development  Manager,  managing the  development of the New River Center in Fort
Lauderdale,  Florida.  He also  served from 1980 to 1983 as Vice  President  and
Project  Manager of Cheezem  Development  Corp.,  a  publicly  held real  estate
development and asset management company.

         JACK W. FELL,  PH.D.  is currently a professor of  Microbiology  at the
University of Miami's  Rosenstiel  School of Marine and Atmospheric  Science and
has served in that  capacity  since 1977.  Dr.  Fell has a B.S. in Biology  from
Northwestern  University,  an M.S.  in Marine  Biology  from the  University  of
Miami's Institute of Marine Science, a Ph.D. in Microbiology from the University
of  Miami's   School  of  Medicine  and  Institute  of  Marine   Science  and  a
post-doctorate  in Microbiology  from the University of California,  Davis.  Dr.
Fell became a director of the Company on February 7, 1997.

         MICHAEL C. FOLEY is currently a Senior Vice  President  and Director of
Janney  Montgomery  Scott,  Inc., an investment  banking firm, where he has been
employed since 1994.  Prior to these  positions he served as President and Chief
Executive Officer of Foley,  Mufson Howe & Company,  an investment banking firm,
from 1992 to 1994.  Mr.  Foley  has  worked in the  security  industry  for over
twenty-five years. He is past Chairman of the Securities Industry  Association's
Mid-Atlantic  Division and past President of the Bond Club of Philadelphia.  Mr.
Foley is a graduate of Villanova  University  and  received a Masters  Degree in
Business  Administration  from the University of Pittsburgh.  Mr. Foley became a
director of the Company on January 12, 1998. Mr. Foley is the  brother-in-law of
Dr. McCabe and the uncle of Mr. McCabe.

         RESIGNATIONS  OF DIRECTORS.  Allyn L. Golub and James A. Joyce resigned
from the  Company's  Board of Directors on December 4, 1998,  and March 5, 1999,
respectively.  The  Company  has not  filled the two  vacancies  on the Board of
Directors caused by the registrations of Dr. Golub and Mr. Joyce.

         ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS.

         The Company's  executive  officers are elected annually by the Board of
Directors and serve at the  discretion of the Board of Directors.  The Company's
directors are elected by the  shareholders  of the Company and hold office until
the first annual meeting of shareholders following their election or appointment
and until their successors have been duly elected and qualified.

         Pursuant to an agreement  with the  underwriter  which managed its IPO,
the Company has agreed that this  underwriter  may  designate  one member of the
Board of  Directors.  The  underwriter  had  designated  James  A.  Joyce as its
designee to the Board of Directors  until his  resignation on March 5, 1999. The
underwriter has not designated a successor. The underwriter's designee's service
on the Board of  Directors  will be subject to the  approval of the holders of a
majority of the outstanding shares of the Company's Common Stock.


                                       49
<PAGE>


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         The Company is not aware of any  failure to comply  with the  ownership
reporting  requirements  of  Section  16(a)  promulgated  under  the  Securities
Exchange Act of 1934, as amended,  during 1998 by any of its executive officers,
directors or owners of more than ten percent of the outstanding shares of Common
Stock.

ITEM 10.          EXECUTIVE COMPENSATION.
-----------------------------------------

COMPENSATION OF DIRECTORS

         Non-employee  directors  receive  a fee  of  $500  for  each  Board  of
Directors meeting attended, plus travel expenses.

         The Company's 1996 Incentive Plan (the "Incentive  Plan") provides that
directors  who are not  employees  of the Company are  automatically  granted an
option to purchase 5,000 shares of the Company's Common Stock in connection with
their  appointment  to the Board of Directors.  Such options will vest after one
year of service on the Board of Directors.  The options granted to the Company's
non-employee  directors  (Mr.  Burroughs and Dr. Fell) have an exercise price of
$12.00 per share (120% of the offering price in the Company's  IPO).  Options to
purchase  5,000  shares of Common  Stock were  granted to Mr.  Michael  Foley on
January  12,  1998 (the date he joined the Board of  Directors)  at an  exercise
price of $7.75.  Options  granted in the  future  will be priced at no less than
100% of the Common  Stock's fair market value on the date of the grant.  Options
granted to non-employee  directors will be non-statutory options and will become
exercisable  after one year of service on the Board and will be exercisable  for
ten years from the date of the grant,  except that  options  exercisable  at the
time of a director's death may be exercised for twelve months thereafter.  Under
the  terms  of the  Incentive  Plan,  neither  the  Board of  Directors  nor any
committee of the Board of  Directors  will have any  discretion  with respect to
options granted to directors.

