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, 1996

       _
      |_|     Transition report 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 or          (I.R.S. Employer
Organization)                                              Identification No.)

2000 South Dixie Highway, Suite 100, Miami, Florida       33133
---------------------------------------------------       -----
(Address of Principal Executive Offices)                  (Zip Code)

                                 (305) 859-7800
                                 --------------
                (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 |X| No |_|

         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. |_|

         The issuer did not generate any revenues  during its most recent fiscal
year.

         The  aggregate  market  value of the  Company's  voting  stock  held by
non-affiliates  as of March 20, 1997 was  approximately  $8,488,846 based on the
average closing bid and asked prices of such stock on that date as quoted on the
OTC Bulletin Board.  There were 2,339,634 shares of Common Stock  outstanding as
of March 28, 1997.

         Documents Incorporated by Reference: See Item 13

         This Form 10-KSB consists of 47 pages. The Exhibit Index begins on page
45.


<PAGE>


                                     PART I


Item 1.       Description of Business.
-------------------------------------

General Information
-------------------

         Genetic  Vectors,  Inc.  (the  "Company"  or  "Genetic  Vectors")  is a
biotechnology  company  which  intends  to  specialize  in  the  development  of
diagnostic  and  quality  control  tools  for the  biopharmaceutical,  food  and
fermented  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 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,
EpiDNA. A second proposed product line,  EasyID,  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.  Genetic  Vectors
anticipates  that it will initiate an EpiDNA product launch in its chosen market
areas  during  the  fourth  quarter of this year and  intends  to  continue  the
development of the EasyID technology.

         The  initial   target  market  for  the  EpiDNA  product  line  is  the
biopharmaceutical  industry, which depends on living organisms and cells to make
its primary  products.  Stringent  United  States  Food and Drug  Administration
("FDA")  guidelines  recommend that DNA contamination of  biopharmaceuticals  be
monitored  using assays  capable of measuring 10 picograms of DNA in an injected
dose.  Biopharmaceutical  companies  are  required to develop  measures  for the
reduction  of DNA levels in these drugs to assure  that DNA has been  reduced to
less than 100  picograms  per injected  dose and to test to confirm that DNA has
been reduced to  acceptable  levels.  Genetic  Vectors has developed DNA assays,
under the product family EpiDNA, that it believes will provide biopharmaceutical
companies  with  tools  to  measure  DNA  in the  process  stream  and  validate
acceptable levels of DNA in the final product.

         Approximately 1,300 companies comprise the United States  biotechnology
industry.  Over one-half of those companies  manufacture human  therapeutics and
diagnostics. The market addressed by Genetic Vectors' EpiDNA Picogram Assay (the
"Picogram  Assay")  includes  at least 400  manufacturers  of  therapeutics  and
imaging diagnostic antibodies.  Worldwide annual sales of biotechnology products
were $9.3 billion in 1995, and are predicted to be $15 billion by 2003.  Several
biotechnology-based  drugs  currently  are on the market or approved by the FDA.

                                       2
<PAGE>

Approximately 500  biopharmaceuticals are now undergoing the regulatory approval
process,  and many of these products will reach the  marketplace in the next few
years.  As the  development  of therapeutic  and  diagnostic  biopharmaceuticals
proceeds and new products enter the regulatory process, Genetic Vectors believes
it will be able to gain entry to the quality assurance market.

EpiDNA Technology
-----------------

         DETECTION  OF  NUCLEIC  ACIDS.  The  EpiDNA  technology  is  a  broadly
applicable  method  for  labeling  and  detecting  nucleic  acids,  particularly
deoxyribonucleic acid ("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  nonradioactive  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 recent introduction of chemiluminescent detection methods for nonradioactive
probes  provides  sensitivity  equaling that of  radioactive  probes without the
risks and expenses of  radioactivity.  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.

         A monoclonal antibody is used in conjunction with the Technology in the
two EpiDNA  products,  the Picogram  Assay and the Nanogram Assay (the "Nanogram
Assay").  The antibody was made, in part, with funds under a federal  government
contract, but no federal rights survived because the patent application relating
thereto was  intentionally  abandoned by the inventors.  Control of the antibody
and the producing cell line has been transferred to the Company.

         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 will provide the basis for
nucleic acid assay kits 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

                                       3
<PAGE>

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.
This requirement creates a niche in the biotechnology industry market into which
Genetic Vectors plans to introduce the Picogram Assay kit for the measurement of
DNA in biopharmaceuticals.

         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.  There is no  requirement  for 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.

         The Company has identified certain  modifications to the Picogram Assay
that it  anticipates  will make this assay easier to use. The first two steps in
the assay  procedure  require adding two reagents (a buffer and a  DNA-modifying
reagent).  In the new protocol  only the modifying  reagents will be added.  The
Company  believes  that this  modification  will lessen the number of repetitive
steps performed in the assay, thus making it easier to use. Secondly, this assay
will be modified so that a single  incubation  temperature  will be used for all
steps.  Previously,  two  temperatures  were used,  which  required  the user to
dedicate two water-bath  incubators to the assay.  This modification will lessen
the number of  incubators  required  to perform  the  assay.  Solutions  used in
subsequent  steps will be  reformulated  to  compensate  for the changes made in
consolidating  the first two steps and the times of incubation  for each step of
the assay will be tested and, if needed,  adjusted.  The instructions for use of
the Picogram Assay will be rewritten to reflect these  modifications.  There can
be no assurance that the Company will be able to successfully  accomplish  these
proposed modifications.

         THE EPIDNA  NANOGRAM  ASSAY.  Genetic  Vectors  believes this assay has
applications  in  research  and for process  monitoring  during  development  or
manufacturing.  The typical  production  process comprises several stages,  from
cell culture through intermediate  purification to final pure biopharmaceutical.
Among the  intermediate  stages  are points at which it would be  beneficial  to
determine the  efficiency  of the  purification  procedures,  both as a means of
preventing   downstream   problems  from  contamination  and  for  devising  new
processes.  The Company  believes  that existing DNA assays are not practical to
apply at these  intermediate  stages,  either  because they are too expensive or
they  require  too  much  time to  complete.  The  Picogram  Assay  would be too
sensitive  for early and  intermediate  process  steps,  where DNA levels can be
expected to be in the nanogram or  microgram  range.  The Nanogram  Assay should
provide a rapid means  (approximately one hour) for measuring one to one hundred
nanograms of DNA in a sample.

         The  Nanogram   Assay  should  also  have   applications   in  research
laboratories.    Molecular   biologists    frequently   measure   nucleic   acid
concentrations   during  experiments.   If  DNA  levels  are  sufficient,   this
measurement  is  accurately  performed  with an  ultraviolet  spectrophotometer.
Often, the nucleic acid is too dilute to measure by this means.  Genetic Vectors

                                       4
<PAGE>

believes the Nanogram Assay should provide a precise, rapid assay suited for use
by technicians and scientists in the research laboratory.

         NUCLEIC ACID PROBE  LABELING AND  DETECTION  KITS.  DNA  technology  is
rapidly  expanding  in the life  sciences in areas that can benefit from genetic
analysis  or the  manipulation  of genetic  material.  Nucleic  acid  probes are
routinely  used in many of these  applications  to identify  specific  genes and
separate  them from all other genes.  The EpiDNA  labeling kits will provide the
components for the preparation of DNA or ribonucleic acid ("RNA") probes for the
detection of specific  nucleic acids using such methods as Southern and Northern
blots, colony  hybridization and in situ  hybridization.  The Company intends to
develop kits  specialized  for the attachment of compounds as diverse as biotin,
digoxigenin,  enzymes,  fluorescent and chemiluminescent compounds and chelators
using the labeling procedure.

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.
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  a  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
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 Technology will allow
the  development  of a series of tests that will detect yeast  strains  commonly

                                       5
<PAGE>

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    $70,873   and   $98,386   on
Company-sponsored  research and development  activities during its 1996 and 1995
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
-------------------

         Genetic  Vectors  intends to enter its various  target markets in three
phases. The Company will target the  biopharmaceutical  quality assurance market
in Phase I during 1997.  Since this market  comprises  relatively few companies,
Genetic Vectors intends to use a direct sales approach. In Phase II, the Company
intends to target the molecular  biology  research market for DNA probe labeling
and  DNA  detection.  The  Phase  II  effort  will  require  a  more  aggressive
advertising campaign and the establishment of an inside and outside sales force.
The Company considers Phase III a long-term  marketing  effort.  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.

