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

                                FORM 10-KSB
(Mark One)
[x]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934
          For the fiscal year ended       December 31, 2000
                                    ----------------------------------

[  ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
          SECURITIES EXCHANGE ACT OF 1934
          For the transition period from            to
                                         ----------    ----------

                       Commission File Number 0-27727
                                             --------

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

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

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


     Issuer's telephone number, including area code      (281) 461-7996
                                                     ----------------------
     Securities registered pursuant to section 12(b) of the Exchange Act:  None

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

                   $.001 par value, common voting shares
                  ---------------------------------------
                              (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 (or for
such shorter period that the registrant was required to file such
report(s), and (2) has been subject to such filing requirements for the
past 90 days.  (1) Yes [X ]  No [   ]

Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this form
10-KSB or any amendment to this Form 10-KSB.  [   ]

The issuer's revenue for its most recent fiscal year was: $(1,050,306).

The aggregate market value of the issuer's voting stock held as of March
21, 2001, by non-affiliates of the issuer was approximately $6,617,324.

As of March 21, 2001, issuer had 19,653,412 shares of its $.001 par value
common stock outstanding.

Transitional Small Busines     Disclosure Format. Yes [  ]  No [X]
Documents incorporated by reference: Form 10-SB
                              Gene-Cell, Inc.
     Annual Report on Form 10-KSB for the Year ended December 31, 2000

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

                             TABLE OF CONTENTS

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

PART I

ITEM 1    DESCRIPTION OF BUSINESS. . . . . . . . . . . . . . . . . . . . .3

ITEM 2    DESCRIPTION OF PROPERTY. . . . . . . . . . . . . . . . . . . . 11

ITEM 3    LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 12

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS. . . . . 12

PART II

ITEM 5    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . 12

ITEM 6    PLAN OF OPERATION. . . . . . . . . . . . . . . . . . . . . . . 14

ITEM 7    FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 16

ITEM 8    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . . 16

PART III

ITEM 9    DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS,
          AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
          OF THE EXCHANGE ACT  . . . . . . . . . . . . . . . . . . . . . 17

ITEM 10   EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . 20

ITEM 11   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . 21

ITEM 12   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . 22

PART IV

ITEM 13   EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . 23

          SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 24




                                     2

Item 1.         Description of Business

Overview
--------
     Gene-Cell, Inc. (the "Company"or "GCI") was originally incorporated in
the state of Nevada on November 3, 1986 under the name Becniel Corporation.
The Company was organized and authorized to pursue any lawful purpose or
purposes. The Company amended its Articles of Incorporation on September
30, 1987, changing its name to Tzaar Corporation and authorizing common
stock of 100,000,000 shares at par value of $0.001. From 1989 to 1996, the
Company did not engage in any business activity. During this time the
Company had no significant revenues and was considered to be a "development
stage company."

     On December 28, 1996, the Company entered into a Plan of
Reorganization with Genesystems, Inc. ("Genesystems"), a corporation
organized in the state of Nevada on December 12,1996.  In connection with
the Plan of Reorganization, the Company made a one for ten reverse split of
its outstanding shares; issued an additional 7,500,000 post-split
restricted shares to effect a share exchange with Genesystems; and
authorized and issued an additional 3,500,000 common shares in a limited
offering.  As a result of the reverse acquisition, control of the Company
was acquired by Genesystem shareholders.  The acquisition of the public
shell (Tzaar Corporation) was accounted for as a recapitalization.  The
current business of the Company is that of Genesystems, Inc.

     In December 1996, the Company changed its name to Gencell, Inc. and
appointed new officers and directors to the Company.  On September 29, 1997
the Company changed its name to Gene-Cell, Inc. Since December 1996, the
Company has focused its plan of operations on the business of developing
therapies that can treat major diseases and disorders of the human blood
system.

Business of the Company
-----------------------

     The Company operates in the biotechnology sector of the pharmaceutical
industry sometimes referred to as the biopharmaceutical or life science
industry.  The mission of the Company is to become a global leader in stem
cell gene therapy by using the Company's technologies to repair and/or
compensate for mutations in defective genes.  Mutations in genes are known
to be the cause of many genetic diseases including Sickle Cell Disease and
Muscular Dystrophy.   A unique aspect of the Company's non-viral process is
that it is performed on a patient's stem cells outside the body or ex vivo.
Stem cells are special cells in the body that are basic or building block
cells.  These cells have the ability to continually create large numbers of
more specialized cells.  The Company's technology allows for attaching or
immobilizing  human stem cells.  These cells can then be microinjected with
properly encoded, healthy DNA.  Following this process, the DNA treated
stem cells can be reintroduced into the patient's body where they can re-
populate.  It is anticipated that these DNA treated and/or corrected cells
will produce millions of cell offspring transmitting the desired effects.
The Company's technology will also be beneficial  to the pharmaceutical
industry for studying the function(s) of individual genes and the possible
contribution of these genes to various diseases.

     To better understand the business of the Company it is helpful to
understand the industry and why the Company entered this market.  In basic
terms, each cell in the human body contains DNA, often called an
individual's "genetic blueprint".  DNA is organized into genes, which are
in turn organized into chromosomes.  A change in the DNA sequence or code
of a gene is called a mutation.  Often mutations are harmless; however,
some mutations lead to serious disease.  There are about 4,000 diseases
that have been traced to gene disorders or mutations.
                                     3
     The Company's approach differs from conventional medical treatment of
genetic diseases.  Rather than treating the symptoms, the gene therapy
proposed by the Company focuses on the cause of disease at the origin, the
DNA.  The Company's approach also differs because it believes it will be
capable of treating the patient's cells outside the body.  The treated
cells will then be returned to the patient's body, thus the patient does
not need to be present for the gene modification.

     To address the disease at the origin either a properly functioning
copy of a gene must be delivered to the cell or the known defect must be
repaired.  Traditionally gene therapy has been done by generating viruses
containing therapeutic DNA.  The virus is then allowed to infect the target
cells, transferring the DNA to those cells.  Viral gene therapy, however,
is only able to carry a finite amount of therapeutic DNA.  Limitations are
apparent when the genetic material required to correct a mutation exceeds
the packaging limit of a virus, which is the case for a number of genetic
diseases. In these cases viral gene therapy is not a viable option.
Further, viruses do not infect all cell types with equal efficiency.
Finally, viruses are not able to deliver genetic fragments (small pieces of
DNA) necessary for gene repair.  These restrictions, as well as safety
issues associated with using live virus, have led to a search for alternate
techniques of performing gene therapy capable of treating a broader range
of genetic diseases.

     Dr. Brian R. Davis and Dr. David B. Brown recognizing the significant
limitations associated with existing viral based gene therapy methods
founded Genesystems in 1996. They decided to focus on alternate methods of
delivery for therapeutic DNA.

     To further the Company's efforts in gene therapy research it developed
and currently employs a delivery technique called microinjection.
Microinjection involves injecting cells with minute amounts of material
using very small glass needles.  To utilize this technique the Company had
to develop new needles because commercially available needles were too
large.  The commercially available needles were so large that they would
cause physical damage to the cell being injecting.  To remedy this problem
the Company developed ultra-fine needles with a tip diameter of ~0.3
microns which is about 1/100 the diameter of a human hair.  These smaller
diameter glass needles are capable of delivering the DNA without damaging
the cell.

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

     There are many different types of cells in the body.  The Company has
selected to initially focus on blood stem cells for gene therapy.   Blood
stem cells are referred to as "mother" blood cells and are found in bone
marrow and umbilical cord blood.  These "mother" blood cells have the
capacity to give rise to all the cells that make up the blood, including
white and red blood cells.  Through microinjection of blood stem cells, the
probability of delivering DNA to cells that will create cell offspring with
the desired effect is enhanced.

                                     4

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

Application of Gene Therapy Technology
--------------------------------------
     The Company envisions that treatment of disease using the Company's
technologies will be performed at major medical centers and gene therapy
centers through licensing agreements with the Company.  The treatment
process is as follows:

     1) Physicians collect tissue samples from patients containing the
     cells needed for genetic modification (e.g. umbilical chord blood,
     bone marrow);
     2) The cells to be modified are purified;
     3) The cells are genetically modified with DNA using the Company's
     technology;
     4) The modified cells are expanded without the loss of biological
     activity; and finally;
     5) The modified cells are transplanted back into the patient.

     This approach is expected to work effectively for adults and children.


     Recent reports suggest that to successfully treat a child with a
genetic disease, at least 10-100 stem cells must be successfully modified.
Estimates from the Company indicate, to achieve a sufficient number of
modified genes, injection of at least 300-5000 cells per patient will be
necessary. The Company is currently refining automated workstations that
will make clinical application of microinjection routine by  providing
rapid and consistent microinjection  into blood stem cells.  The process of
microinjection done manually is limited to injecting approximately 300-500
cells per hour.  It is anticipated that workstations will be able to
microinject approximately 1200-2000 cells per hour.   Workstations are at
the core of applying the Company's technology in a clinical setting and
will be included in licensing agreements to use the Company's technology.

Diseases Potentially Treatable by Stem Cell Gene Therapy
--------------------------------------------------------
     The following charts outline the estimated number of patients in the
U.S. with the seven most potentially treatable inherited diseases by blood
and muscle/bone stem cell gene therapy. There are many other genetic
disorders, which are more rare in occurrence that may also be treatable by
the Company's technology.