EXECUTIVE COMPENSATION

         The following table shows all the cash compensation paid by the Company
as well as certain other  compensation  paid or accrued,  during the years ended
December 31, 1998, 1997, and 1996 to Mead M. McCabe, Sr., Ph.D., Chairman of the
Company.  No restricted stock awards,  long-term incentive plan payouts or other
types of compensation other than the compensation  identified in the chart below
were paid to Dr. McCabe during years 1998,  1997,  and 1996. No other  executive
officer of the Company  earned a total annual  salary and bonus for any of these
years in excess of  $100,000.  The  summary  compensation  table  which  follows
includes all payments to Dr. McCabe for years 1998, 1997, and 1996.


                                       50
<PAGE>


<TABLE>
<CAPTION>

                                  ANNUAL COMPENSATION              LONG TERM COMPENSATION
                                  -------------------              ----------------------
                                                                            AWARDS              PAYOUTS
                                                                            ------              -------

                                                                                SECURITIES
                                                                   RESTRICTED   UNDERLYING
                                                    OTHER ANNUAL      STOCK       OPTIONS/       LTIP         ALL OTHER
NAME AND PRINCIPAL             SALARY     BONUS     COMPENSATION    AWARD(S)        SARS       PAYOUTS ($)   COMPENSATION
POSITION                YEAR      ($)       ($)         ($)            ($)          (#)                          ($)
---------------------- ------- ---------- -------- --------------- ------------ ------------- ------------ ----------------
<S>                     <C>    <C>          <C>         <C>            <C>      <C>               <C>            <C>
Mead M. McCabe, Sr.,    1998   $125,000     -0-         -0-            -0-          -0-           -0-            -0-
Ph.D., Chairman of
the Board of
Directors

                        1997   $125,000     -0-         -0-            -0-      100,000(1)        -0-            -0-

                        1996   $125,000     -0-         -0-            -0-          -0-           -0-            -0-
</TABLE>
-----------------


(1) These options were granted on August 15, 1996, and have an exercise price of
$12.00 per  share.  These  options  vest in equal  increments  over a three year
period.  All of these grants are for options to purchase  Common Stock. No SAR's
were granted.


                                       51
<PAGE>


                        AGGREGATED OPTIONS/SAR EXERCISES
                             IN LAST FISCAL YEAR AND
                      FISCAL YEAR END OPTIONS/SAR VALUES(1)

<TABLE>
<CAPTION>

                                                      Number of Securities       Value of Unexercised
                          Shares                      Underlying Unexercised       In-the-Money
                       Acquired on        Value       Options/SAR's at Fiscal    Options/SAR's at
               Name      Exercise     Realized ($)            Year End            Fiscal Year End
------------------------------------------------------------------------------------------------------
<S>                        <C>            <C>         <C>             <C>                 <C>
Mead M. McCabe, Sr.        -0-            -0-         Exercisable:    66,667              -0-
                                                      Unexercisable:  33,333
</TABLE>
-----------------

(1) These grants represent  options to purchase Common Stock. No SAR's have been
    granted.
(2) None of these  options  were  in-the-money  as of December 31, 1998.


Employment Agreements

         Effective August 15, 1996, the Company entered into written  employment
agreements (the "Employment  Agreements")  with Dr. McCabe and Mr. McCabe for an
initial three year period.  Both individuals  devote  substantially all of their
time to the business of the Company.  Dr.  McCabe's  base salary is $125,000 per
year and Mr.  McCabe's  base  salary is $75,000  per year.  Pursuant  to a Stock
Option Addendum to Dr. McCabe and Mr. McCabe's Employment Agreements, Dr. McCabe
and Mr.  McCabe  were  granted  options to purchase  100,000 and 75,000  shares,
respectively,  of the Common  Stock at $12.00  per share  (120% of the per share
public offering price in the Company's initial public  offering).  These options
vest over a three year period,  expire ten years after the date of the grant and
are granted  under and are subject to the terms and  conditions of the Incentive
Plan and Stock Option  Addendum.  The  provisions  of the Stock Option  Addendum
shall control in the event of the  termination  of either of these  individuals'
employment with the Company.  The Employment  Agreements provide that during the
employee's period of employment and in the event of a termination for cause, for
two years after  termination,  the employee will not participate in any business
that is  competitive  with that of the Company in any location where the Company
is doing business as of the date of  termination  of the employee's  employment.
This non-competition covenant will not apply in the event of Dr. McCabe's or Mr.
McCabe's resignation.