         Phase I of the Company's  marketing  plan will target  companies in the
biopharmaceutical  industry and in the reference laboratories serving as quality
assurance testing sites for smaller  biopharmaceutical  companies. The Company's
marketing and sales  strategy will be to establish  direct contact with specific
individuals within each target company or reference laboratory.  Genetic Vectors
believes that this direct  marketing  approach will allow it to sell its initial
products without  incurring large  advertising costs or developing a sizable and
expensive sales force.  The Company intends to place  advertising in major trade
journals  such as  Science,  Biotechniques  and  BioPharm  to  inform  potential
customers of the existence and potential  benefits of the Picogram Assay and the
Nanogram  Assay.  The  Company  intends  to have  representatives  attend  major
national  and  international  industry  trade  shows to gain  direct  access  to
potential   customers   and  to  establish   overseas   distributors   to  reach
international customers. Genetic Vectors also intends to establish a presence on
the Internet,  which may be a relatively  inexpensive  means of  presenting  its
product lines to a variety of potential customers.  The Company currently has no
sales force,  and there can be no assurance that a sales force can be hired, or,
if hired,  that such sales force will be able to successfully sell the Company's
products.

         Genetic Vectors intends to begin Phase II marketing of its Nucleic Acid
Labeling and EpiDNA Nanogram Assay kits to the molecular biology research market
during 1998.  The Company  believes the target  audience in Phase II is research
workers in more than 15,000  laboratories  worldwide.  The Company believes that
this market includes potential customers who have widely differing interests and
are spread over a wide geographical  range. The Company believes that aggressive

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<PAGE>

advertising,  direct  mailings and  appearances at trade shows will be needed to
effectively reach such a market.  The Company believes that a modest sales force
and technical  assistance available by telephone and e-mail will be required for
the exploitation of this market.

         In Phase III, the Company  intends to introduce and market the products
developed by its EasyID product research and development  activities.  This is a
long-term  development  activity to formulate products that the Company believes
will have quality assurance  applications in the food and beverage industry.  In
Phase  III,  Genetic  Vectors  intends  to  develop  and  market  kits  for  the
identification of beneficial yeasts  significant in wine and beer  manufacturing
and yeasts associated with food and beverage spoilage.

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,   workmens'   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  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.  This  type of
determination is not subject to FDA approval.

Manufacturing
-------------

         Genetic  Vectors'  initial  manufacturing  will  be  conducted  in  its
research  laboratory located at the University of Miami. The Company is actively
seeking  suitable  manufacturing  and wet lab facilities in another  location to

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<PAGE>

house its manufacturing and research activities.  Initially, the Company expects
to lease approximately  10,000 square feet of space. The precise floor space may
vary,  contingent upon availability.  The floor space should be adequate for the
first eighteen  months with floor space  requirements  increasing in year two if
sales goals are met.

         Certain key components of the Company's products are currently provided
by a limited  number of  sources,  and one  component  is  provided  by a single
source.  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 EpiDNA  Picogram  Assay,  is available only
from DAKO Diagnostics, Ltd.

Strategy for Growth
-------------------

         Genetic  Vectors  intends  to  expand  its  existing  business  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.  Management  believes that such acquisitions would enable it to achieve
economies of scale,  improve gross margins and increase  revenues  and/or market
share.  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.

                                       8
<PAGE>

         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.

         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.  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.

         NUCLEIC ACID  LABELING AND DNA  DETECTION  KITS.  The market  served by
nucleic acid labeling and detection  reagents is the molecular  biology research
market. There are at least 50 companies which are primarily identified with this
market. Of these, several offer nucleic acid labeling and detection kits. In the
DNA  detection  area,  Genetic  Vectors  knows of several  vendors  that provide
reagents for detecting DNA.

         Genetic Vectors  believes that its products will lend themselves to low
cost  manufacturing  of DNA  labeling  and  detection  products on a large scale
basis,  which should provide a pricing  advantage in both of the areas described
above.  The Company also believes its Technology can be used to produce reagents
and test kits at quality  equivalent  to or better than its direct  competitors.
There can be no assurance that this large-scale  development,  pricing advantage
or quality level will occur.

Customers
---------

         Because the Company has not yet launched its first product, the Company
has no current customers.

Employees
---------

         Genetic  Vectors  currently  has five  employees,  three  of which  are
executive  officers  and  all of  which  are  full-time  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

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<PAGE>

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
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.

         On August 21,  1996,  the Company and the  University  of Miami and its
School of  Medicine  executed  an  agreement  to assign the  patents  and patent
applications  referred to herein as well as rights to develop,  manufacture  and
sell  products  under the patents and patent  applications  to the Company  (the
"Technology Assignment Agreement").  The Technology Assignment Agreement must be
approved  by the  Department  of Health and Human  Services  represented  by the
National  Institutes of Health (the "NIH"),  since the  Technology was developed
with funding from this federal agency. All necessary documents in support of the
request for  approval of the  assignment  were filed with the NIH on October 10,
1996.

                                       10
<PAGE>

         On March 26, 1997 the Company  received  notice that the NIH has denied
approval of the  Technology  Assignment  Agreement.  The Company will be able to
continue to develop,  manufacture  and sell  products  utilizing the patents and
patent applications referred to herein under the terms of the License Agreement.
The Company  believes  that the terms of the License  Agreement  will need to be
amended to comply  with  applicable  patent law  relating to  government  funded
inventions.

         Since the patents and patent applications referred to herein were made,
in part,  using  federal  funds  provided  by a  federal  agency,  the 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 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  would cause the
Company to suffer a material adverse effect on its business, financial condition
and viability if the march-in rights were exercised.  As described  herein,  the
Company has already  developed  products  based on the Technology and intends to
continue the commercialization of the Technology.

         The  University of Miami has applied for patent  protection for part of
the  Technology  in the United  States and other  countries.  The  University of
Miami, at Company expense, is currently pursuing this patent protection, and has
patent  applications  pending  in the name of the  University  of Miami  for the
Technology  in the United  States and  certain  foreign  jurisdictions.  Letters
Patent  Number  246228 has been  issued for the  Technology  in New  Zealand and
Patent  Number  671970 has been  issued for the  Technology  in  Australia.  The
University of Miami, at Company expense,  has filed a patent  application  under
the International Patent Cooperation Treaty,  followed by national stage filings
in Australia, New Zealand and the European Patent Office. There is currently one


                                     11
<PAGE>

United States patent pending, and United States Patent Number 5,593,829 has been
issued for the  Technology.  The pending United States patent  application   has
been  allowed  and is  expected  to mature into a patent in the next six to nine
months. There can be no assurance that any additional patents will be granted or
that patents granted will be maintained in any jurisdiction.

Item 2.       Description of Property.
-------------------------------------

         The  Company  currently  leases  approximately  612 square feet at 2000
South Dixie Highway,  Suite 100, Miami,  Florida 33133, which is the site of its
executive offices.  This space is leased on a month-to-month  basis. The Company
also  leases  approximately  800  square  feet at the  University  of Miami on a
month-to-month basis.

         The Company is currently  actively seeking suitable  manufacturing  and
wet lab  facilities  for use in its  manufacturing  operations  and research and
development  activities.  The Company's executive offices will also be relocated
to this site.  The Board of Directors of the Company (the "Board of  Directors")
has formed a  Facilities  Committee  which is charged with  locating  acceptable
properties.  The Company expects to lease  approximately  10,000 square feet for
this  facility,  although the actual square  footage may vary  depending on site
availability. The Company anticipates that this space should be adequate for its
needs for approximately eighteen months.

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 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  during the period  from  December  20,  1996 (the date of
initial quotation on the OTC Bulletin Board) through March 20, 1997(1):

                             Bid Price per share(2)
                             ----------------------
                                        High                           Low
                                        ----                           ---
Fourth Quarter 1996(3)                 $16.00                        $12.00

First Quarter 1997(4)                  $13.875                        $3.00

                                       12
<PAGE>

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

(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.