                                     5
Diseases Potentially Treatable by Blood Stem Cell Gene Therapy
--------------------------------------------------------------
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Disease                     Sickle Cell         a Thalassemia          B Thalassemia
------------------------------------------------------------------------------------
<S>                    <C>                 <C>                   <C>
# of Patents (US)         40,000-60,000                       100,000 ner cases/year worldwide*
------------------------------------------------------------------------------------
Gene Affected                  B-globin              a-globin               B-globin
------------------------------------------------------------------------------------
More Common Gene         Point mutation     Deletions of gene        Point mutations
Defects                                        (80% of cases)           (6 mutations
                                              Point mutations        responsible for
                                                                     90% of cases in
                                                                   each racial group)
------------------------------------------------------------------------------------
Results of Defects      Crescent shaped           Poor oxygen            Poor oxygen
                       red blood cells,             transport              transport
                            poor oxygen
                        transport heart
                          trouble, etc.
------------------------------------------------------------------------------------
Current Treatment    Blood transfusions         Regular blood          Regular blood
                                                 transfusions           transfusions
                                             chelatin therapy       chelatin therapy
------------------------------------------------------------------------------------
GCI Gene Therapy            Gene Repair         Gene Delivery            Gene repair
Treatment                                        of a-globin;
                                               gene repair of
                                              point mutations
------------------------------------------------------------------------------------
RESULTS              Corrected B-globin    Corrected a-globin     Corrected a-globin
                     in red blood cells    in red blood cells     in red blood cells
------------------------------------------------------------------------------------
*Thalassemia occurs most frequently in people of Italian, Middle Eastern,
African, Greek Southeast Asian ancestry.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Disease            Osteogenesis     Ehlers-Danlos         Duchenne            Marfan
                     Imperfecta          Syndrome         Muscular          Syndrome
                                                         Dystrophy
------------------------------------------------------------------------------------
<S>            <C>              <C>                                <C>                 <C>
# of US Patients         12,500            50,000           12,500     12,500-25,000
(US)
------------------------------------------------------------------------------------
Gene Affected          Collagen   Collagen; Lysyl       Dystrophia         Fibrillin
                                      Hydroxylase
------------------------------------------------------------------------------------
More Common     Point mutations   Point mutations  Large deletions   Point mutations
Gene Defects    small deletions   small deletions
------------------------------------------------------------------------------------
Results of        Brittle bones    Joint problems  Muscle weakness  Skeletal & heart
Defect               Continuous  Extreme bruising      Progressive         problems,
               fractures/breaks      and bleeding       scholiosis    Reduced vision
------------------------------------------------------------------------------------
                                          6

<PAGE>
------------------------------------------------------------------------------------
Current/           Ineffective.   None. Continued   Glucocorticoid    None. Surgical
Treatment     Continued surgery    surgical joint    therapy slows      replacement/
Prognosis     and physiotherapy  repair, bleeding   progression up         repair of
                                        disorders       to 3 years      aorta, etc.;
                                                     (only in some        adrenergic
                                                          patients)           agents
------------------------------------------------------------------------------------
GCI Gene            Gene Repair       Gene Repair      Delivery of       Gene repair
Therapy                                                 dystrophin
Treatment                                                     gene
------------------------------------------------------------------------------------
RESULTS                Collagen       Collagen or           Normal         Corrected
                     corrected:       hydroxylase       dystrophin        fibrillin:
                    osteoblasts        corrected:        overrides     eye, skeletal
                            and       osteoblasts     defective in               and
                    osteoclasts               and         skeletal           cardiac
                                      osteoclasts           muscle            muscle
------------------------------------------------------------------------------------
</TABLE>

Use of The Company's Technology to Study Gene Function
------------------------------------------------------
     The Company believes its technology can also be applied immediately to
fill a current need in the pharmaceutical industry  by developing cells
that are modified and/or mutated at very specific points within the code of
a gene.  These customized "gene modified cells" could be used by
pharmaceutical firms to determine the function or action of specific genes
and/or mutations within those genes.  The information gained from such
studies could be used to design and develop new drugs and treatments for
various diseases.  This application is referred to in the biotechnology
industry as functional genomics.

     Differences in the ability of patients to respond to certain drugs,
(that is, the extent to which a drug treats a disease in one patient versus
another), is often the result of small differences in the code of certain
genes.  Understanding these differences will allow for the development of
drugs tailored to treatment of a particular individual.  Research aided by
the Company's technology may help to explain the function of newly
discovered genes, and to assist in determining whether specific mutations
in genes are truly responsible for a disease.  Such information may be very
useful to the pharmaceutical industry in the developing new drugs to better
treat diseases using functional genomics.

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

     The Company believes it has secured sufficient funding through July,
2001, from  private investors.  The Company is actively seeking bridge
financing and additional funding.  It is customary for biotech companies at
a certain stage of research to actively pursue partnerships and/or
licensing agreements with large biopharmaceutical companies.  The Company
is currently seeking similar relationships with  two companies and has
entered a collaborative agreement with Athersys, a Delaware corporation.
This collaborative agreement with Athersys has been incorporated herein as
Exhibit 10.01.  The two relationships referred to are in the early stages
of development and there can be no assurance that any relationship will
ever fully develop with either company. Future partnership(s)/investment(s)
with a pharmaceutical/large biotechnology company may be centered on one
particular disease or a group of related diseases in which said company has
clinical and financial interests.  Such an arrangement would provide the
Company with revenue to further develop the technology required for a
particular program, additional scientific and legal expertise, and
assistance and guidance through the regulatory processes required prior to
beginning clinical trials.
                                     7
     In addition, licensing agreements and/or partnerships with various
pharmaceutical firms relating to gene function studies would result in
revenues over the next few years.  When possible, royalties could be
generated from the sale of pharmaceuticals developed using information
gained from the Company's gene modified cells.

Competition
-----------
     The microinjection technology utilized by the Company for gene therapy
is unique.  The Company, however, is aware of several development-stage and
established enterprises, including prominent pharmaceutical and
biotechnology firms, (such as Cell Genesys, Genzyme, Systemix/Novartis,
Chiron/Viagene, Vali Gen), which are exploring the field of human gene
therapy or are actively conducting research in areas of gene insertion
using viruses and other methods.  In essence, virus-based systems and
microinjection-mediated techniques represent two approaches to the common
goal of stem cell gene therapy.

     Current technology focuses on introducing DNA into stem cells via
viruses.  To date, viral-based human stem cell gene therapy has
demonstrated only marginal success in clinical trials.  Further, even if
virus-based methods should advance, viruses can carry only about 8,000 base
pairs of DNA information into a cell, which thus far, has not been
sufficient to successfully correct the defective gene(s) in the most common
blood diseases.  In contrast, the Company believes its proprietary
technology will allow greater than 20,000 base pairs of DNA to be
successfully microinjected into each stem cell.  It also allows for
delivery of enhancing factors such as protein(s) which may be necessary for
the successful integration of new DNA information within the existing code
of mutations.  Gene repair can not be easily accomplished using virus-based
delivery systems.  The Company believes the microinjection-mediated
delivery of specialized small fragments of genetic material, will allow for
successful gene repair of stem cells.

Biohazardous Waste
-------------------
     While the Company does not produce any biohazardous waste it does work
with human blood products that must be handled and disposed of as
biohazardous waste. The Company currently contracts with BFI Corporation to
dispose of its human blood products.


Governmental Approval
---------------------

     As research and development progress, the Company will seek
relationships with major pharmaceutical companies in order to take the
technology through the required government regulatory process and FDA
approval.

     The Company believes that the short term potential of gene therapy
lies in the ex vivo (out of body)  genetic modification of cells. In the
United States, gene therapy will be regulated by the FDA's Center for
Biologic Evaluation and Research ("CBER"). For ex vivo gene therapy, CBER
regulation places a statutory emphasis on manufacturing, that is, the
genetic modification and processing of cells. To ensure compliance with
FDA/CBER regulation, the Company will carry out the ex vivo modification
and processing of cells at facilities under its own control.


                                     8

     Before obtaining regulatory clearance for commercial sale of any
potential products or services/therapies under development, the Company
must demonstrate through preclinical studies and clinical trials that the
potential product or service/therapy is safe and effective for use in
humans for each target indication. The results from preclinical studies and
early clinical trials may not be predictive of results that will be
obtained in large-scale testing.  Moreover, there can be no assurance that
the Company's clinical trials will demonstrate sufficient safety and
efficacy  to obtain the requisite regulatory clearance or will result in
marketable products. A number of companies in the pharmaceutical industry,
including biotechnology companies, have suffered significant setbacks in
advanced clinical trials, even after promising results in earlier trials.
The failure to adequately demonstrate the safety and efficacy of a
potential product under development could delay or prevent regulatory
approval of the Company's product and would have a material adverse effect
on the Company's business, financial condition and results of operations.

     Before a pharmaceutical agent may be marketed in the United States
preclinical testing must be performed.  Preclinical testing includes
laboratory evaluation of potential products and animal studies to assess
the potential safety and efficacy of the product or service/therapy and its
formulations.  The results of these studies and other information must be
submitted to the FDA as part of an investigational new drug application.
This must be reviewed and approved by the FDA before proposed clinical
testing can begin.  Clinical trials involve the administration of the
investigational new drug to healthy volunteers or to patients under the
supervision of a qualified principal investigator.  Clinical trials are
conducted in accordance with Good Clinical Practices under protocols that
detail the objectives of the study, the parameters for monitoring safety
and the efficacy criteria to be evaluated.  Each protocol must be submitted
to the FDA as part of the investigational new drug application.  Further,
each clinical study must be conducted under the auspices of an independent
institutional review board at the institution at which the study is
conducted.  The institutional review board considers, among other things,
ethical factors and the safety of human subjects.  In addition, certain
protocols involving the use of genetically modified human cells must also
be reviewed by the Recombinant Advisory Committee of the National
Institutes of Health.