Incentive Plan

         Overview of the Incentive Plan

         Incentive compensation for non-employee directors, executives and other
key employees of the Company will be provided  under the Genetic  Vectors,  Inc.
1996  Incentive  Plan.  The purpose of the Incentive Plan is to (a) increase the
proprietary and vested interest of non-employee  directors of the Company in the
growth and  performance  of the Company,  (b) assist in attracting and retaining
highly  competent  employees,  (c) provide an incentive for motivating  selected
officers and other key employees of the Company, (d) achieve long-term corporate
objectives and (e) enable cash incentive awards to qualify as  performance-based
for  purposes  of the tax  deduction  limitations  under  Section  162(m) of the
Internal Revenue Code of 1986, as amended.


                                       52
<PAGE>


         The  Incentive  Plan is  administered  by the Board of Directors of the
Company or such  committees,  officers  and/or  employees  of the Company as the
Board of Directors may so designate.  Eligible participants include non-employee
directors  and such  officers and other key employees of the Company as the plan
administrator  may designate from time to time. The Incentive Plan will continue
in  effect  until  terminated  by its  terms  or,  if  earlier,  by the Board of
Directors.

         The Incentive Plan  authorizes the plan  administrator  to grant any or
all of the following types of awards: (1) stock options, including non-qualified
stock options and incentive stock options,  (2) stock  appreciation  rights, (3)
restricted shares of Common Stock, (4) performance awards, (5) other stock-based
awards, and (6) short-term cash incentive awards.

         Administration

         The Incentive Plan is  administered by a plan  administrator,  which is
currently  the  Compensation  Committee  of the  Board  of  Directors.  The plan
administrator has been granted exclusive and final authority under the Incentive
Plan with  respect  to all  determinations,  interpretations  and other  actions
affecting the Incentive Plan and its participants.

         Shares Subject to the Incentive Plan

         Three hundred  thousand shares of the Company's  Common Stock have been
initially  authorized to be issued under the  Incentive  Plan.  Such  authorized
shares will be  appropriately  adjusted to reflect  adjustments  (if any) to the
Company's capital structure.

Indemnification of Officers and Directors


         Pursuant to authority  conferred by Florida law, the Company's  By-laws
provide that the Company's directors,  officers, and employees be indemnified to
the fullest  extent  permitted by Florida law.  Insofar as  indemnification  for
liabilities  arising under the Securities Act may be permitted for directors and
officers and  controlling  persons  pursuant to the  foregoing  provisions,  the
Company has been  advised  that in the opinion of the  Securities  and  Exchange
Commission  such  indemnification  is against  public policy as expressed in the
Securities Act and is, therefore, unenforceable.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
--------------------------------------------------------------------------------

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

         The following table sets forth, as of April 25, 1999, information  with
respect to the beneficial ownership of the Company's Common Stock by (i) persons
known  by the  Company  to  beneficially  own  more  than  five  percent  of the
outstanding shares of the Company's Common Stock, (ii) each director, (iii) each
executive officer and (iv) all directors and executive officers as a group.


                                       53
<PAGE>


                                                      COMMON STOCK
                                                  BENEFICIALLY OWNED (1)
                                                  ----------------------
NAME/ADDRESS                               NUMBER               PERCENT
------------                               ------               -------

Mead M. McCabe, Sr. And..............      216,500(2)            9.2%(2)
Marigrace McCabe (jointly)
12901 SW 63rd Ct.
Miami, FL 33156

Mead M. McCabe, Sr. .................        1,000(2)            0.04%(2)
12901 SW 63rd Ct.
Miami, FL 33156

Mead M. McCabe, Jr...................      151,960(2)            6.5%(2)
5201 N.W. 77th Avenue
Suite 100
Miami, Florida 33133

Nyer Medical Group                         870,215(2),(3)       37.0%(2),(3)
1292 Hammond St.
Bangor, ME 04401

James A. Joyce.......................       65,500(2,(7)         2.8%(2),(7)
7825 Bay Avenue, Suite 200
La Jolla, California  92037

Jack W. Fell, Jr., Ph.D..............        5,000(1),(6)        0.2%(1),(6)
University of Miami-RSMAS
4600 Rickenbacker Causeway
Key Biscayne, Florida 33149