(3)  The Common  Stock's  initial  quotation  on the OTC  Bulletin  Board was on
     December 20, 1996.

(4)  Through March 20, 1997.

Holders of Common Stock
-----------------------

         As of March 4, 1997  there were  approximately  95 holders of record of
the Common Stock.

Dividends

         The Company has not paid any dividends on its Common Stock at any time.
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 in the foreseeable future.

Sales of Unregistered Securities
--------------------------------

         In June,  1996, the Company  consummated  the sale of 110,000 shares of
Common Stock at a price of $5.00 per share in a private  placement  transaction.
This transaction was exempt from registration  under the Securities Act of 1933,
as  amended  (the  "Securities  Act"),  pursuant  to  Regulation  D and Rule 506
promulgated thereunder, as well as Section 4(2) of the Securities Act.

         In June, 1996 the Company granted options to James A. Joyce to purchase
a total of 75,000 shares of Common Stock.  In July,  1996,  the Company  granted
options to  purchase  75,000  shares of Common  Stock to  Richard  H.  Tullis in
connection with his employment  agreement.  In August, 1996, the Company granted
options to purchase 100,000 and 75,000 shares of Common Stock to Mead M. McCabe,
Sr. and Mead M. McCabe, Jr.,  respectively,  in connection with their employment
agreements.  The Company has also  granted  options to purchase  5,000 shares of
Common Stock to Messrs.  Mark E.  Burroughs,  William J. Clifford,  Jr., Kurt R.
Gehlsen,  Jack W. Fell and Allyn L. Golub,  its  nonemployee  directors.  All of
these  transactions  were  exempt from  registration  under the  Securities  Act
pursuant    to    Rule    701    promulgated    thereunder.    See    "Executive
Compensation--Employment  Agreements"  and "Certain  Relationships  and "Related
Transactions--Consulting Agreement."

         In August, 1996 the Company issued (a) 41,352 shares of Common Stock to
Nyer  Medical in exchange for the  conversion  of  indebtedness,  and (b) 13,282
shares of Common  Stock to certain  officers in exchange for the  conversion  of
accrued payroll  obligations.  These  transactions were exempt from registration
under the Securities Act pursuant to Section 4(2) thereof.


Item 6.       Management's Plan of Operation.
--------------------------------------------

         ADDITIONAL FUND RAISING  ACTIVITIES IN THE NEXT EIGHTEEN MONTHS.  Based
solely on expenditures in the absence of significant  product sales, the Company
believes that the funds raised in its initial public offering (the  "Offering"),
which was closed on December  26,  1996,  will last for  approximately  eighteen

                                       13
<PAGE>

months. The Company anticipates,  however, that limited product sales will occur
in the year following the Offering.  If  significant  product sales are realized
during the first eighteen months after the Offering, the Company should not need
to raise  additional  funds within such time period unless the Company  achieves
significant  and  unexpected  rapid  development  of new products  which require
additional  personnel,  capital expenditures and working capital or in the event
of unforeseen difficulties.

         SUMMARY OF ANTICIPATED  PRODUCT RESEARCH AND DEVELOPMENT.  Although the
development of new products can never be fully anticipated, the Company believes
that it has a feasible plan for product  development  during 1997 and 1998.  The
major components of this plan are as follows:

1997  o   Product Launch for modified EpiDNA  Picogram Assay kit

      o   Completion of EpiDNA Nanogram Assay development

      o   Development of automated production protocols for the EpiDNA Assays

      o   Completion  of  first  DNA labeling  product for test  marketing  in
          the molecular biology research market

1998  o   Continued  research in  applications of Genetic  Vectors'  nucleic
          acid labeling technology

      o   Introduction  of  EpiDNA  Nanogram  Assay  kits  and  new DNA labeling
          products for use in molecular biology research laboratories

      o   Research  in  the  application of automated techniques of DNA analysis
          for EpiDNA

      o   Initiation  of  EasyID  DNA  probe  product  development  for  quality
          assurance in the food and beverage industry

         SIGNIFICANT PLANT OR EQUIPMENT  PURCHASES.  Management  anticipates the
purchase  of  approximately  $550,000  of  equipment  (including   approximately
$400,000 of research and development  equipment)  during 1997 and 1998. The only
item whose cost will exceed $25,000 is a high performance  liquid  chromatograph
and associated  hardware  which is used in the analysis and  preparation of high
purity chemicals for both production and research purposes.

         CHANGES IN THE NUMBER OF EMPLOYEES.  As shown in the  following  chart,
the Company  anticipates  hiring additional  personnel during 1997 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.  In 1997  the  Company  expects  to hire  primarily  research  and
development and production  personnel since it does not expect to commence sales
of its initial  EpiDNA  product line until the fourth  quarter of 1997. In 1998,
additional  sales  and  production  staff are  expected  to be hired to meet the
Company's sales goals.

Proposed Personnel Addition Plan                              1997          1998
--------------------------------                              ----          ----

Sales and Administration
Administrative Personnel .............................          1             1
Secretaries ..........................................          1             1
Director--Sales and Marketing ........................          0             1
Salespersons .........................................          0             2
Technical Info/Inside Sales ..........................          0             3
Supervisors ..........................................          1             1
Technicians ..........................................          6             5
                                                              ----         -----
Total New Employees ..................................          9            14
                                                              ====         =====
Total Employees at end of year........................         12            26
                                                              ====         =====

                                       14
<PAGE>


Item 7.       Financial Statements.
----------------------------------

                             Genetic Vectors, Inc.,
                                and Subsidiaries
                          (A Development Stage Company)


                        Consolidated Financial Statements


                     Years ended December 31, 1996 and 1995



                                       15
<PAGE>

                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                      Index to Consolidated Financial Statements

===============================================================================





                                                                          Page

Report of Independent Certified Public Accountants                         17

Consolidated Balance sheet                                                 18

Consolidated Statements of Operations                                      19

Consolidated Statements of Stockholders' Equity (Deficit)                  20

Consolidated Statements of Cash Flows                                      21

Notes to Consolidated Financial Statements                                 22




                                       16
<PAGE>

                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                      Index to Consolidated Financial Statements

================================================================================

Report of Independent Certified Public Accountants

To the Board of Directors and Stockholders of
Genetic Vectors, Inc., and Subsidiaries
(A Development Stage Company)


     We have  audited the  accompanying  consolidated  balance  sheet of Genetic
Vectors, Inc., and Subsidiaries (a development stage company) as of December 31,
1996 and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for each of the two years in the period ended  December
31, 1996 and the cumulative  period from the period January 1, 1992  (inception)
through December 31, 1996. These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the financial  position of Genetic
Vectors, Inc., and Subsidiaries,  a (a development stage company) as of December
31,  1996 and the results of their  operations  and their cash flows for each of
the two years in the period ended  December 31, 1996 and the  cumulative  period
from January 1, 1992  (inception)  through  December 31, 1996 in conformity with
generally accepted accounting principles.



                                                       /s/ BDO Seidman, LLP
                                                       ---------------------
                                                        BDO Seidman, LLP

Miami, Florida
February 28, 1997

                                       17
<PAGE>

                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                                      Consolidated Balance Sheet

================================================================================

December 31                                                                 1996
--------------------------------------------------------------------------------

Assets

Current

   Cash                                                            $   4,745,208
--------------------------------------------------------------------------------

Total current assets                                                   4,745,208

Equipment, net (Note 2)                                                   17,245
Deferred Patent costs (Note 4)                                           155,351
--------------------------------------------------------------------------------

                                                                   $   4,917,804
--------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Current liabilities
   Accounts payable and accrued liabilities                        $     135,527
   Note Payable (Note 5)                                                  35,000
--------------------------------------------------------------------------------

                                                                         170,527
--------------------------------------------------------------------------------

Commitments (Note 8)
--------------------------------------------------------------------------------

Stockholders' Equity (Deficit) (Note 7)
   Common Stock, $.001 par value, 10,000,000 shares authorized,
   2,339,634 shares issued and outstanding                                 2,340
   Additional paid-in capital                                          6,150,201
   Deficit accumulated during the development stage                  (1,405,264)
--------------------------------------------------------------------------------
Total stockholders' equity                                             4,747,277
--------------------------------------------------------------------------------
                                                                   $   4,917,804
--------------------------------------------------------------------------------

                    See accompanying notes to consolidated financial statements.