     Typically, clinical testing involves a three-phase process.  In Phase
I, clinical trials are conducted with a small number of subjects to
determine the early safety profile and pharmacology of the new therapy.  In
Phase II, clinical trials are conducted with groups of patients afflicted
with a specific disease in order to determine preliminary efficacy, optimal
dosages and expanded evidence of safety.  In Phase III, large scale,
multicenter, comparative clinical trials are conducted with patients
afflicted with a target disease to provide enough data for the statistical
proof of efficacy and safety required by the FDA and others.  In the case
of products or therapies for life-threatening diseases, the initial human
testing is generally done with diseased patients rather than with healthy
volunteers.  Since these patients are already afflicted with the target
disease, it is possible that such studies may provide results traditionally
obtained in Phase II trials.  These trials are frequently referred to as
Phase I/II trials.



                                     9

     The results of the preclinical and clinical testing, together with
chemistry and manufacturing information, are submitted to the FDA in the
form of a new drug application for a pharmaceutical product, and in the
form of a product license application for a biological product, for
approval to commence commercial sales.  In responding to a new drug
application or a product license application, the FDA may grant marketing
approvals, request additional information or further research, or deny the
application if it determines that the application does not satisfy its
regulatory approval criteria.  Approvals may not be granted on a timely
basis, if at all, or if granted may not cover all the clinical indications
for which the Company is seeking approval or may have contraindications
with respect to conditions of use.

     The Company has not yet begun the process of applying for FDA
approval.  Before doing so, the Company anticipates first demonstrating
that its technology works in an animal model before initiating clinical
trails involving human patients. To do this, the Company will attempt to
isolate an enriched population of human blood stem cells and introduce, by
microinjection (or other technology), a new gene (DNA) into the cells. The
Company plans to then transfer the cells into mice lacking a fully
developed immune system to show that: 1) the cells survive; 2) the cells
adapt to the environment in the new host (engraft); 3) the engrafted cells
produce new blood cells for an extended period of time; and 4) the gene
introduced into the stem cells functions in the newly produced cells
derived from the stem cells.

Research & Development
----------------------
     The Company's research and development efforts will continue to focus
on optimization of its technology to achieve the efficiencies of stem cell
genetic modification required for clinical application and gene function
studies.  The Company spent  $400,177 in 1998, $386,231 in 1999, and
$788,883 in 2000, on research and development and anticipates expending an
additional $2,100,000 during the next twelve months.  The Company has
established working relationships with investigators at several
universities and other biotechnology companies.

Number of Employees
-------------------
     The Company currently has eight full-time employees, three of whom are
Ph.D. trained scientists, and six part-time employees, one of whom is a
Ph.D. trained scientists.  The Company  does not anticipate hiring
additional employees in fiscal year 2001.



                                     10

Reports to Security Holders
---------------------------
     The public may read and copy any materials filed by the Company with
the SEC at the SEC's Public Reference Room at 150 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
Company is an electronic filer and the SEC maintains an Internet site that
contains reports and other information regarding the Company which may be
viewed at http://www.sec.gov.




Item 2.   Description of Property

Property & Facilities
---------------------
     The Company has established a research and development laboratory in
the Clear Lake area between Houston and Galveston, Texas. It consists of
approximately 2,000 square feet of fully-equipped, state of the art
laboratory space. The lease term was renewed in October of 2000, for a
three year term and includes a renewal option for an additional three years
at market rate.

     The Company's laboratory is fully operational with a fully functional
climatized (dehumidified, air conditioned) room for microinjection and
pulling microinjection needles. The laboratory is continuously monitored
with fire and burglar alarm systems.

     The Company leases office equipment at a rate of $1,868 per year for
the years 2001 and 2002.  These lease agreements conclude in 2003 with $156
due for fiscal year 2003.  The Company also leases lab equipment through
multiple separate leasing agreements for a total of $92,579 in 2001,
$79,269 in 2001, and $47,792 in 2003.  Most of the agreements expire at
various times in 2003 and 2004.

Patent Applications
-------------------

     The Company owns the following filed patent applications:

     Title                                   Number
     -----                                   ------

     Nucleic Acid Constructs and             PCT/US97/24236
     Uses thereof for Direct Nucleic
     Acid Incorporation into Cells

     Method and Device for                   PCT/US97/23781
     Microinjection of Macromolecules
     Into Non-Adherent Cells

                                     11

Investment Policies
-------------------
     Currently the Company does not own any real property.  In addition,
the Company has no intention to purchase any real property at this time.
Therefore, the Company does not have any policies with respect to
investments in real estate or interests in real estate, real estate
mortgages, or securities of/or interests in persons primarily engaged in
real estate activities.  The Company, however,  may purchases real property
if the need arises.  These properties would not be pursued for investment
purposes.  Rather, they will be used to carry out the business of the
Company.



Item 3.   Legal Proceedings.

          The Company is not a party to any pending material legal
proceedings.  To the knowledge of management, no federal, state, or local
governmental agency is presently contemplating or proceeding against the
Company.  To the knowledge of the management, no director, officer or
affiliate of the Company or owner of record or beneficiary of more than 5%
of the Company's common stock is a party adverse to the Company or has a
material interest adverse to the Company in any proceeding.

Item 4.   Submission of Matters to a Vote of Securities Holders

          None.

PART II

Item 5.   Market for Common Equity and Related Stockholder Matters

     The Company's common stock is listed on the Over the Counter Bulletin
Board ("OTCBB"), under the symbol "GCLL".  As of December 31, 2000 the
Company had approximately 93 shareholders holding 19,653,412 shares of
common stock.  Of the issued and outstanding common stock 7,956,743 are
free trading, the balance are restricted stock as that term is used in Rule
144.  The Company has never declared a dividend on its common stock other
than a special dividend issued to one investor in 1998.  The special
dividend was declared in an attempt to equalize the price the  investor
paid for stock in 1997 and was paid in the form of issuing additional
shares. (see note 5. Stockholders Equity on page F-16 of the attached
financial statements).
<TABLE>
<CAPTION>
                                    CLOSING BID         CLOSING ASK
                                   ------------------  ------------------
                                   HIGH      LOW       HIGH      LOW
                                   --------  --------  --------  --------
<S>                                <C>       <C>       <C>       <C>
1999

First Quarter                      0.50      0.40625   0.625     0.4375
Second Quarter                     0.625     0.40625   0.8125    0.4375
Third Quarter                      0.625     0.50      0.78125   0.625
Fourth Quarter                     0.51      0.0625    0.875     0.4375

2000
First Quarter                      0.85      0.0625    1.00      0.46
Second Quarter                     0.55      0.25      1.00      0.4375
Third Quarter                      1.6875    0.75      1.9375    0.875
Fourth Quarter                     0.9375    0.495     0.96875   0.5625
</TABLE>
                                     12


     The above quotations, as provided by the Pink Sheets, LLC., represent
prices between dealers and do not include retail markup, markdown or
commission.  In addition, these quotations do not represent actual
transactions.

Recent Sales of Unregistered Securities

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

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

     In March of 1998, the Company issued 120,000 restricted shares to
non-US residents for an aggregate offering price of $30,000 cash. These shares
were sold pursuant to Regulation S promulgated by the Securities and
Exchange Commission under the Securities Act of 1933.  The Company did not
offer the securities to any person in the United States, any identifiable
groups of U.S. citizens abroad, or to any U.S. Person as that term is
defined in Regulation S.

     In August of 1998, the Company issued 6,000,000 restricted shares to
non-US residents for an aggregate offering price of $1,500,000 cash. These
shares were sold pursuant to Regulation S promulgated by the Securities and
Exchange Commission under the Securities Act of 1933.  The Company did not
offer the securities to any person in the United States, any identifiable
groups of U.S. citizens abroad, or to any U.S. Person as that term is
defined in Regulation S.

     In October of 2000, the Company sold 1,875,000 units to accredited
investors for an aggregate offering price of $1,500,000 cash.  All proceeds
have been allocated to meet the working capital needs of the Company.  Each
unit consisted of one restricted common share of the Company and one
warrant to purchase an additional share of restricted common stock.  As a
result, the Company has issued 1,875,000 common shares and 1,875,000
warrants. The Company also issued 80,000 warrants for finder fees in
connection with this offering. Each warrant issued in conjunction with the
October 2000 offering grants the holder thereof the right to purchase an
additional share of restricted common stock of the Company at a price of
$2.00.  The warrants expire in October 2005. These shares were sold
pursuant to exemption from registration under Section 4(2) of the
Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder.


                                     13

Item 6.   Plan of Operation

For a complete understanding, this Plan of Operations should be read in
conjunction with Part I, Item 1- Description of Business and Item 7 -
Financial Statements of this Form 10-KSB.

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

     During the period from inception, December 12, 1996, to December 31,
2000, the Company has not generated any revenue from sales of clinical
products and does not expect to generate any material revenue from sales of
clinical products for at least two to three years because during such time
period management will use substantially all Company resources for further
development of its technology, including microinjection tools.

     As of December 31, 2000, the Company had an accumulated deficit of
($3,365,974) funded by paid-in capital.  During the years ended December
31, 1999 and 1998, the Company had losses from operations of ($547,742) and
($499,260), respectively. The Company had losses of approximately
($1,050,306) for the year ending December 31, 2000.   The Company does not
expect to make any major capital expenditures in the foreseeable future,
(other than a significant increase in research and development
expenditures), but expects that operating losses will continue until such
time as product sales generate sufficient revenues to fund its continuing
operations, as to which there can be no assurance.