Allyn L. Golub, Ph.D.................        5,000(1),(6),(7)    0.2%(1),(6),(7)
10320 USA Today Way
Miramar, Florida  33025

Mark E. Burroughs....................        5,000(1),(6)        0.2%(1),(6)
4523-C Edwards Mills Road
Raleigh, North Carolina 27612

All directors and executive officers
as a group(4)(5)(6)..................      449,960              19.1%

---------------------------

(1)  Applicable  percentage of ownership is based on 2,349,843  shares of Common
     Stock outstanding as of April 25, 1999 together with applicable options for
     each shareholder. Beneficial ownership is determined in accordance with the
     rules of the Commission and generally  includes voting or investment  power
     with respect to securities.  Shares of Common Stock subject to options that
     are currently  exercisable or exercisable  within 60 days of April 25, 1999
     are deemed to be beneficially  owned by the person holding such options for
     the purpose of computing the  percentage  of ownership of such person,  but
     are not treated as outstanding  for the purpose of computing the percentage
     ownership of any other  person.  The Common  Stock is the only  outstanding
     class of equity securities of the Company.


                                       54
<PAGE>


(2)  Pursuant to a letter agreement dated March 25, 1996, Nyer Medical agreed to
     vote the shares of Common Stock held by it to elect one member of the Board
     of Directors  designated by Nyer Medical and the  remaining  members of the
     Board of Directors as designated by Dr. McCabe, Mrs. McCabe and Mr. McCabe.
     If, pursuant to this agreement,  the beneficial ownership of Nyer Medical's
     Common Stock is  attributed to Dr. McCabe and Mrs.  McCabe  (jointly),  Dr.
     McCabe  (individually) and Mr. McCabe,  they would own 1,086,715,  871,215,
     and  1,022,175  shares  of  Common  Stock,  respectively.  Their  ownership
     percentages would be 46.2%, 37.1% and 43.5%, respectively.

(3)  Includes Common Stock owned by Nyle  International  Corp.  (115,447 shares)
     and Mr.  Samuel Nyer (4,228  shares),  which are deemed to be  beneficially
     owned by Nyer Medical.  Mr. Samuel Nyer is the only natural  person who may
     be deemed to be the beneficial owner of the shares of the Common Stock held
     by Nyer Medical.

(4)  Six (6) persons, including Mr. Joyce and Dr. Golub.

(5)  Represents  197,167  shares  which may be  acquired  upon the  exercise  of
     presently exercisable stock options.

(6)  Represents  shares  which may be acquired  upon the  exercise of  presently
     exercisable stock options.

(7)  Mr. Golub and Mr. Joyce  resigned from the Company's  Board of Directors on
     December 4, 1998 and March 5, 1999, respectively.

         Nyer Medical Group, Inc., a Florida corporation ("Nyer Medical"),  is a
publicly  held holding  company with various  interests in the medical  products
business.  In addition to its investment in the Company,  its interests  include
distribution   of  medical  and   rehabilitation   supplies  and  equipment  and
distribution of fire, police and rescue supplies and equipment, all primarily in
the New England area.  Nyer  Medical's  Common Stock is listed and traded on the
NASDAQ SmallCap Market under the symbol "NYER."

         Nyer  Medical has entered into an  agreement  (the "Voting  Agreement")
dated March 25, 1996 with Mead M. McCabe,  Sr.,  Marigrace M. McCabe and Mead M.
McCabe, Jr., (collectively,  the "McCabes"). The Voting Agreement provides among
other things that, for a period of five years, Nyer Medical will vote its shares
of Common  Stock to elect (a) one  member of the  Company's  Board of  Directors
designated  by Nyer  Medical,  and (b) all  other  Board of  Directors  nominees
designated by the McCabes.  The Voting  Agreement will not affect Nyer Medical's
rights to vote its shares of Common Stock in  connection  with other  matters on
which the Company's shareholders vote.

         Dr.  McCabe is the founder of the Company and  currently  serves as its
Chairman.  Marigrace McCabe is the wife of Dr. McCabe.  Mead McCabe,  Jr. is the
son of Dr. McCabe.

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

PAYMENT FOR REAL ESTATE CONSULTING SERVICES

         The Company paid approximately  $109,000 to Mark E. Burroughs, a member
of the Board of Directors,  in 1997. This payment was made to Mr.  Burroughs for
his  services  in  connection  with  the  identification  of a  facility,  lease
negotiations and design,  engineering and construction  management  services for
the Company's new facility.