                                       18
<PAGE>
<TABLE>
<CAPTION>


                                                                             Genetic Vectors, Inc., and Subsidiaries
                                                                                       (A Development Stage Company)

                                                                               Consolidated Statements of Operations

====================================================================================================================



                                                           Cumulative from
                                                           January 1, 1992
                                                               (inception)              For the              For the
                                                                   through           year ended           year ended
                                                              December 31,         December 31,         December 31,
                                                                      1996                 1996                 1995
--------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                      <C>                   <C>

Expenses:
   Research and development                               $        747,451         $     70,873         $     98,386
   General and administrative                                      708,025              318,750              126,803
   Depreciation and amortization                                     6,935                3,811                1,477
--------------------------------------------------------------------------------------------------------------------

Total expenses                                                   1,462,411              393,434              226,666
--------------------------------------------------------------------------------------------------------------------

Other Income                                                        57,147                   --                   --
--------------------------------------------------------------------------------------------------------------------

Net loss                                                 $     (1,405,264)         $  (393,434)        $   (226,666)
--------------------------------------------------------------------------------------------------------------------

Weighted average number of common shares
outstanding (Note 1)                                                    -             1,721,860            1,692,500
--------------------------------------------------------------------------------------------------------------------

Net loss per common share                                $              -          $      (.23)        $       (.13)
--------------------------------------------------------------------------------------------------------------------
                    See accompanying notes to consolidated financial statements.

</TABLE>
                                       19
<PAGE>
<TABLE>
<CAPTION>


                                                                            Genetic Vectors, Inc., and Subsidiaries
                                                                                       (A Development Stage Company)

                                                          Consolidated Statements of Stockholders' Equity (Deficit)

===================================================================================================================



                                                                                              Deficit
                                                                                          Accumulated
                                                                           Additional      During the
                                                                              Paid-in     Development
                                                     Common Stock             Capital           Stage          Total
                                               Shares          Amount
--------------------------------------------------------------------------------------------------------------------
<S>                                         <C>               <C>          <C>             <C>           <C>

Initial  capitalization  for  cash  at      1,600,000         $ 1,600      $  (1,500)       $      --     $      100
   $0.0000625 per share (Note 7(a))

Capital contribution (Note 7(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 7(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 7(d))                    41,352              42         413,476              --        413,518

Conversion   of  $132,822  of  accrued
   payroll  and   consulting   to  the
   president   and   chairman  of  the
   Board of  13,282  shares  of common
   stock (Note 7(d))                           13,282              13         132,809              --        132,822

Issuance  of common  stock for cost at
   $10.00 per share,  net of  offering
   costs of $1,180,249 (Note 7(e))            575,000             575       4,569,176              --      4,569,751

Stock options granted for services
   (Note 8(b))                                     --              --          56,250              --         56,250

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

                                           See accompanying notes to consolidated financial statements.

</TABLE>


                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                                            Genetic Vectors, Inc., and Subsidiaries
                                                                                      (A Development Stage Company)

                                                                              Consolidated Statements of Cash Flows

===================================================================================================================



                                                       Cumulative from
                                                       January 1, 1992                For the                For the
                                                   (inception) through             year ended             year ended
                                                          December 31,           December 31,           December 31,
                                                                  1996                   1996                   1995
--------------------------------------------------------------------------------------------------------------------
<S>                                                <C>                           <C>                    <C>

Operating Activities:
   Net loss                                             $  (1,405,264)           $  (393,434)           $  (226,666)
   Adjustments  to  reconcile  net  loss  to net cash
     used in operating activities:
     Depreciation and amortization                               6,935                  3,811                  1,477
     Stock options granted for services                         56,250                 56,250                     --
     Decrease in accounts receivable                                --                     --                  3,312
     Decrease in other assets                                       --                     --                  5,000
     Increase  in  accounts   payable,   accrued
       liabilities,    accrued    payroll    and
       consulting fees                                         268,350                 19,913                122,868
---------------------------------------------------------------------------------------------------------------------
Total adjustments                                              331,535                 79,974                132,657
---------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities                      (1,073,729)              (313,460)               (94,009)
---------------------------------------------------------------------------------------------------------------------

Investing Activities:
   Purchase of equipment                                      (24,180)               (16,794)                     --
   Deferred patent costs                                     (155,351)               (48,586)               (12,724)
--------------------------------------------------------------------------------------------------------------------

Net cash used in investing activities                        (179,531)               (65,380)               (12,724)
--------------------------------------------------------------------------------------------------------------------

Financing Activities:
   Increase due to parent                                      413,518                 39,098                105,058
   Proceeds from note payable                                   35,000                 35,000                     --
   Net proceeds from issuance of common stock                5,049,950              5,049,851                     --
   Capital contribution                                        500,000                     --                     --
--------------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities                    5,998,468              5,123,949                105,058
--------------------------------------------------------------------------------------------------------------------

Net increase in cash                                         4,745,208              4,745,109                (1,675)
Cash at beginning of period                                         --                     99                  1,774
--------------------------------------------------------------------------------------------------------------------
Cash at end of period                                     $  4,745,208           $  4,745,208     $               99
--------------------------------------------------------------------------------------------------------------------

Supplemental Disclosures:
   Conversion  of due to parent in exchange  for
     stock                                                $    413,518           $    413,518     $               --
   Conversion of accrued wages for stock                  $    132,822           $    132,822     $               --
   Cash paid for interest                                 $         --           $         --     $               --
   Cash paid for taxes                                    $         --           $         --     $               --
--------------------------------------------------------------------------------------------------------------------

                                                       See accompanying notes to consolidated financial statements.

</TABLE>

                                       21
<PAGE>

                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                      Notes to Consolidated Financial Statements

================================================================================

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
                                products are intended to allow biopharmaceutical
                                companies to test for biopharmaceutical  product
                                purity  in  compliance  with  regulatory stand-
                                ards.   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 owned 74.9% of the Company's common
                                stock, distributed to its shareholders,  512,000
                                shares,  representing  32%  of  the  outstanding
                                shares of the  Companys  common stock as of May
                                31, 1996.

                                Principles of Consolidation
                                ---------------------------

                                The consolidated  financial  statements  include
                                the accounts of Genetic  Vectors,  Inc., and all
                                of its subsidiaries.  All material  intercompany
                                balances and transactions have been eliminated.

                                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.

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

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

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

                                Equipment is recorded at cost.  Depreciation  is
                                provided over the  estimated  useful life of the

                                       22
<PAGE>
                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                      Notes to Consolidated Financial Statements

================================================================================


                                assets which range from three to five years.

                                Deferred Offering Costs
                                -----------------------

                                The  costs  incurred  in  connection  with  the
                                Company's public offering and private  placement
                                of securities  are deferred  and offset  against
                                the proceeds in stockholders' equity (deficit).

                                Deferred Patent Costs
                                ---------------------

                                Costs    incurred    in   relation   to   patent
                                applications  are capitalized as deferred patent
                                costs.  If and  when a  patent  is  issued,  the
                                related   patent   application   costs  will  be
                                transferred  to the patent account and amortized
                                over  the  legal  life of the  patent.  If it is
                                determined that a patent will not be issued, the
                                related patent application costs will be charged
                                to  expense  at the time such  determination  is
                                made.

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

                                The  Company  filed a  consolidated  income  tax
                                return  with  its  parent through August 1996 at
                                which time it was deconsolidated.  Thereafter it
                                will  file  on  a  separate  company basis.  The
                                parent  company  has  filed  its  income  tax
                                reporting  consolidated  losses since inception.
                                The Company uses  the   asset   and   liability
                                method of accounting  for income  taxes.  Income
                                taxes are computed,  none  since  inception,  as
                                if  the Company filed a separate tax return. The
                                Company and  its parent do not have a formal tax
                                sharing arrangement.