     The Company has financed its operations mainly through the sale of its
common stock and has been entirely dependent on outside sources of
financing for continuation of operations.  In October 2000, the Company
received $1,500,000 through sale of units comprised of common stock and
warrants.  It is the belief of the Company that these funds will be
sufficient for the Company to continue operations and its research and
development efforts through July, 2001.

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

     The Company is currently seeking relationships with larger
biopharmaceutical companies.  To date, however, the Company has not entered
into any such relationships.  The Company anticipates that three years from
now its research will be far enough along to enhance the Company's ability
to establish relationships with major pharmaceutical companies.  These
relationships, if aquired, should help the Company get its technology
through the required government regulatory process and FDA approval.


                                     14

     The Company's capital requirements will depend on numerous factors,
including the progress of its research and development programs; the time
and cost involved in obtaining regulatory approvals; the cost of filing,
prosecuting, defending and enforcing any patent claims and other
intellectual property rights; the economic impact of competing
technologies; developments and changes arising from the Company's
continuing research; and the terms of any new collaborative, licensing and
other arrangements that the Company may establish.  The Company believes
that its current assets and potential committed contributions from certain
accredited investors will be sufficient to meet the Company's short-term
operating expenses and capital expenditures through July 2001.  At the
present time, however, there is no way to predict when, and if, any
additional contributions may be made beyond those currently committed.
Consequently, at the expiration of current commitments, the Company will
need to seek one or more substantial new investors.

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

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

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


                                     15

Item 7.   Financial Statements

The following financial statements of the Company are filed as a part of
this report:

     Report of Ham Langston & Barnett, LLP, Certified Public Accountants;
     Balance Sheet as of December 31, 2000;

     Statements of Operations for the years ended December 31, 2000,
     1999,and 1998 for the period of inception, December 12, 1996, to
     December 2000;

     Statements of Stockholders' Equity for the years ended December 31,
     2000, 1999,and 1998 for the period of inception, December 12, 1996, to
     December 2000;

     Statements of Cash Flows for the years ended December 31, 2000,
     1999,and 1998 for the period of inception, December 12, 1996, to
     December 2000;

     Notes to Financial Statements.

     There are no financial statement schedules included as part of this
report. The financial statements of the Company are set forth immediately
following the signature page to this Form 10-KSB.

Item 8.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure

     (a)  On May 15, 1998 the Company engaged Ham, Langston & Brezina,
          L.L.P. ("Ham, Langston & Brezina") as its independent
          accountants.  The decision to engage Ham, Langston & Brezina as
          the Company's independent accountant was recommended by the
          Company's Chief Executive Officer and approved by the Company's
          Board of Directors.

     (b)  In a report dated January 27, 1997, Schvaneveldt and Company,
          Certified Public Accountants, reported on the Company's financial
          statements as of December 31, 1996, 1995 and 1994, and the
          related statements of operations, stockholders' equity and cash
          flows for the years then ended, and for the period from
          inception, December 1, 1986 to December 31, 1996.  Such report
          did not contain any adverse opinion or disclaimer of opinion, nor
          was such report qualified or modified as to uncertainty, audit
          scope, or accounting principles.  Schvaneveldt and Company,
          Certified Public Accountants, understands that they were
          dismissed as the Company's independent accountants effective
          January 30, 1997.  The decision to dismiss Schvaneveldt and
          Company was made by the Company's Chief Executive Officer and
          neither recommended or approved by the Company's Board of
          Directors.  Thereafter, the Company engaged Ham, Langston &
          Brezina as its independent accountants on May 15, 1998.




                                     16

     (c)  During the two years ended December 31, 1996 and 1995, and the
          subsequent interim period to May 15, 1998 preceding the decision
          to engage independent accountants, neither the Company nor anyone
          on its behalf consulted Ham, Langston & Brezina, L.L.P. regarding
          either the application of accounting principles to a specified
          transactions, either completed or proposed, or the type of audit
          opinion that might be rendered on the Company's financial
          statements, nor has Ham, Langston & Brezina, L.L.P. provided to
          the Company a written report or oral advice regarding such
          principles or audit opinion.

     (d)  During the two years ended December 31, 1996 and 1995, and for
          the period from December 31, 1996 to January 30, 1997, the date
          of dismissal, there were:  (i) no disagreements between the
          Company and Schvaneveldt and Company on any matter or accounting
          principles or practice, financial statement disclosure, or
          auditing scope or procedure, which disagreements if not resolved
          to the satisfaction of Schvaneveldt and Company would have caused
          it to make reference thereto in its report; and (ii) no
          reportable events as defined in paragraph 304(a)(1)(iv) of
          Regulation S-B.

     Schvaneveldt and Company, Certified Public Accountants, has previously
provided the Company with a letter pursuant to Rule 304 of Regulation S-B,
which was filed as an exhibit to the Form 10-SB filed by the Company on
October 20, 1999, and is hereby incorporated by reference.

PART III

Item 9.   Directors and Executive Officers, Promoters, and Control Persons;
          Compliance with section 16(a) of the Exchange Act

<TABLE>
<CAPTION>
Name                Age   Position                   Director or Officer Since
------------------  ----- -------------------------- --------------------------
<S>                 <C>   <C>                        <C>
Brian R. Davis      46    President, CEO, Director   January 1997
                          Chairman of the
                          Scientific Advisory
                          Board

David B. Brown      47    Secretary, Director,       January 1997
                          Director of Microinjection
                          Development

Michael R. Davis    47    Treasurer, Director        January 1997

Tom Kubota          60    Chairman of the Board,     January 1997
                          Director

Gunther Soraperra   40    Director                   November 1997
</TABLE>

     The following sets forth certain biographical information relating to
the Company's Officers and Directors:


                                     17

     Brian R. Davis, Ph.D., President, CEO, Director, and Chairman of the
Scientific Advisory Board.      Dr. Davis is a co-founder of Gene-Cell and
joined the Company on a full-time basis September 1, 2000. Dr. Davis
currently holds the position of Adjunct Associate Professor, Department of
Microbiology & Immunology Department of Internal Medicine at the University
of Texas Medical Branch ("UTMB"). From 1995 to 2000, Dr. Davis held the
position of Associate Professor, Department of Microbiology & Immunology
Department of Internal Medicine  and Senior Scientist, Sealy Center for
Oncology & Hematology also at UTMB. Prior to joining UTMB, Galveston in
1995, Dr. Davis was a Visiting Scholar at the Department of Molecular
Microbiology & Immunology at the Johns Hopkins School of Public Health in
Baltimore Maryland (1994-1995) and spent nine years as Scientist at the
Institute of Cancer Research/ Geraldine Brush Cancer Research Institute in
San Francisco, holding the positions of Acting Director and Associate
Director(1986-1995). Dr. Davis received his A.B. summa cum laude from
Harvard University in 1976, received his Ph.D. from California Institute of
Technology in 1980, and conducted his postdoctoral training at the
University of California, Irvine from 1982-1986. Dr. Davis has an extensive
list of publications in the fields of hematopoiesis and retrovirology.

     David B. Brown, Ph.D., Secretary, Director, and Director of
Microinjuection Technology.      Dr. Brown is a co-founder of Gene-Cell.
Dr. Brown currently holds the position of Assistant Professor, Department
of Human Biological Chemistry and Genetics, at University of Texas Medical
Branch (1987-present), and was director of the
Microinjection/Microdissection Core Facility, Sealy Center for Oncology and
Hematology, UTMB (1995-2000). Dr. Brown received his B.S. (1975) and M.S.
(1978) from Colorado State University, received his Ph.D. in 1982 from the
University of Texas Health Science Center at Houston, and conducted his
postdoctoral training at the University of Texas System Cancer Center and
at Yale University. Dr. Brown has published extensively in the fields of
microinjection and reproductive biology.

     Michael R. Davis, Treasurer, Director.      Mr. Davis is a co-founder
of Gene-Cell.  Mr. Davis graduated with honors in economics and business
from Harvard University in 1975, pursuing graduate business studies
thereafter at the Harvard Business School, UCI and Clairemont's Peter
Drucker Graduate School of Management. He assisted in the founding of EPL
Prolong, Inc. He has headed up the Maruzen Co. Ltd.(the oldest public
company in Japan) expansion and investment efforts in the United States
from 1990 to 1997. Mr. Davis served as president of Gene-Cell from its
inception in December of 1996 up until Brian R. Davis took over the
responsibilities in late 1997.  In the past five years, Mr. Michael Davis
also served as president of EPL Prolong, Inc.

     Tom Kubota, Director, Chairman of the Board.      Mr. Kubota has
thirty years of experience in the investment banking, securities and
corporate finance field. He held the position of Vice President at Drexel
Burnham Lambert; at Stem, Frank, Meyer and Fox; and at Cantor Fitzgerald.
Mr. Kubota is the president of Nanko Corporation which specializes in
capital formation services for high technology and natural resources
companies.  He has expertise in counseling emerging public companies and
has previously served as a director of both private and public companies.
For the last five years, Mr. Kubota has been primarily engaged in serving
as president of Nanko Corporation.


                                     18


     Gunther Soraperra, Director.      Mr. Soraperra graduated as master in
economics and business administration from the University of Graz, Austria
in 1990. He lectured as Professor of Economics and Business Administration
at the Academy of Economics in Bludenz, Austria. He has seven years
experience in international investments, international commercial
transactions, financial advice, and capital management. Prior to his
University studies he worked for four years in industry. There he
specialized in international sales, marketing and administration.  In 1992
Mr. Soraperra founded Eurotrade, an Austrian counseling company in
international business.  He currently serves as president of Eurotrade and
has done so since its inception in 1992.