CONSULTING AGREEMENT

         On June 19, 1996 the Company  entered into a consulting  agreement with
Mr. James A. Joyce,  who became a director of the Company on August 13, 1996. He
was granted options to purchase a total of 75,000 shares of the Company's Common
Stock at an  exercise  price of $5.00  per  share,  all of which  are  currently
exercisable.  These  options were not issued  through the Incentive  Plan.  This
agreement terminated in December 1996. Mr. Joyce continued to provide consulting


                                       55
<PAGE>


services  through June 1997. Mr. Joyce's  option  exercise  rights will continue
until the fourth anniversary of the execution of such consulting agreement.

ROLE OF MEAD M. MCCABE, SR.

         Dr.  McCabe has been  involved in the  Company's  operations  since its
inception but he did not serve as a traditional  "promoter" of the Company. As a
scientist,  his role  since the  Company's  inception  has been  focused  on the
technical aspects of the Technology rather than the traditional  promoter's role
of attempting  to build the Company and promote its success.  Dr. McCabe was the
developer of the nucleic acid  labeling and  detection  Technology  which is the
basis for the  Company's  products.  He was the sole  owner of ProVec,  Inc.,  a
company which was the original licensee of the Technology and which subsequently
assigned  its license  rights to the  Company.  Though the Company was formed in
1991, he did not receive any shares of its Common Stock until 1996. At that time
he received 20% of the Company's  Common Stock in exchange for all of the shares
of the Class B Preferred  Stock of Nyer  Medical  owned by him and his wife.  In
1996,  he received an  additional  11,322 shares of Common Stock in exchange for
the conversion of certain  indebtedness owed to him by the Company in connection
with accrued payroll and expenses.

OBLIGATIONS UNDER INVESTORS FINDERS AGREEMENT

         In June 1994,  the Company and Nyer  Medical  entered into an Investors
Finders  Agreement with an investment firm pursuant to which the investment firm
assisted the Company in obtaining approximately $135,000 in funding through Nyer
Medical. The Agreement requires the Company to pay the investment firm 5% of its
gross sales revenues until five years from the date of the Agreement have passed
or the cumulative payments total $50,000,  whichever comes first. This agreement
has been assigned to Shamrock  Partners  International  Inc., a firm  affiliated
with the underwriter who managed the Offering.

TRANSACTIONS WITH OFFICERS AND SHAREHOLDERS

         The  Company  believes  that all  transactions  entered  into  with its
officers and  shareholders  have been  effected on terms and  conditions no less
favorable to the Company than those available from  unaffiliated  third parties.
The  Company  anticipates  that any  future  transactions  with such  affiliated
parties will be made on terms and  conditions  no less  favorable to the Company
than those available from unaffiliated third parties.

ITEM 13.          EXHIBITS, LIST AND REPORTS ON FORM 8-K.
---------------------------------------------------------

(A)      EXHIBITS.

<TABLE>
<CAPTION>

 Exhibit
   No.      Description                                   Location                                         Page
 -------    -----------                                    -------                                         ----
  <S>       <C>                                           <C>                                              <C>
   3.1      Articles of Incorporation of the Company,     Incorporated by reference to Exhibit No.
            as amended                                    3.1 to Registrant's Registration Statement
                                                          (the "Registration Statement") on Form
                                                          SB-2 (Registration Number 333-5530-A).

   3.2      By-laws of the Company                        Incorporated by reference to Exhibit No.
                                                          3.2 to the Registration Statement.


                                                                 56
<PAGE>


   4.1      Form of Common Stock certificate              Incorporated by reference to Exhibit No.
                                                          4.1 to the Registration Statement.

   4.2      Form of Underwriters' Warrant                 Incorporated by reference to Exhibit No.
                                                          4.2 to the Registration Statement.

   4.3      Form of 1996 Incentive Plan                   Incorporated by reference to Exhibit No.
                                                          4.3 to the Registration Statement.

   10.1     License Agreement dated September 7, 1990     Incorporated by reference to Exhibit No.
            between the University of Miami and its       10.1 to the Registration Statement.
            School of Medicine and ProVec, Inc.

   10.2     Assignment of License Agreement dated         Incorporated by reference to Exhibit No.
            January 20, 1992 between ProVec, Inc. and     10.2 to the Registration Statement.
            EpiDNA, Inc.