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

                                Net  loss  per  common  share  is  based  on the
                                weighted  average  number  of  shares  of common
                                stock  outstanding,  as adjusted for the effects
                                of the  application  of Securities  and Exchange
                                Commission Staff  Accounting  Bulletin (SAB) No.
                                83.  Pursuant to SAB No. 83, common stock issued
                                and options to purchase  common stock granted by
                                the   Company   at  a  price   less   than   the
                                contemplated  public  offering price are treated
                                as outstanding for all periods presented.  Stock
                                options  outstanding  are not included since the
                                effects    of   such    inclusion    would    be
                                anti-dilutive.

                                Long-Lived Assets
                                -----------------

                                In  March   1995,   the   Financial   Accounting
                                Standards  Board  ("FASB")  issued  Statement of
                                Financial    Accounting    Standards   No.   121
                                "Accounting for Impairment of Long-Lived  Assets
                                and for  Long-Lived  Assets to be  Disposed  of"
                                ("SFAS No. 121").  SFAS No. 121 requires,  among
                                other  things,  impairment  loss of assets to be
                                held and gains or losses  from  assets  that are
                                expected  to be  disposed  of be  included  as a

                                       23
<PAGE>
                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                      Notes to Consolidated Financial Statements

================================================================================

                                component of income from  continuing  operations
                                before taxes on income.  The Company has adopted
                                SFAS  No.  121 as of  January  1,  1996  and its
                                implementation did not have a material effect on
                                the financial statements.

                                Stock Based Compensation
                                ------------------------

                                In  October  1995,  FASB  issued  SFAS No.  123,
                                "Accounting for Stock Based  Compensation." SFAS
                                No.  123  establishes  a fair  value  method for
                                accounting for  stock-based  compensation  plans
                                either through  recognition  or disclosure.  The
                                Company  did not  adopt  the  fair  value  based
                                method but instead  will  disclose  the proforma
                                effects  of  the  calculation  required  by  the
                                statement.

2. Equipment                   The Company's equipment is summarized as follows:
                               -------------------------------------------------
                               December 31,                                1996
                               -------------------------------------------------
                               Laboratory equipment                  $    2,136
                               Office furniture                           5,250
                               Computers                                 16,794
                               -------------------------------------------------
                                                                         24,180
                               less:  accumulated depreciation           (6,935)
                               -------------------------------------------------

                                                                     $   17,245
                               -------------------------------------------------

3.  Depedence On                Certain key components of the Companys  products
    Limited Number              are  currently  provided by a limited  number of
    Of Suppliers                sources,  and one  component  is  provided  by a
                                single source.

4.  Acquired                    On August 21, 1996,  Genetic  Vectors  purchased
    Technology                  certain  rights  to  the Technology (as defined
                                herein)   pursuant  to  an  Agreement  with  the
                                University  of Miami and its School of  Medicine
                                (the  "Technology  Assignment  Agreement").  The
                                assignment  of such rights under the  Technology
                                Assignment Agreement was subject to the approval
                                of the  Department of Health and Human  Services
                                represented by the National  Institute of Health
                                ("NIH")  because the  Technology  was  developed
                                under a Federal grant from that agency.  The NIH
                                also has  certain  rights  allowing  it to grant
                                licenses  to third  parties if it is  determined
                                that practical

                                       24
<PAGE>
                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                      Notes to Consolidated Financial Statements

================================================================================

                                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. On March 26, 1997 the
                                Company  received notice that the NIH has denied
                                approval of the Technology Assignment Agreement.
                                The Company will be able to develop, manufacture
                                and  sell  its   products   under  the   License
                                Agreement.  The Company  believes that the terms
                                of the License Agreement will need to be amended
                                to comply with applicable  patent law related to
                                government funded inventions.

                                A patent has been issued for the  technology  in
                                New Zealand,  Australia  and the United  States,
                                and the  Company is in the  process of  applying
                                for an additional patent in the United States.

5.  Note Payable                In December 1996, the Company  borrowed  $35,000
                                from Nyer,  interest  is payable at a rate of 6%
                                per annum with the  principal  and  interest due
                                upon the  completion  of the  Company's  initial
                                public  offering of securities.  The full amount
                                of  principal  and  interest was paid in January
                                1997.

6.  Income Taxes                At  December  31,  1996,  the  Company had a net
                                operating    loss    (NOL)   of    approximately
                                $1,134,000.   The  NOL   expires  in  the  years
                                2006-2011. 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
                                $427,000  deferred  tax  asset at  December  31,
                                1996, resulting from the utilization of the NOL,
                                is not  likely to be  realized,  accordingly,  a
                                valuation allowance has been established for the
                                full amount of such asset.

                                Net operating loss carryforward       $  427,000
                                Less:  Valuation allowance               427,000
                                Net deferred tax asset                $       --

7.  Stockholders'               a) During 1992, the Company issued 100 shares of
    Equity                         common   stock   for  $100  as  the   initial
    (Deficit)                      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  increased  its
                                   authorized common stock to 10,000,000 shares,
                                   $.001 par value.

                                       25
<PAGE>

                                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.

                                d) 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 13,822 shares of common
                                   stock.  The  conversion  price was $10.00 per
                                   share.

                                e) In December  1996,  the Company  completed an
                                   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).

8.  Commitments                 a) The  Company  has  acquired  rights  to a new
                                   nucleic   acid    labeling   and    detection
                                   technology  (the "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  include the  manufacture  of products
                                   utilizing  the  Technology  and the marketing
                                   and  sale  of  such  products.   The  License
                                   Agreement could expire or be terminated prior
                                   to  the  Company's  development  of  products
                                   using  the  Technology.  Such  expiration  or
                                   termination  of the License  Agreement  would
                                   have  a  material   adverse   effect  on  the
                                   Company's  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.

                                       26
<PAGE>

                                   In  addition,  during June 1996,  the Company
                                   entered  into  a  consulting   agreement  for
                                   general  business  consulting  services.  The
                                   agreement  had  a  term  of  180  days,   was
                                   extended for an additional ninety day period,
                                   and will continue on a  month-to-month  basis
                                   thereafter unless either party terminates the
                                   agreement.   The  agreement  provides  for  a
                                   monthly fee of $5,000 and 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).  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  new  Chief
                                   Executive  Officer  (Note 9).  The  remaining
                                   25,000 of such shares became exercisable upon
                                   the closing of the Company's  initial  public
                                   offering  (Note  9).  The fair  value of such
                                   options  amounting  to $56,250 was charged to
                                   operations  during the period ended  December
                                   31, 1996.

                                c) In July 1996, the Company  entered into a one
                                   year employment  agreement with its new Chief
                                   Executive Officer. The agreement provides for
                                   an initial  annual  base  salary of  $110,000
                                   through the  completion of the initial public
                                   offering   of   securities,   and  upon  such
                                   completion,  his  salary  was  raised  to an
                                   annual rate of $125,000 for the  remainder of
                                   the year. In addition, ten year stock options
                                   were granted under the plan discussed in Note
                                   9, to purchase  75,000 shares of common stock
                                   at 120% of the initial public offering price.
                                   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.

                                d) In  August  1996,  the  Company  entered into
                                   two employment  agreements  with the Chairman
                                   of the  Board  and the  President  with  base
                                   salaries    of    $125,000    and    $75,000,
                                   respectively. Pursuant to the agreements, the
                                   Company granted the Chairman of the Board and
                                   the President ten year options under the plan
                                   discussed  in  Note 9,  vesting  over a three
                                   year period, exercisable during the period of
                                   employment  and for up to a three year period
                                   thereafter,  to  purchase  100,000 and 75,000
                                   shares of common stock,  respectively,  at an
                                   exercise  price  equal to 120% of the initial
                                   public  offering  price  per  share of common
                                   stock.

                                       27
<PAGE>
                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                      Notes to Consolidated Financial Statements

================================================================================

                                e) In August 1996, the Company  granted ten year
                                   options  under the plan  discussed in Note 9,
                                   vesting  one year  after the grant  date,  to
                                   purchase  10,000  shares of  common  stock at
                                   120% of the initial public  offering price to
                                   two directors of the Company (Note 9).