Significant Employees
---------------------

     Judith I. Yannariello-Brown, Ph.D., Senior Scientist, Project Leader,
and Director of Cell Biology Group.      Dr. Yannariello-Brown joined the
Company on a full-time basis on September 1, 2000.  She currently holds the
position of Adjunct Assistant Professor, Department of Human Biological
Chemistry and Genetics, University of Texas Medical Branch (1993-present),
and director of the Hematopoietic Stem Cell Facility, Sealy Center for
Oncology and Hematology, UTMB (1997-2000).  Prior to this, Dr.
Yannariello-Brown was Assistant Professor of Ophthalmology and Visual
Sciences, UTMB.  Dr. Yannariello-Brown received her B.S. from Rutgers
University, received her M.S. at the University of Texas System Cancer
Center, Graduate School of Biomedical Sciences, received her Ph.D. at Yale
University, and conducted her postdoctoral training at UTMB. Dr.
Yannariello-Brown has published extensively in the field of cell- cell and
cell-matrix interactions.

     Nicole L. Prokopishyn, Ph.D., Lab Director, Scientist.      Dr.
Prokopishyn joined the Company in 1997 as Research Scientist I after
receiving her Ph.D. from the University of Saskatchewan. She previously
received her B.Sc. with honors from the University of Saskatchewan (1991).

Dependence Upon Key Personnel
-----------------------------
     The Company has an acute dependence upon certain key members of
management and technical personnel.  Particular reliance is made on Brian
R. Davis, Ph.D.  Certain other key personnel have been and will continue to
be added on an "as needed" basis to complete the tactical management group.
Because of the specialized nature of the Company's business, the Company's
ability to achieve success will depend, in part, upon its ability to
attract and retain highly qualified people in the areas of management and
technology while maintaining relationships with leading research
institutions.  The loss of Dr. Davis, or other key individuals may
adversely affect the Company's business and prospects.  At this time, the
Company does not carry key man life insurance on any of its employees.


                                     19

Family Relationships
--------------------
     Michael R. Davis, Treasurer and Director of the Company, is the
brother of Brian R. Davis, President and Director of the Company.  Judith
I. Yannariello-Brown, Senior Scientist, Project Leader and Director of Cell
Biology Group, is the wife of David B. Brown, Secretary, director and
Director of Microinjection Technology of the Company.

Compliance with Section 16(a) of the Exchange Act

     Directors and executive officers are required to comply with Section
16(a) of the Securities Exchange Act of 1934, which requires generally that
such persons file reports regarding ownership of and transactions in
securities of the Company on Forms 3, 4, and 5.  A Form 3 is an initial
statement of ownership of securities, which is to be filed by the officers
and directors owning shares in the Company within 10 days after the
effective date of the Company's filing on Form 10-SB.    Form 4 is to
report changes in beneficial ownership and is due on or before the tenth
day of the month following any month in which they engage in any
transaction in the Company's common stock.  Form  5 covers annual statement
of changes in beneficial ownership which is due 45 days after the fiscal
year end of the Company.

     Based solely on a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year, and Forms 5
and amendments thereto furnished to the Company with respect to the most
recent fiscal year, it appears the following forms were inadvertantly filed
late:  Brian R. Davis, David Brown, Michael Davis, Tom Kubota, and Gunther
Soraperra  respective Form 5s for 2000.

Item 10.  Executive Compensation
<TABLE>
<CAPTION>
                              SUMMARY COMPENSATION TABLE


               Annual Compensation                Awards           Payouts
               -----------------------   Other    -------          -------
Name and                                 Annual   Restricted
Principal                       Bonus    Compen   Stock  Options   LTIP    Compen
Position       Year    Salary   $        sation   Awards /SARs     Payout  sation
<S>            <C>     <C>      <C>      <C>      <C>    <C>       <C>     <C>
------------------------------------------------------------------------------------
Brian R.       2000    $77,329  -0-      -0-      -0-    -0-       -0-     -0-
Davis          1999    $33,000  -0-      -0-      -0-    -0-       -0-     -0-
President      1998    $30,000  -0-      -0-      -0-    -0-       -0-     -0-

David B.       2000    $29,450  -0-      -0-      -0-    -0-       -0-     -0-
Brown          1999    $28,048  -0-      -0-      -0-    -0-       -0-     -0-
               1998    $26,712  -0-      -0-      -0-    -0-       -0-     -0-

Michael R.     2000    $36,000  -0-      -0-      -0-    -0-       -0-     -0-
Davis          1999    -0-      -0-      -0-      -0-    -0-       -0-     -0-
               1998    -0-      -0-      -0-      -0-    -0-       -0-     -0-
</TABLE>

     The Company provides an employee benefits program for its full time
employees which includes Medical/Dental/Life Insurance and a simple IRA
with matching funds of up to 3% of salary.


                                     20
Compensation of Directors

     None

Employment Contracts and Termination of Employment and Change in Control
Arrangement

     None.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth as of December 31, 2000, the name and
the number of shares of the Company's Common Stock, par value $.001 per
share, held of record or beneficially by each person who held of record, or
was known by the Company to own beneficially, more than 5% of the
19,653,412 issued and outstanding shares of the Company's Common Stock, and
the name and shareholdings of each director and of all officers and
directors as a group.
<TABLE>
<CAPTION>
                                           Amount and
                                           Nature of
Title of    Name and Address of            Beneficial         Percentage of
Class       Beneficial Owner               Ownership (2)      Class
--------    ---------------------------    --------------     --------------
<S>         <C>                            <C>                <C>
Common      Brian Davis (1)                2,024,000          10.30%
            8606 Arranmore Lane
            Houston, TX 77095

Common      David B. Brown (1)             1,900,000          9.67%
            2013 Charter Pointe Court,
            League City, TX 77573

Common      Michael R. Davis (1)           1,250,000          6.36%
            22681 Sweet Meadow Lane,
            Mission Viejo, CA 92692

Common      Tom Kubota (1)                 0                  0%
            6 Thomas Irvine,
            California 92618

Common      Gunther Soraperra (1)          400,000            2.04%
            Arlbergstrasse 119
            A-6751 Braz Austria

Common      Amafin Trust                   2,600,000          13.23%
            c/o ATV
            Aeulestr. 5
            FL 9490 Vaduz
            Liechtenstein

Common      Auric Stiftung                 1,500,000           7.63%
            c/o ATV
            Aeulestr. 5
            FL 9490 Vaduz
            Liechtenstein


                                          21

Common      Eurifa Anstalt                 1,600,000            8.14%
            Meierhofstrasse 121
            Triesen, FL-9495
            Liechtenstein

Common      Spezial Transport AG           1,620,000            8.24%
            Manfred Heeb
            Meierhofstrasse 21
            FL-9495 Triesen
            Liechtenstein
--------------------------------------------------------------------------
Common      Officers, Directors and        5,574,000          28.36%
            Nominees as a Group:
            5 persons
--------------------------------------------------------------------------
</TABLE>
(1) Officer and/or Director of the Company

(2) The term "beneficial owner" refers to both the power of investment (the
right to buy and sell) and rights of ownership (the right to received
distributions from the company and proceeds from sales of the shares).
Inasmuch as these rights or shares may be held by more than one person,
each person who has a beneficial ownership interest in shares is deemed the
beneficial owners of the same shares because there is shared power of
investment or shared rights of ownership.

     There are no arrangements which would result in a change in control of
the Company.

Item 12.  Certain Relationships and Related Transactions

     In consideration of Mr. Michael R. Davis making a loan of $7,500 in
December 1996 and for compensation of services such as assistance in
founding the Company and managerial efforts, the Company gave Mr. Davis
3,500,000 restricted common shares.  Approximately 3,431,818 of the shares
were for services. These shares had a market value of $0.11 per share or
$385,000.  Mr. Davis returned 1,000,000 shares of common stock to the
Company because at the time of the original issuance of 3,500,000 shares,
Mr. Davis planned to use 1,000,000 of the shares to compensate attorneys
and other providers of professional services for the Company.  However,
management ultimately decided to use cash to pay for such services.

     In December 1997, Michael R. Davis, Treasurer and Director of the
Company, leased certain equipment to the Company under a direct finance
lease agreement.  Mr. Davis purchased $7,876 of office equipment, office
furniture, lab equipment (e.g. Fax machine, answering machine,
refrigerator, dehumidifiers, typewriter, deskjet printer, VCR, laser
printer, desks, slide projector) and is leasing it to Gene-Cell at 18%
interest over 60 months. The lease provides for monthly lease payments of
$200 per month through November 2002.  The Company believes this equipment
lease to be no more or less favorable to the Company than leases with
unrelated third parties.


                                     22
PART IV

Item 13.  Exhibits and Reports on Form 8-K

Exhibit
Number      Title of Document                          Location

2.1         Articles of Incorporation                  Incorporated by
                                                                reference*

2.2         Certificate of Amendment                   Incorporated by
            To the Articles of Incorporation Of        reference*
            Becniel Corporation

2.3         Articles of Amendment to                   Incorporated by
            Articles of Incorporation of               reference*
            Tzaar Corporation

2.4         Amendment to the Articles                  Incorporated by
            of Incorporation of                        reference*
            Tzaar Corporation

2.5         Certificate of Amendment of                Incorporated by
            Articles of Incorporation of               reference*
            Gencell, Inc.

2.6         Articles of Exchange                       Incorporated by
                                                       reference*

2.7         Bylaws                                     Incorporated by
                                                       reference*

6.1         Assignment of Patent, "Method and          Incorporated by
            Device in Microinjection of                reference*
            Macromolecules with Non-Adherent Cells."

6.2         Assignment of Patent, "Nucleic Acid        Incorporated by
            Constructs and Uses thereof for            reference*
            Direct Nucleic Acid Incorporation
            Into Cells.