   10.3     Agreement between University of Miami and     Incorporated by reference to Exhibit No.
            its School of Medicine and the Company        10.3 to the Registration Statement.
            dated August 21, 1996

   10.4     Employment Agreement dated August 15, 1996    Incorporated by reference to Exhibit No.
            between Mead M. McCabe, Sr. and the Company   10.4 to the Registration Statement.

   10.5     Stock Option  Addendum to  Employment         Incorporated  by reference to
            Agreement  dated  August 15, 1996  between    Exhibit No.  10.5 to the Registration Statement.
            Mead M. McCabe, Sr. And the Company

   10.6     Employment Agreement dated August 15, 1996    Incorporated by reference to Exhibit No.
            between Mead M. McCabe, Jr. and the Company   10.6 to the Registration Statement.

   10.7     Stock Option  Addendum to  Employment         Incorporated  by reference to
            Agreement  dated  August 15, 1996  between    Exhibit No. 10.7 to the Registration Statement.
            Mead M. McCabe, Jr. and the Company

   10.8     Consulting Agreement dated June 19, 1996      Incorporated by reference to Exhibit No.
            between James A. Joyce and the Company        10.10 to the Registration Statement.

   10.9     Letter Agreement dated December 16, 1994      Incorporated by reference to Exhibit No.
            among Nyer Medical Group, Inc., the           10.11 to the Registration Statement.
            Company, Mead M. McCabe, Sr. And Mead M.
            McCabe, Jr.

  10.10     Investors  Finders  Agreement  dated          Incorporated  by  reference to
            June 9, 1994 among Nyer  Medical  Group,      Exhibit  No.  10.12 to the Registration Statement.
            Inc., and the Company and Gulf American
            Trading Company

  10.11     Industrial Real Estate Lease dated June 12,   Incorporated  by reference  to
            1997 among the Company and Jetex Group, Inc.  Exhibit No. 10.13 to the Company's
                                                          Quarterly Report on Form 10-QSB for the
                                                          Quarter ended June 30, 1997

  10.12     Letter from University of Miami dated April   Incorporated by reference to
            8, 1998                                       Exhibit No. 10.12 to the Company's Annual
                                                          Report on Form 10-KSB for the Year Ended
                                                          December 31, 1997

  10.13     Promissory Note dated as of November 2,       Provided herewith
            1998 in the Original Principal Amount of
            $50,000 given by the Company to Ms.
            Patricia A. Gionone


                                                                 57
<PAGE>


  10.14     Common Stock Purchase Warrant No. W-2 dated   Provided herewith
            as of November 2, 1998 granted by the
            Company to Ms. Patricia A. Gionone

  10.15     Promissory  Note dated as of November 2,      Provided  herewith
            1998 in the Original  Principal  Amount of
            $100,000 given by the Company to Jerome P.
            Seiden Irrevocable Trust Dated April 22,
            1998

  10.16     Common Stock Purchase Warrant No. W-1 dated   Provided herewith
            as of November 2, 1998 granted by the
            Company to Jerome P. Seiden Irrevocable
            Trust Dated April 22, 1998

  10.17     Common Stock Purchase Warrant No. W-5 dated   Provided herewith
            as of September  3, 1998  granted by the 
            Company to  Sterling  Technology Partners,
            Ltd.

  10.18     Common Stock Purchase Warrant No. W-4 dated   Provided herewith
            as of January  19,  1999  granted by the 
            Company to Sterling Technology Partners,
            Ltd.

  10.19     Common Stock Purchase Warrant No. W-7 dated   Provided herewith
            as of March  9,  1999  granted  by  the
            Company  to  Sterling  Technology Partners,
            Ltd.

  10.20     Common Stock Purchase Warrant No. W-3 dated   Provided herewith
            as of January 19, 1999 granted by the
            Company to Capital Research, Ltd.

  10.21     Promissory  Note dated as of January 19,      Provided herewith
            1999 in the Original  Principal  Amount
            of $163,500  given by the Company to
            Capital Research, Ltd.

  10.22     Pledge and Security  Agreement dated as of    Provided herewith
            January 19, 1999 between the Company and
            Capital Research, Ltd.

  10.23     Registration  Rights Agreement dated as of    Provided herewith
            January 19, 1999 between the Company and
            Capital Research, Ltd. 

  10.24     Promissory  Note dated as of March 9, 1999    Provided herewith
            in the Original  Principal  Amount  of 
            $125,000  given by the  Company  to
            Capital Research, Ltd.