9.  Stock Based                 At December  31,  1996,  the Company has a fixed
    Compensation                stock option plan and non-plan options which are
                                described below. The Company applies APB 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  will  be 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 will be administered by a plan
                                administrator  which may  consist  of either the
                                Board  or  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.  To date,  options to
                                purchase  260,000  shares of common  stock  have
                                been granted pursuant to the Plan.

                                In addition,  in 1996 four year non-plan options
                                to purchase  75,000 shares at $5.00 were granted
                                to a consultant for general business services.

                                       28
<PAGE>
                                         Genetic Vectors, Inc., and Subsidiaries
                                                   (A Development Stage Company)

                                      Notes to Consolidated Financial Statements

================================================================================

                                FASB Statement 123,  Accounting for  Stock-Based
                                Compensation,  requires  the  Company to provide
                                pro forma  information  regarding net income and
                                net income 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
                                Black-Scholes   option-pricing  model  with  the
                                following weighted-average  assumptions used for
                                grants  in  1996:  no  dividend  yield  percent;
                                expected volatility of 0.001; risk-free interest
                                rates of 6.1%,  and  expected  lives of 10 years
                                for the Plan and non-plan options.

                                Under   the   accounting   provisions   of  FASB
                                Statement  123,  the  Company's  net  income and
                                earnings per share would not have differed.

                                A summary of the status of the  Company's  fixed
                                stock  option  plan and  non-plan  options as of
                                December 31, 1996,  and changes  during the year
                                ending on that date is presented below:


                                                             December 31, 1996
                                                             -----------------
                                                                       Weighted-
                                                                         Average
                                                                        Exercise
                                                             Shares     Price
--------------------------------------------------------------------------------

Outstanding at beginning of year                                $    --   $   --
Granted                                                         335,000    10.43
Exercised                                                            --       --
Forfeited                                                            --       --
--------------------------------------------------------------------------------

Outstanding at end of year                                      335,000    10.43
--------------------------------------------------------------------------------

Options exercisable at year-end                                 100,000     6.75
Weighted-average fair value of options granted during the year     2.09       --
--------------------------------------------------------------------------------

                                       29

<PAGE>
<TABLE>
<CAPTION>
                                                                            Genetic Vectors, Inc., and Subsidiaries
                                                                                      (A Development Stage Company)

                                                                         Notes to Consolidated Financial Statements

===================================================================================================================

The  following  table  summarizes  information  about  fixed  stock  options and  non-plan options  outstanding  at
 December 31, 1996:


                                       Options Outstanding                                 Options Exercisable
                     ----------------------------------------------------------------------------------------------
                                                 Weighted-
                                Number             Average          Weighted-                Number       Weighted-
                           Outstanding           Remaining            Average           Exercisable        Average
Range of Exercise                   at         Contractual           Exercise                    at       Exercise
Prices                        12/31/96                Life              Price              12/31/96          Price
------------------------------------------------------------------------------------------------------------------
<S>                           <C>               <C>                   <C>                 <C>            <C>

$5.00-$12.00                   335,000                 9.5              10.43               100,000           6.75


</TABLE>




                                       30

<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. .......   59      Chairman of the Board of Directors
Richard H. Tullis, Ph.D. .........   52       Chief Executive Officer; Director
Mead M. McCabe, Jr. ..............   31       President and Secretary; Director
Mark E. Burroughs ................   40                   Director
William J. Clifford, Jr. .........   46                   Director
James A. Joyce ...................   35                   Director
Kurt R. Gehlsen, Ph.D. ...........   40                   Director
Jack W. Fell, Ph.D. ..............   64                   Director
Allyn L. Golub, Ph.D. ............   56                   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  Institutes 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.

         RICHARD H. TULLIS, PH.D. is the Chief Executive Officer of the Company.
Dr. Tullis has extensive management and research experience in biotechnology. In
1981,  Dr.  Tullis  co-founded  Molecular  Biosystems,  a company whose stock is

                                       31
<PAGE>

currently traded on the New York Stock Exchange. Dr. Tullis served as a director
and principal of that company until 1985 and  participated  in the completion of
that  company's  initial  public  offering in 1984. In 1985 Dr. Tullis left that
company  and  founded  Synthetic  Genetics  Inc.,  a  company   specializing  in
manufacturing specialized chemical supplies for biotechnology research. In 1991,
Synthetic  Genetics  was acquired by Molecular  Biology  Resources,  a Milwaukee
based biotechnical  manufacturing  company, where he subsequently served as Vice
President  and a member of the board of directors for four years.  In 1996,  Dr.
Tullis  established Syngen Research as a vehicle for his consulting and research
activities.  In July, 1996, Dr. Tullis joined Genetic Vectors as Chief Executive
Officer and as a member of the Board of  Directors.  Dr. Tullis will oversee the
production, sales and research activities of the Company.

         MEAD M.  MCCABE,  JR.  will serve as  President  and  Secretary  of the
Company and will be responsible for the Company's corporate  development,  sales
and  marketing.  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. 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 Capital  Associates,  L.P., a full service
real estate development, brokerage and asset management concern. He has 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,  travel 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.

         WILLIAM J. CLIFFORD,  JR. has served as a director of the Company since
March 1995. He has served as Vice President and General Manager of ADCO Surgical
Supply,  Inc., ADCO South Medical Supplies,  Inc. and Nyle Home Health Supplies,
Inc. since 1988, 1992 and 1990,  respectively.  ADCO Surgical  Supply,  Inc. and
ADCO South Medical Supplies,  Inc. are wholly owned subsidiaries of Nyer Medical
Group,  Inc.  ("Nyer  Medical"),  and Nyer Medical  owns 90% of the  outstanding
common stock of Nyle Home Health Supplies,  Inc. From 1980 to 1988, Mr. Clifford
was General Sales Manager of ADCO Surgical Supply, Inc. Mr. Clifford served as a
director  of  Advanced  Technology  Home  Care,  a provider  of high  technology
products and services to patients  cared for at home,  from 1988 to 1995. He has
also been Vice  President of Sales and a director of Nyer Medical since December
1991.  He has  over 23 years  experience  in the  medical  supply  industry  and
possesses substantial experience in medical warehousing,  purchasing,  sales and
sales management.

         JAMES A. JOYCE is the  Chairman  and Chief  Executive  Officer of James
Joyce & Associates,  an investment banking and management  consulting company he
founded  in  January,  1993.  In  addition,  the  "American  Finance  Network" a
cooperative  network of corporate  finance  executives  representing NASD member
investment  banks  throughout the U.S., was founded by Mr. Joyce and is actively

                                       32
<PAGE>

managed by James Joyce & Associates.  In April of 1991, Mr. Joyce was co-founder
of Mission  Labs,  Inc., a developer of video  compression  software.  Mr. Joyce
served as Chairman  and Chief  Executive  Officer of Mission  Labs,  Inc.  until
January of 1993 when it was acquired by an outside  investment  group.  Prior to
his tenure at  Mission  Labs,  Inc.,  Mr.  Joyce was  President  of Wall  Street
Advisors,  Inc.,  and from  1987-89  served as a principal in charge of the U.S.
operations of London Zurich Securities Ltd., an NASD member  broker/dealer.  Mr.
Joyce is a graduate of the  University of Maryland.  Mr. Joyce became a director
of the Company on August 13, 1996, as the  director-designee  of the underwriter
who managed the Company's Offering.

         KURT R. GEHLSEN, PH.D. is currently the Vice President, Development and
Chief  Technical  Officer  of  Maxim  Pharmaceuticals,  Inc.  He  also  provides
independent  consulting services to biomedical companies,  research institutions
and related service providers in such areas as product  development  strategies,
research and development and grant and patent strategies. From 1991 to 1995, Dr.
Gehlsen  served as  Chairman  of the  Board of  Directors,  President  and Chief
Executive Officer of Trauma Products,  Inc., a biomedical company.  From 1989 to
1991, Dr. Gehlsen served as Vice President, Chief Operating Officer and Director
of Molecular and Cellular  Biology for the La Jolla  Institute for  Experimental
Medicine. From 1989 to 1991, Dr. Gehlsen served as Senior Research Scientist and
Director,  Division of Molecular and Cellular  Biology,  Pharmacia  Experimental
Medicine Division of Pharmacia,  Inc., a biopharmaceutical  company. Dr. Gehlsen
received a B.S. in Biology from the  University of Arizona and a Ph.D.  from the
University of Arizona  College of Medicine.  He became a director of the Company
on February 7, 1997.