6.3         Secured Promissory Note                    Incorporated by
                                                       reference*

10          Material Contracts- Collaboration
            Agreement                                  See Attached

12          1996 Stock Option Plan                     Incorporated by
                                                       reference*

16          Letter Regarding Change in Certifying      Incorporated by
            Accountant                                 reference*

*Incorporated by reference from the Registrant's registration statement on
Form 10-SB, as amended, filed with the Commission, SEC File No. 0-27727.

                                     23

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

                                 Signatures

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

     In accordance with the Exchange Act, the Registrant has caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                     GENE-CELL, INC.

April 12, 2001                       By: /s/ Brian R. Davis
                                     ------------------------
                                     President

April 12, 2001                       By: /s/ Michael R. Davis
                                     -------------------------
                                     Treasurer









                                     24


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

                                 Signatures

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

     In accordance with the Exchange Act, the Registrant has caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                     GENE-CELL, INC.

April 12, 2001                       By:
                                     ------------------------
                                     President

April 12, 2001                       By:
                                     -------------------------
                                     Treasurer









                                     24







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




                            FINANCIAL STATEMENTS
                   WITH REPORT OF INDEPENDENT ACCOUNTANTS
              as of December 31, 2000 and for the years ended
                        December 31, 2000 and 1999,
           and for the period from inception, December 12, 1996,
                            to December 31, 2000

















                                    F-1



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

                                                                        Page
                                                                       ------

Report of Independent Accountants                                      F-2

Financial Statements:

  Balance Sheet as of December 31, 2000                                F-3

  Statement of Operations for the years ended
    December 31, 2000 and 1999, and for the period
    from inception, December 12, 1996, to December 31,
    2000                                                               F-4

  Statement of Stockholders' Equity for the years
    ended December 31, 2000 and 1999, and for the
    period from inception, December 12, 1996, to
    December 31, 2000                                                  F-5

  Statement of Cash Flows for the years ended
    December 31, 2000 and 1999, and for the period
    from inception, December 12, 1996, to
    December 31, 2000                                                  F-7

Notes to Financial Statements                                          F-8

















                                       F-2








                     Report of Independent Accountants
                    -----------------------------------


To the Stockholders and Directors
Gene-Cell, Inc.


We have audited the accompanying balance sheet of Gene-Cell, Inc. (a
corporation in the development stage) as of December 31, 2000, and the
related statements of operations, stockholders' equity and cash flows for
the years ended December 31, 2000 and 1999, and for the period from
inception, December 12, 1996, to December 31, 2000.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based
upon 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 financial statements referred to above present fairly,
in all material respects, the financial position of Gene-Cell, Inc. as of
December 31, 2000, and the results of its operations and its cash flows for
the years ended December 31, 2000 and 1999, and for the period from
inception, December 12, 1996, to December 31, 2000, in conformity with
generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.  As shown in
the financial statements and discussed in Note 11, the Company has incurred
significant recurring losses from operations since inception and is
dependent on outside sources of financing for continuation of its
operations.  These factors raise substantial doubt about the Company's
ability to continue as a going concern.  Management's plans with regard to
this matter are also discussed in Note 11.  These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

                                          /s/ Ham, Langston & Brezina, L.L.P.
March 23, 2001
Houston, Texas

                                    F-3

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                               BALANCE SHEET
                             December 31, 2000
                            --------------------
<TABLE>
<CAPTION>

     ASSETS
     ------
<S>                                                       <C>
Current assets:
  Cash and cash equivalents                               $1,142,083
                                                          ----------
    Total current assets                                   1,142,083

Laboratory equipment under capital leases,
  net of accumulated amortization of $158,690                199,701
Deposits                                                      14,985
                                                          ----------

      Total assets                                        $1,356,769
                                                          ==========

     LIABILITIES AND STOCKHOLDERS' EQUITY
     ------------------------------------

Current liabilities:
  Note payable to a bank                                  $   30,000
  Current portion of capital lease obligations                53,298
  Accounts payable and accrued liabilities                   167,858
                                                          ----------

    Total current liabilities                                251,156

Capital lease obligations, net of current
  portion                                                     70,300
                                                          ----------

      Total liabilities                                      321,456
                                                          ----------

Commitment and contingencies

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

      Total liabilities and stockholders'
        equity                                            $1,356,769
                                                          ==========

</TABLE>

                          See accompanying notes.
                                    F-4

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                          STATEMENT OF OPERATIONS
             for the years ended December 31, 2000 and 1999 and
   for the period from inception, December 12, 1996, to December 31, 2000
                         -------------------------
<TABLE>
<CAPTION>
                                   Year Ended      Year Ended    Inception to
                                   December 31,   December 31,   December 31,
                                       2000           1999           2000
                                   ------------   ------------   ------------
<S>                                <C>            <C>            <C>
Operating, general and
  administrative expenses          $   227,311    $   142,760    $   910,284
Research and development costs         788,883        386,231      2,361,730
                                   ------------   ------------   ------------
     Loss from operations           (1,016,194)      (528,991)    (3,272,014)

Interest income                         15,366         11,921         32,223
Interest expense                       (49,478)       (30,672)      (126,183)
                                   ------------   ------------   ------------
Net loss                           $(1,050,306)   $  (547,742)   $(3,365,974)
                                   ============   ============   ============


Weighted average
shares outstanding                  17,870,878     18,233,207
                                   ============   ============

Basic and diluted loss per common
  share                            $     (0.06)   $     (0.03)
                                   ============   ============



























                               See accompanying notes.
                                         F-5

<PAGE>
                                   GENE-CELL, INC.
                       (A CORPORATION IN THE DEVELOPMENT STAGE)
                          STATEMENT OF STOCKHOLDERS' EQUITY
             for the years ended December 31, 2000 and 1999, and for the
            period from inception, December 12, 1996 to December 31, 2000
                         -----------------------------------

</TABLE>
<TABLE><CAPTION>                                              Losses
                                                              Accumulated
                                                              During
                                        Addit-     Subscr-    the
                  Common Stock          ional      iption     Devel-
                  --------------------  Paid-In    Recei-     opment
                  Shares      Amount    Capital    vable      Stage      Total
                  --------------------------------------------------------------
<S>               <C>         <C>       <C>        <C>        <C>        <C>
Balance at
inception,
December
12, 1996                -     $   -           -    $      -   $      -   $     -

Shares issued
as compensation
at a price of
$0.11             7,500,000    7,500     817,500          -          -    825,000

Recapitalization
effective
December
28, 1996          1,058,412    1,058      (1,058)         -          -         -

Net proceeds
from a private
placement of
common stock
at a price
of $0.11 per
share, net of
offering costs
of $49,100        3,500,000    3,500      329,900         -          -    333,400

Net loss,
as restated             -         -            -          -  (841,139)   (841,139)

Balance at
December
31, 1996          12,058,412  12,058     1,146,342        -  (841,139)    317,261

Proceeds from
private
placement of
100,000 shares
of common stock
at a price of
$1.35 per share,
net of offering
costs                100,000     100       134,900        -          -      135,000

Net loss                -         -           -           -   (427,527)   (427,527)
                  ------------------------------------------------------------------
Balance at
December
31, 1997          12,158,412  $12,158   $1,281,242 $      -   $(1,268,666) $24,734
                  ==============================================================
</TABLE>                  See accompanying notes.
                                    F-6

<PAGE>
                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                STATEMENT OF STOCKHOLDERS' EQUITY, Continued
        for the years ended December 31, 2000 and 1999, and for the
       period from inception, December 12, 1996 to December 31, 2000
                      --------------------------------
<TABLE><CAPTION>                                              Losses
                                                              Accumulated
                                                              During
                                        Addit-     Subscr-    the
                  Common Stock          ional      iption     Devel-
                  --------------------  Paid-In    Recei-     opment
                  Shares      Amount    Capital    vable      Stage      Total
                  --------------------------------------------------------------
<S>               <C>         <C>       <C>        <C>        <C>        <C>

Balance at
December
31, 1997          12,158,412  $ 12,158  $1,281,242 $      -   $(1,268,666) $ 24,734

Special dividend
of 500,000
Shares of common
stock to a
stockholder          500,000      500        (500)        -          -         -

Notes payable
to stockholders
contributed as
additional
paid-in capital         -         -         77,887        -          -       77,887

Proceeds from
private
placement of
common stock
at a price of
$0.25 per share    6,120,000     6,120   1,523,880  (1,000,000)     -       530,000

Net loss                -         -           -           -     (499,260)  (499,260)
                  ------------------------------------------------------------------
Balance at
December 31, 1998 18,778,412    18,778   2,882,509  (1,000,000)(1,767,926)  133,361

Receipt of
subscription
receivable              -         -           -        500,000           -  500,000

Cancellation
of shares
surrendered
by officer        (1,000,000)  (1,000)      1,000         -          -         -

Net loss               -          -           -           -     (547,742)  (547,742)
                  ------------------------------------------------------------------
Balance at
December
31, 1999          17,778,412    17,778   2,883,509   (500,000)(2,315,668)    85,619

Proceeds from
private
placement of
common stock
(See Note 3)       1,875,000     1,875   1,498,125        -          -    1,500,000

Receipt of
subscription
receivable              -         -           -        500,000       -      500,000
                  ------------------------------------------------------------------
Net loss                -         -           -           -   (1,050,306)     (1,050,306)

Balance at
December
31, 2000          19,653,412  $ 19,653  $4,381,634 $    -     $(3,365,974)$1,035,313
                  ==================================================================

</TABLE>
                          See accompanying notes.
                                    F-7