  10.25     Common Stock Purchase Warrant No. W-6 dated   Provided herewith
            as of March 9, 1999 granted by the Company
            to Capital Research, Ltd.

  10.26     Registration Rights Agreement dated as of     Provided herewith
            March 9, 1999 between the Company and
            Capital Research, Ltd.

  11.       Statement re:  computation of earnings        Not applicable

  18.       Letter on change in accounting principles     Not applicable

  21.       Subsidiaries of the Registrant                Provided herewith


                                       58
<PAGE>


  22.       Published report regarding matters            Not applicable
            submitted to Vote

  24.       Power of Attorney                             Not applicable

  27.       Financial Data Schedule                       Provided herewith
</TABLE>

(b)      REPORTS ON FORM 8-K.

         On May 21,  1998,  the  Company  filed a Form  8-K with  respect  to an
agreement in principle to acquire all of the  outstanding  capital  stock of Gen
Trak, Inc., for 350,000  newly-issued  shares of Common Stock of the Company. On
August 7, 1998, the Company announced that the acquisition of Gen Trak, Inc. had
been terminated.




                                       59
<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.


                                   GENETIC VECTORS, INC.


                                   By:    /s/ Mead M. McCabe, Jr.
                                          -----------------------
                                          Mead M. McCabe, Jr.
                                          President

                                          Date:    April 27, 1999

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.


    DATE                   SIGNATURE                          TITLE
    ----                   ---------                          -----
April 27,1999       /s/ Mead M. McCabe, Sr., Ph.D.    Chairman of the Board of 
                    ---------------------------       Directors (Principal 
                    Mead M. McCabe, Sr., Ph.D.        Executive Officer)

April 27, 1999      /s/ Mead M. McCabe, Jr.           President; Director 
                    ---------------------------       (Principal Financial 
                    Mead M. McCabe, Jr.               Officer; Principal
                                                      Accounting Officer)

April 27, 1999      /s/ Mark E. Burroughs             Director
                    ---------------------------        
                    Mark E. Burroughs

April 27, 1999      /s/ Jack W. Fell, Ph.D            Director
                    ---------------------------        
                    Jack W. Fell, Ph.D.

April 27, 1999      /s/ Michael C. Foley              Director
                    ----------------------------       
                    Michael C. Foley




                                       60
<PAGE>


                                  EXHIBIT INDEX
                                  -------------
<TABLE>
<CAPTION>

 Exhibit
   No.
 -------
            Description                                   Location                                         Page
            -----------                                   --------                                         ----
  <S>       <C>                                           <C>                                              <C>
   3.1      Articles of Incorporation of the Company,     Incorporated by reference to Exhibit No.
            as amended                                    3.1 to Registrant's Registration Statement
                                                          (the "Registration Statement") on Form
                                                          SB-2 (Registration Number 333-5530-A).

   3.2      By-laws of the Company                        Incorporated by reference to Exhibit No.
                                                          3.2 to the Registration Statement.

   4.1      Form of Common Stock certificate              Incorporated by reference to Exhibit No.
                                                          4.1 to the Registration Statement.

   4.2      Form of Underwriters' Warrant                 Incorporated by reference to Exhibit No.
                                                          4.2 to the Registration Statement.

   4.3      Form of 1996 Incentive Plan                   Incorporated by reference to Exhibit No.
                                                          4.3 to the Registration Statement.

   10.1     License Agreement dated September 7, 1990     Incorporated by reference to Exhibit No.
            between the University of Miami and its       10.1 to the Registration Statement.
            School of Medicine and ProVec, Inc.

   10.2     Assignment of License Agreement dated         Incorporated by reference to Exhibit No.
            January 20, 1992 between ProVec, Inc. and     10.2 to the Registration Statement.
            EpiDNA, Inc.

   10.3     Agreement between University of Miami and     Incorporated by reference to Exhibit No.
            its School of Medicine and the Company        10.3 to the Registration Statement.
            dated August 21, 1996

   10.4     Employment Agreement dated August 15, 1996    Incorporated by reference to Exhibit No.
            between Mead M. McCabe, Sr. and the Company   10.4 to the Registration Statement.

   10.5     Stock Option  Addendum to  Employment         Incorporated  by reference to
            Agreement  dated  August 15, 1996  between    Exhibit No.  10.5 to the Registration Statement.
            Mead M. McCabe, Sr. And the Company

   10.6     Employment Agreement dated August 15, 1996    Incorporated by reference to Exhibit No.
            between Mead M. McCabe, Jr. and the Company   10.6 to the Registration Statement.