         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.

         ALLYN L.  GOLUB,  PH.D.  is  currently  the  Chairman  of the  Board of
Directors  of  Guidelines,  Inc.,  and a member of the Board of Directors of the
Center for Health  Technologies.  He has been associated with  Guidelines,  Inc.
since October,  1986 and the Center for Health  Technologies  since March, 1990.
Dr.  Golub  was  Vice   President,   Clinical  and  Technical   Affairs  of  Key
Pharmaceuticals from 1981 to 1986. Prior to serving as Vice President, Dr. Golub
was Director of Research and  Development  of Key  Pharmaceuticals  from 1978 to
1981 and Clinical and  Professional  Coordination in 1977 and 1978. From 1986 to
1991 and from 1987 to 1990,  Dr.  Golub  was a  consultant  with  Shering-Plough
Corp.,  and  served  as  the  president  of  the  Science-Technology   Alliance,
respectively.  Dr. Golub has a B.A. in Biology from the  University of Hartford,
Connecticut  and an M.S.  and  Ph.D.  in  Cellular-Molecular  Biology  from  the
University of Miami. He became a director of the Company on February 7, 1997.

         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

                                       33
<PAGE>

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 initial
public offering,  the Company has agreed that this underwriter may designate one
member of the Board of Directors.  The underwriter has designated James A. Joyce
as its designee to the Board of Directors.  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 (the "Common
Stock").

Section 16(a) Beneficial Ownership Reporting Compliance

         The following persons failed to file their initial Form 3's on a timely
basis:
<TABLE>
<CAPTION>

                                                                                   Number of
                                                                                 Transactions
                                                                 Number          that were not        Number of
                                                                 of Late         reported on a     known failures
                      Name and Title                             Reports         timely basis           to file

<S>   <C>                                                        <C>                 <C>           <C>
1.    Mead M. McCabe, Sr., and Marigrace McCabe (jointly)           1                  1                  0
2.    Richard H. Tullis                                             1                  1                  0
3.    Mead M. McCabe, Jr.                                           1                  1                  0
4.    Mark E. Burroughs                                             1                  1                  0
5.    William J. Clifford, Jr.                                      1                  1                  0
6.    James A. Joyce                                                1                  1                  0
7.    Nyer Medical Group, Inc.                                      1                  1                  0

</TABLE>

Item 10.      Executive Compensation.
------------------------------------

Compensation of Directors
-------------------------

         Non-employee  directors  will  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  to be 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  initial  non-employee  directors (Mr.  Burroughs,  Mr. Clifford,  Dr.

                                       34
<PAGE>

Gehlsen, Dr. Fell and Dr. Golub) will have an exercise price of $12.00 per share
(120% of the offering price in the Company's initial public  offering).  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 fiscal years
ended December 31, 1996, 1995, and 1994 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 fiscal years 1996, 1995, and 1994. 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 fiscal years 1996,  1995,  and
1994.

<TABLE>
<CAPTION>

                                    Annual Compensation                    Long Term Compensation
                                    -------------------                    ----------------------

                                                                             Awards          Payouts
                                                                             ------          -------

<S>                      <C>    <C>          <C>        <C>            <C>         <C>      <C>          <C>

                                                                       Restricted
                                                        Other Annual   Stock       Options/  LTIP          All Other
Name and Principal                            Bonus     Compensation   Award(s)    SARs      Payouts     Compensation
Position                 Year    Salary ($)     ($)         ($)           ($)        (#)       ($)           ($)
---------------------- --------- ------------ -------- --------------- ----------- -------- ---------- ----------------

Mead M. McCabe,  Sr.,    1996    $125,000       -0-         -0-           -0-        -0-       -0-           -0-
Ph.D.,   Chairman  of
the      Board     of
Directors
                         1995    $125,000       -0-         -0-           -0-        -0-       -0-           -0-
                         1994    $70,000(1)     -0-         -0-           -0-        -0-       -0-           -0-
----------------

(1) Dr.  McCabe's  annual salary was $70,000  through  October 16, 1994 at which

                                       35
<PAGE>

time his annual salary was raised to $125,000.

                       OPTION GRANTS IN LAST FISCAL YEAR1
                               (Individual Grants)

                                                           Percent of
                                     Number of           Total Options
                                     Securities            Granted to
                                     Underlying           Employees in
            Name                  Options Granted         Fiscal Year         Exercise Price         Expiration Date
             (a)                        (b)                   (c)                   (d)                    (e)
------------------------------ ----------------------- ------------------- ---------------------- ----------------------

Mead M. McCabe, Sr.            100,000 shares of             40.0%         $12.00 per share       August 15, 2006
                               Common Stock

</TABLE>

----------------
1    All grants are for options to purchase Common Stock. No SAR's were granted.

Employment Agreements
---------------------

         Effective  August  15,  1996,  the  Company  entered  into new  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.

         Effective  July  24,  1996  the  Company  entered  into  an  Employment
Agreement with Richard H. Tullis, Ph.D. for a twelve month period. Dr. Tullis is
required  to devote  substantially  all of his  working  time and efforts to the
business of the Company.  Dr. Tullis'  annual salary is $125,000.  Pursuant to a
Stock Option  Addendum to Dr. Tullis'  Employment  Agreement he has been granted
options to purchase  75,000 shares of the  Company's  Common Stock at $12.00 per
share (120% of the per share public  offering price in the Company's  Offering).
One-third of Dr. Tullis' options vested as of July 24, 1996, one-third will vest
on June 26, 1997 and the  remaining  one-third  will vest on December  26, 1997.
These options expire ten years after the date of grant and are granted under and
are  subject to the terms and  conditions  of the  Incentive  Plan and the Stock
Option  Addendum.  The provisions of the Stock Option  Addendum shall control in
the event of the termination of Dr. Tullis'  employment  with the Company.  This
Employment  Agreement provides that during the period of his employment with the
Company and for a period of six months  thereafter Dr. Tullis shall not directly

                                       36
<PAGE>

or indirectly compete with the Company or own, manage, control or participate in
the  ownership,  management or control of or be employed or engaged or otherwise
affiliated or associated with any business that is competitive  with that of the
Company in any  location  where the Company is doing  business as of the date of
the termination of his employment.

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.

         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 nonqualified
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 may
consist of either the Board of Directors  or such  committees,  officers  and/or
employees of the Company as the Board of Directors  may so  designate.  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


                                       37
<PAGE>

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 March 28, 1997,  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.

                                                      Common Stock
                                               Beneficially Owned (1), (2)

                                          --------------------------------------
Name/Address                                    Number             Percent
                                          -------------------  -----------------

Mead M. McCabe, Sr. and...............            184,322(3)         7.9%(3)
Marigrace McCabe (jointly)
12901 SW 63rd Ct.
Miami, FL 33156
                                                    1,000(3)         0.04%(3)
Mead M. McCabe, Sr. ..................
12901 SW 63rd Ct.
Miami, FL 33156

Mead M. McCabe, Jr....................            102,293(3)         4.4%(3)
2000 South Dixie Highway
Suite 100
Miami, Florida 33133

Nyer Medical Group....................            929,027(3),(4)    39.7%(3),(4)
1292 Hammond St.
Bangor, ME 04401

Richard H. Tullis.....................             25,500(5)         1.1%
2000 South Dixie Highway
Suite 100
Miami, FL 33133

                                       38
<PAGE>

James A. Joyce........................             75,000(6)         3.1%
835 5th Avenue
Suite 202
San Diego, CA 92101

All directors and officers
as a group(7)(8)(9) ..................            388,115           15.9%


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

(1)  Applicable  percentage of ownership is based on 2,339,634  shares of Common
     Stock outstanding as of March 28, 1997 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 March 28, 1997
     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.