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                           STATEMENT OF CASH FLOWS
            for the years ended December 31, 2000 and 1999, and
   for the period from inception, December 12, 1996, to December 31, 2000
                        ----------------------------
<TABLE>
<CAPTION>
                                        Year Ended     Year Ended     Inception to
                                        December 31,   December 31,   December 31,
                                           2000           1999            2000
                                        ------------   ------------   ------------
<S>                                     <C>            <C>            <C>
Cash flows from operating activities:
  Net loss                              $(1,050,306)   $  (547,742)   $(3,365,974)
  Adjustments to reconcile net loss
    to net cash used in operating
    activities:
    Common stock issued as compensation
      or in payment of accounts payable        -              -           825,000
    Depreciation and amortization            60,289         41,712        157,306
    Changes in operating assets and
      liabilities:
      Decrease (increase) in deposits         3,337           -           (14,985)
      Increase (decrease) in accounts
        payable                             157,240         (3,135)       167,858
                                        ------------   ------------   ------------
        Net cash used in operating
          activities                       (829,440)      (509,165)    (2,230,795)
                                        ------------   ------------   ------------
Cash flows from financing activities:
  Proceeds from sale of common stock      1,500,000           -         2,062,500
  Proceeds from collection of
    subscription receivable                 500,000        500,000      1,500,000
  Payment of stock offering costs              -              -           (64,100)
  Proceeds from notes payable               213,000           -           330,887
  Payments on notes payable                (183,000)          -          (223,000)
  Payments on capital lease obligations     (87,147)       (71,573)      (233,409)
                                        ------------   ------------   ------------
        Net cash provided by financing
          activities                      1,942,853        428,427      3,372,878
                                        ------------   ------------   ------------
Net increase (decrease) in cash and
  cash equivalents                        1,113,413        (80,738)     1,142,083

Cash and cash equivalents at beginning
  of period                                  28,670        109,408           -
                                        ------------   ------------   ------------
Cash and cash equivalents at end of
  period                                $ 1,142,083    $    28,670    $ 1,142,083
                                        ============   ============   ============
Supplemental disclosures:
  Cash paid for interest expense        $    49,478    $    30,672    $   126,183
                                        ============   ============   ============
</TABLE>





                          See accompanying notes.
                                    F-8

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

1.   Organization and Summary of Significant Accounting Policies
     -----------------------------------------------------------
     Gene-Cell, Inc. (the "Company") is a Nevada Corporation involved in
biopharmaceutical research.  The Company's research is directed at
developing gene-based therapies for treatment of a wide variety of genetic
diseases and disorders using its proprietary technology for microinjecting
DNA and proteins into living cells.  The Company was originally
incorporated as Genesystems, Inc. on December 12, 1996 and subsequently
adopted a name change to Gene-Cell, Inc. upon completion of a
recapitalization in December 1996.  The December 1996 recapitalization
occurred when the Company acquired the non-operating public shell of Tzaar
Corporation.  Tzaar Corporation had no net assets or liabilities at the
date of acquisition.  The historical financial statements presented herein
are those of Gene-Cell, Inc. and its predecessor, Genesystems, Inc.  The
Company is considered a development stage enterprise because it has not yet
generated revenue from sale of its products.  Since its inception, the
Company has devoted substantially all of its efforts to research and
development and the search for sources of capital to fund its efforts.
Following is a summary of the Company's significant accounting policies:

     Significant Estimates
     ---------------------

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses
during the periods.  Actual results could differ from estimates making it
reasonably possible that a change in the estimates could occur in the near
term.

     Cash and Cash Equivalents
     -------------------------
     The Company considers all highly liquid short-term investments with an
original maturity of three months or less when purchased, to be cash
equivalents.









                                 Continued
                                    F-9




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


1.   Organization and Summary of Significant Accounting Policies, continued
     ----------------------------------------------------------------------

     Laboratory Equipment
     --------------------
     Laboratory equipment acquired under capital leases is recorded at cost
and depreciated on the straight-line method over a five year  estimated
useful life.  Accordingly the weighted average life of the company's
laboratory equipment under capital leases is five years.  Expenditures for
normal repairs and maintenance are charged to expense as incurred.  The
cost and related accumulated depreciation of assets sold or otherwise
disposed of are removed from the accounts, and any gain or loss is included
in operations.

     Income Taxes
     ------------
     The Company uses the liability method of accounting for income taxes.
Under this method, deferred income taxes are recorded to reflect the tax
consequences on future years of temporary differences between the tax basis
of assets and liabilities and their financial amounts at year-end.  The
Company provides a valuation allowance to reduce deferred tax assets to
their net realizable value.

     Research and Development Expenses
     ----------------------------------
     Research and development costs are expensed as incurred.  These costs
consist of direct and indirect costs associated with specific projects.

     Stock-Based Compensation
     ------------------------
     Stock-based compensation is accounted for using the intrinsic value
method prescribed in Accounting Principles Board Opinion ("APB") No. 25,
"Accounting for Stock Issued to Employees", rather than applying the fair
value method prescribed in Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation".  The Company
applies the disclosure only provisions of SFAS No. 123.

     Loss Per Share
     --------------
     Basic and diluted net loss per share is computed on the basis of the
weighted average number of shares of common stock outstanding during each
period.  Potentially dilutive options that were outstanding during  1999,
were  not considered  in the  calculation of diluted earnings per share
because the Company's net loss rendered their impact anti-dilutive.
Accordingly, basic and diluted loss per share were identical for the years
ended December 31, 2000 and 1999.



                                 Continued
                                    F-10

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


1.   Organization and Summary of Significant Accounting Policies, continued
     ----------------------------------------------------------------------

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

     The Company includes fair value information in the notes to financial
statements when the fair value of its financial instruments is different
from the book value.  When the book value approximates fair value, no
additional disclosure is made.

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

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

     Recently Issued Pronouncements
     ------------------------------

     In June 1998 and June 2000, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No.
133, "Accounting for Derivative Instruments and Hedging Activities" and
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities".  These statements establish accounting and reporting
standards requiring that every derivative instrument be recorded on the
balance sheet as either an asset or liability measured at its fair value.
SFAS Nos. 133 and 138 also require that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met.  SFAS Nos. 133 and 138 are effective for fiscal years
beginning after June 15, 2000.  The Company does not currently hold
derivative instruments or engage in hedging activities and, accordingly,
the adoption of these new standards is not expected to have a material
impact on the Company's results of operations or financial position.

                                 Continued
                                    F-11

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

1.   Organization and Summary of Significant Accounting Policies, continued
     ----------------------------------------------------------------------
     Recently Issued Pronouncements, continued
     -----------------------------------------

     In December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), which clarifies certain existing accounting
principles for the timing of revenue recognition and its classification in
the financial statements.  In October 2000, the SEC issued further guidance
on the interpretations included in SAB 101.  The implementation of SAB 101
did not have a material impact on the Company's results of operations or
financial position.


2.   Cash and Cash Equivalents
     -------------------------
     Included in cash and cash equivalents at December 31, 2000 were
interest bearing deposits of $1,000,103.


3.   Accounts Payable and Accrued Liabilities
     ----------------------------------------
     Accounts payable and accrued liabilities at December 31, 2000
consisted of the following:

               Accounts payable                                $   29,800
               Accrued patent license option costs                118,058
               Accrued legal and professional expenses             20,000
                                                               ----------
                 Total                                         $  167,858
                                                               ==========

4.   Note Payable to a Bank
     ----------------------
     Note payable to a bank at December 31, 2000 consists of amounts due
under a $60,000 revolving line of credit agreement.  The line of credit
bears interest of 11.75% and is collateralized by the guarantee of certain
primary stockholders.









                                 Continued
                                    F-12

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

5.   Income Taxes
     ------------

     The composition of deferred tax assets and the related tax effects at
December 31, 2000 were as follows:

               Liability
               ---------
               Book vs. tax basis of capital lease assets      $  (13,507)

               Asset
               -----
               Benefit from carryforward of net
                 operating loss                                   884,315

               Less valuation allowance                          (870,808)
                                                               ----------

                 Net deferred tax asset                        $     -
                                                               ==========

     The difference between the income tax benefit in the accompanying
statement of operations and the amount that would result if the U.S.
Federal statutory rate of 34% were applied to pre-tax loss is as follows:
<TABLE>
<CAPTION>
                                        2000                       1999
                              -------------------------  -------------------------
                                           Percentage                  Percentage
                                           of Pre-Tax                  of Pre-Tax
                                 Amount       Loss         Amount         Loss
                              ------------ -----------   ------------  -----------
<S>                           <C>          <C>           <C>           <C>
  Benefit for income tax at
  federal statutory rate      $  357,104      34.0%      $  186,232   34.0%

  Increase in valuation
    allowance                   (357,104)    (34.0)        (186,232)     (34.0)
                              ------------ -------       ------------  -------
       Total                  $     -          -  %      $     -           -  %
                              ============ ===========   ============  =======

</TABLE>

     At December 31, 2000, for federal income tax and alternative minimum
tax reporting purposes, the Company has approximately $2,600,000 of unused
net operating losses available for carryforward to future years.  The
benefit from carryforward of such net operating losses will expire in
various years between 2001 and 2020.  The benefit from utilization of net
operating loss carryforwards incurred prior to December 28, 1996 was
significantly limited in connection with a Company merger.  Such benefit
could be subject to further limitations if significant future ownership
changes occur in the Company.  The Company currently believes that
approximately $100,000 of its unused net operating loss carryforwards will
never be utilized due to expiration or limitations on use due to ownership
changes that occurred in 1996.