   10.7     Stock Option  Addendum to  Employment         Incorporated  by reference to
            Agreement  dated  August 15, 1996  between    Exhibit No.  10.7 to the Registration Statement.
            Mead M. McCabe, Jr. and the Company

   10.8     Consulting Agreement dated June 19, 1996      Incorporated by reference to Exhibit No.
            between James A. Joyce and the Company        10.10 to the Registration Statement.

   10.9     Letter Agreement dated December 16, 1994      Incorporated by reference to Exhibit No.
            among Nyer Medical Group, Inc., the           10.11 to the Registration Statement.
            Company, Mead M. McCabe, Sr. And Mead M.
            McCabe, Jr.


                                                                 61
<PAGE>


  10.10     Investors  Finders  Agreement  dated          Incorporated  by  reference to Exhibit  No.
            June 9, 1994 among Nyer  Medical  Group,      10.12 to the Registration Statement.
            Inc., and the Company and Gulf American
            Trading Company

  10.11     Industrial Real Estate Lease dated June 12,   Incorporated  by reference  to Exhibit No. 
            1997 among the Company and Jetex Group, Inc.  10.13 to the Company's
                                                          Quarterly Report on Form 10-QSB for the
                                                          Quarter ended June 30, 1997

  10.12     Letter from University of Miami dated April   Incorporated by reference to
            8, 1998                                       Exhibit No. 10.12 to the Company's Annual
                                                          Report on Form 10-KSB for the Year Ended
                                                          December 31, 1997 provided herewith

  10.13     Promissory Note dated as of November 2,       Provided herewith
            1998 in the Original Principal Amount of
            $50,000 given by the Company to Ms.
            Patricia A. Gionone

  10.14     Common Stock Purchase Warrant No. W-2 dated   Provided herewith
            as of November 2, 1998 granted by the
            Company to Ms. Patricia A. Gionone

  10.15     Promissory  Note dated as of November 2,      Provided herewith
            1998 in the Original  Principal  Amount of
            $100,000  given by the Company to
            Jerome P. Seiden Irrevocable Trust Dated
            April 22, 1998

  10.16     Common Stock Purchase Warrant No. W-1 dated   Provided herewith
            as of November 2, 1998 granted by the
            Company to Jerome P. Seiden Irrevocable
            Trust Dated April 22, 1998

  10.17     Common Stock Purchase Warrant No. W-5 dated   Provided herewith
            as of September  3, 1998  granted by the 
            Company to  Sterling  Technology
            Partners, Ltd.

  10.18     Common Stock Purchase Warrant No. W-4 dated   Provided herewith
            as of January 19, 1999 granted by the
            Company to  Sterling  Technology
            Partners, Ltd.

  10.19     Common Stock Purchase Warrant No. W-7 dated   Provided herewith
            as of March  9,  1999  granted  by  the
            Company  to  Sterling  Technology
            Partners, Ltd.

  10.20     Common Stock Purchase Warrant No. W-3 dated   Provided herewith
            as of January 19, 1999 granted by the
            Company to Capital Research, Ltd.

  10.21     Promissory  Note dated as of January 19,      Provided herewith
            1999 in the Original  Principal  Amount of
            $163,500  given by the Company to
            Capital Research, Ltd.

  10.22     Pledge and Security  Agreement dated as of    Provided herewith
            January 19, 1999 between the Company and
            Capital Research, Ltd.


                                                                 62
<PAGE>


  10.23     Registration  Rights Agreement dated as of    Provided herewith
            January 19, 1999 between the Company and
            Capital Research, Ltd.

  10.24     Promissory  Note dated as of March 9, 1999    Provided herewith
            in the Original Principal Amount of $125,000
            given by the Company to Capital Research, Ltd.

  10.25     Common Stock Purchase Warrant No. W-6 dated   Provided herewith
            as of March 9, 1999 granted by the Company
            to Capital Research, Ltd.

  10.26     Registration Rights Agreement dated as of     Provided herewith
            March 9, 1999 between the Company and
            Capital Research, Ltd. 

   11.      Statement re:  computation of earnings        Not applicable

   18.      Letter on change in accounting principles     Not applicable

   21.      Subsidiaries of the Registrant                Provided herewith

   22.      Published report regarding matters            Not applicable
            submitted to Vote

   24.      Power of Attorney                             Not applicable

   27.      Financial Data Schedule                       Provided herewith
</TABLE>


                                                                           63