(2)  Reflects 575,000 shares issued in the Company's initial public offering.

(3)  Pursuant to a letter  agreement  dated March 25, 1996,  Nyer Medical Group,
     Inc. ("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 the  Common  Stock  owned   by  Nyer  Medical  is
     attributed  to  Dr.   McCabe  and  Mrs.   McCabe   (jointly),   Dr.  McCabe
     (individually)  and Mr.  McCabe,  they  would own  1,113,349,  930,027  and
     1,031,320 shares of Common Stock, respectively. Their ownership percentages
     would be 47.6%, 39.8% and 44.1%, respectively.

(4)  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.

(5)  Includes  25,000  shares  which  may  be  acquired  pursuant  to  presently
     exercisable stock options.

(6)  Includes  75,000  shares  which  may  be  acquired  pursuant  to  presently
     exercisable stock options.

(7)  Nine (9) persons.

(8)  Includes  100,000  shares  which  may be  acquired  upon  the  exercise  of
     presently exercisable stock options.

(9)  Neither Mr. Clifford,  Mr.  Burroughs,  Dr. Gehlsen,  Dr. Fell or Dr. Golub
     (directors   of  the  Company)  own  any  Common  Stock  or  any  presently
     exercisable rights to acquire Common Stock.



                                       39
<PAGE>
         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"). This 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.
------------------------------------------------------------

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

                                       40
<PAGE>

exercisable.  These  options were not issued  through the  Incentive  Plan.  Dr.
Tullis was introduced to the Company by Mr. Joyce. This consulting agreement had
an initial term of 180 days and was extended for an additional ninety-day period
and continues  thereafter on a  month-to-month  basis until terminated by either
party upon thirty days prior written notice.  Mr. Joyce's option exercise rights
will continue until the fourth  anniversary of the execution of such  consulting
agreement.

Nyer Medical Spin-off
---------------------

         Concurrently with the effective date of the Registration  Statement for
the Company's Offering  (December 20, 1996), Nyer Medical,  which owned 74.9% of
the  Common  Stock  prior to that  Offering,  effected  a  spin-off  (the  "Nyer
Spin-off") to Nyer  Medical's  shareholders  of 512,000  shares of the Company's
Common Stock owned by Nyer  Medical.  The Nyer Spin-off was made to Nyer Medical
shareholders of record as of May 31, 1996. The Company has been informed by Nyer
Medical's  counsel that these shares are freely tradable unless they are held by
affiliates  of the  Company.  As a result of the Nyer  Spin-off,  however,  Nyle
International  Corp.  ("Nyle") and Mr.  Samuel Nyer  received  115,447 and 4,228
shares of Common Stock, respectively.  Since Nyle is the majority shareholder of
Nyer Medical and Mr. Nyer is the chairman of Nyle,  these shares of Common Stock
are deemed to be beneficially owned by Nyer Medical, giving Nyer Medical current
beneficial ownership of 39.7% of the Common Stock.

Conversion of Indebtedness
--------------------------

         In August,  1996,  the Company issued (a) 41,352 shares of Common Stock
to  Nyer  Medical  at  $10.00  per  share  in  exchange  for the  conversion  of
indebtedness  of  $413,518,  and (b)  11,322  shares of Common  Stock to Mead M.
McCabe, Sr. and Marigrace McCabe (jointly held) and 1,960 shares of Common Stock
to Mead M. McCabe,  Jr., both at $10.00 per share for the  conversion of accrued
payroll of $113,222 and $19,600, respectively.

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.

                                       41
<PAGE>


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.

   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.

   9.1      Letter  Agreement  dated  March  25,  1996    Incorporated by reference to Exhibit No.
            among Mead M. McCabe, Sr., Marigrace McCabe,  9.1 to the Registration Statement.
            Mead M. McCabe, Jr. and Nyer Medical Group,
            Inc.

   9.2      Letter Agreement dated July 24, 1996          Incorporated by reference to Exhibit No.
            among Mead M. McCabe, Sr.,  Marigrace McCabe, 9.2 to the Registration Statement.
            Mead M. McCabe, Jr. and Nyer Medical Group,
            Inc.

   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.

                                       42
<PAGE>

   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 Exhibit No.
            Agreement dated August 15, 1996 between       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 Exhibit No.
            Agreement dated August 15, 1996 between       10.7 to the Registration Statement.
            Mead M. McCabe, Jr. and the Company

   10.8     Employment Agreement dated July 24, 1996      Incorporated by reference to Exhibit No.
            between Richard H. Tullis and the Company     10.8 to the Registration Statement.

   10.9     Stock Option Addendum to Employment           Incorporated by reference to Exhibit No.
            Agreement dated July 24, 1996 between         10.9 to the Registration Statement.
            Richard H. Tullis and the Company

  10.10     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.

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

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

   21.      Subsidiaries of the Registrant                Attached                                        47



</TABLE>

(b)  Reports on Form 8-K.
     -------------------

         None.


                                       43
<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: March 28, 1997

         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.

<TABLE>
<CAPTION>

             Date                               Signature                                    Title
             ----                               ---------                                    -----
<S>                             <C>                                             <C>

March 28, 1997                  /s/ Mead M. McCabe, Sr.
                                ----------------------------------------        Chairman of the Board of Directors
                                Mead M. McCabe, Sr., Ph.D.                      (Principal Executive Officer)

March 28, 1997                  /s/ Richard H. Tullis                           Chief Executive Officer; Director
                                ----------------------------------------
                                Richard H. Tullis, Ph.D.

March 28, 1997                  /s/ Mead M. McCabe, Jr.                         President; Director (Principal
                                ----------------------------------------        Financial Officer; Principal
                                Mead M. McCabe, Jr.                             Accounting Officer)

March 28, 1997                  /s/ Mark E. Burroughs                           Director
                                ----------------------------------------
                                Mark E. Burroughs

March 28, 1997                  /s/ William J. Clifford, Jr.                    Director
                                ----------------------------------------
                                William J. Clifford, Jr.

March 28, 1997                  /s/ James A. Joyce                              Director
                                ----------------------------------------
                                James A. Joyce

March 28, 1997                  /s/ Kurt R. Gehlsen                             Director
                                ----------------------------------------
                                Kurt R. Gehlsen, Ph.D.

March 28, 1997                  /s/ Jack W. Fell                                Director
                                ----------------------------------------
                                Jack W. Fell, Ph.D.

March 28, 1997                  /s/ Allyn L. Golub                              Director
                                ----------------------------------------
                                Allyn L. Golub, Ph.D.


                                       44
<PAGE>


                                  EXHIBIT INDEX

 Exhibit
   No.      Description                                   Location                                        Page
 -------    -----------                                   --------                                        ----

   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.

   9.1      Letter  Agreement  dated  March  25,  1996    Incorporated  by reference to Exhibit No.
            among Mead M. McCabe, Sr., Marigrace McCabe,  9.1 to the Registration Statement.
            Mead M. McCabe, Jr. and Nyer Medical Group,
            Inc.

   9.2      Letter Agreement dated July 24, 1996          Incorporated by reference to Exhibit No.
            among Mead M. McCabe, Sr., Marigrace McCabe,  9.2 to the Registration Statement.
            Mead M. McCabe, Jr. and Nyer Medical Group,
            Inc.

   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 Exhibit No.
            Agreement dated August 15, 1996 between       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 Exhibit No.
            Agreement dated August 15, 1996 between       10.7 to the Registration Statement.
            Mead M. McCabe, Jr. and the Company


                                       45
<PAGE>

   10.8     Employment Agreement dated July 24, 1996      Incorporated by reference to Exhibit No.
            between Richard H. Tullis and the Company     10.8 to the Registration Statement.

   10.9     Stock Option Addendum to Employment           Incorporated by reference to Exhibit No.
            Agreement dated July 24, 1996 between         10.9 to the Registration Statement.
            Richard H. Tullis and the Company

  10.10     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.

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

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

   21.      Subsidiaries of the Registrant                Attached                                        47



</TABLE>

                                       46