                                 Continued
                                    F-13


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

6.   Common Stock
     ------------
     During 2000, the Company sold 1,875,000 equity units to certain
individuals and trusts (the "Investors") under a private placement
agreement for $0.80 per unit.  Each unit consisted of one share of the
Company's common stock and a warrant to acquire one share at an exercise
price of $2.00 per share for a five-year term.  The total proceeds raised
in the private placement were $1,500,000.  In addition to the 1,875,000
shares and 1,875,000 warrants issued to the Investor, the Company also
issued 80,000 warrants with an identical exercise price and term to two
individuals for fund raising efforts.

     During 1998, the Company entered a funding agreement (the "Funding
Agreement") under which the Company issued 6,000,000 shares of common stock
to certain individuals and companies in exchange for $500,000 and two
promissory notes for $500,000 each that mature in January 1999 and January
2000.  These notes are non-interest bearing.  The Company also issued
120,000 shares of common stock to an individual for $30,000 in a
transaction unrelated to the funding agreement.

     During 1997, the Company issued 100,000 shares of common stock to an
individual for $1.50 per share.  Sales of the Company's stock during 1998
were all priced at $0.25 per share and Company management made the decision
to issue the 1997 investor an additional 500,000 shares of the Company's
common stock to equalize his share price with 1998 investors.  The issuance
of the additional shares has been treated as a special dividend to the
stockholder in the statement of stockholders' equity.

7.   Stock Warrants
     --------------
     Following is a summary of stock warrant activity during the year ended
December 31, 2000:
<TABLE>
<CAPTION>
                              Number of      Exercise         Weighted
                                Shares        Price         Average Price
                              -----------    -----------    -------------
<S>                           <C>            <C>            <C>
   Warrants outstanding at
     December 31, 1999             -         $ -               $ -

     Issued                   1,955,000      $2.00             $2.00
     Canceled                      -           -                 -
     Exercised                     -           -                 -
                              -----------
   Warrants outstanding at
     December 31, 2000        1,955,000      $2.00             $2.00
                              ===========
</TABLE>

     The weighted average fair value of warrants issued during the year
ended December 31, 2000 was $0.21.

                                 Continued
                                    F-14

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

8.   Lease Commitments
     -----------------
     The Company acquired certain office and laboratory equipment under
leases accounted for as capital leases.  Amortization of leased assets is
included in depreciation and amortization expense.

     The Company also leases office and laboratory facilities and certain
office equipment under operating leases.  The Company's lease for office
and laboratory space was renewed in October 2000 for a three year term and
includes a renewal option for an additional three years at the market rate.
Rental expense for operating leases was $24,843 and $22,383 during the year
ended December 31, 2000 and 1999, respectively.

     Minimum lease payments due under leases with original lease terms of
greater than one year and expiration dates subsequent to December 31, 2000
are summarized as follows:
<TABLE>
<CAPTION>

                                       Operating Leases
                                     ----------------------
    Year Ended             Capital   Laboratory     Office
   December 31,            Leases    and Office   Equipment     Total
   ------------          ----------  ----------   ----------  ----------
   <S>                   <C>         <C>          <C>         <C>
      2001               $   68,800  $   23,979   $    1,868  $   94,647
      2002                   55,290      23,979        1,868      81,137
      2003                   23,813      23,979          156      47,948
                         ----------  ----------   ----------  ----------

   Total minimum leases     147,903  $   71,937   $    3,892  $  223,732
                                     ==========   ==========  ==========

   Less amount
      representing
     interest               (24,305)
                         ----------
   Present value of
      minimum
     lease payments         123,598

   Less current
      portion               (53,298)
                         ----------
   Long-term portion     $   70,300
                         ==========
</TABLE>


                                 Continued
                                    F-15

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

9.   Employee Benefit Plans
     ----------------------
     Simplified Employee Pension Plan
     --------------------------------

     Effective August 1997, the Company adopted a defined contribution
Simplified Employee Pension plan that covers substantially all Company
employees.  Under the Plan, employees may contribute, on a tax deferred
basis, up to 15% of their compensation; however, annual employee
contributions may not exceed $6,000.  During the year ended December 31,
2000 and 1999, the Company matched deferrals of up to 3% of compensation.
Company contributions to the Plan are discretionary and totaled $5,046 and
$2,416 for the years ended December 31, 2000 and 1999, respectively.

     Stock Option Plan
     -----------------
     The Company periodically issues incentive stock options to key
employees, officers, and directors to provide additional incentives to
promote the success of the Company's business and to enhance the ability to
attract and retain the services of qualified persons.  The issuance of such
options are approved by the Board of Directors.  The exercise price of an
option granted is determined by the fair market value of the stock on the
date of grant.

     The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
FASB Statement No. 123, "Accounting for Stock-Based Compensation", requires
use of option valuation models that were not developed for use in valuing
employee stock options.  Under APB 25, because the exercise price of the
Company's employee stock options is greater than or equals the market price
of the underlying stock on the date of grant, no compensation expense has
been recognized.

     Proforma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of
that Statement.  The fair value for these options was estimated at the date
of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for 2000 and 1999:  risk-free interest rate of
6%; no dividend yield; weighted average volatility factor of the expected
market price of the Company's common stock of 70%; and a weighted-average
expected life of the options of 5 years.

                                 Continued
                                    F-16

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


9.   Employee Benefit Plans, continued
     ---------------------------------
     The Black-Scholes option valuation model was developed for use in
estimating fair value of traded options which have no vesting restrictions
and are fully transferable.  In addition, option valuation models require
the input of highly subjective assumptions including the expected stock
price volatility.  Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its
employee stock options.

     The Company has adopted the 1998 Stock Option Plan (the "Option Plan")
under which stock options for up to 2,500,000 shares of the Company's
common stock may be awarded to officers, directors and key employees.  The
Option Plan is designed to attract and reward key executive personnel.  At
December 31, 2000, the Company had granted options for 24,696 of the
2,500,000 shares of common stock reserved for issuance under the Option
Plan.

     Stock options granted pursuant to the Option Plan expire not more than
ten years from the date of grant and typically vest over three years, with
33% vesting after one year and 33% vesting after each of the two succeeding
years.  During 2000 and 1999, all of the options granted by the Company
were granted at option prices in excess of the fair market value of the
common stock at the date of grant.

     For purposes of proforma disclosures, the estimated fair value of the
options is included in expense over the option's vesting period or expected
life.  The Company's proforma net loss and basic and dilutive net loss per
share were essentially the same as net loss and basic and dilutive net loss
per share as reported in the financial statements.












                                 Continued
                                    F-17

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

9.   Employee Benefit Plans, continued
     ---------------------------------
     Stock Option Plan, continued
     ----------------------------
     A summary of the Company's stock option activity and related
information for the years ended December 31, 2000 and 1999 follows:
<TABLE>
<CAPTION>
                                        Number of
                                         Shares
                                          Under             Weighted-Average
                                         Options             Exercise Price
                                        -----------         ----------------
     <S>                                <C>                 <C>
     Outstanding-December 31, 1998          8,144                $1.00

     Granted                                8,152                $1.00
     Exercised                               -
     Forfeited                               -
                                        -----------
     Outstanding-December 31, 1999         16,296                $1.00


     Granted                                8,400                $1,00
     Exercised                               -
     Forfeited                               -
                                        -----------

     Outstanding-December 31, 2000         24,696                $1.00
                                        ===========
</TABLE>

     The weighted-average fair value of options granted during the years
ended December 31, 2000 and 1999 was approximately $0.30.

     A summary of outstanding stock options at December 31, 2000, follows:
<TABLE>
<CAPTION>
                                             Remaining
                                             Contractual
     Number of Shares    Expiration Date     Life (Years)        Exercise Price
     ----------------    ---------------     ------------        --------------
     <S>                 <C>                 <C>                 <C>
     Exercisable at December 31, 2000:

          8,144          June 2008               7.5                 $1.00
          5,434          June 2009               8.5                 $1.00
          2,800          June 2010               9.5                 $1.00

     Non-exercisable at December 31, 2000:

          2,718          June 2009               8.5                 $1.00
          5,600          June 2010               9.5                 $1.00
         ------
         24,696
         ======
</TABLE>
                                 Continued
                                    F-18

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

19.  Related Party Transactions
     --------------------------

     During the year ended December 31, 2000, certain stockholders made
loans to the Company totaling $130,000.  These notes bore interest at 9%
per year and were fully repaid when the Company completed a $1,500,000
private placement in December 2000.

     During the year ended December 31, 1997, the Company entered into a
$7,876 capital lease transaction for certain laboratory equipment, with an
officer/stockholder of the Company.  The lease bears interest at an
effective annual rate of 18% per year and is due in monthly payments of
$200 through November 2002.  During each of the years ended December 31,
2000 and 1999, the Company made lease payments under this lease of $2,400.

     During the period from inception, December 12, 1996, to December 31,
1996, the Company issued 7,500,000 shares of its common stock to the three
founders of the Company.  These shares were issued primarily for services
rendered founding the corporation and for the rights to certain in-process
research and development that was conceptualized by the founders.  One of
the founders received 3,500,000 of the 7,500,000 shares issued in the
transaction because he planned to use 1,000,000 of the shares to compensate
attorneys and other providers of professional services.  The common stock
issued to the founders was not subject to any vesting or future service
requirements and, accordingly, the issuance of all shares was recognized in
1996 as follows:


     Research and development expense                            $436,000
     General and administrative expense                           389,000
                                                                 --------
          Total                                                  $825,000
                                                                 ========
     During the year ended December 31,1999, the founder that originally
received 3,500,000 shares returned 1,000,000 of the shares because
management ultimately decided to use cash to pay for professional services.
The shares returned were treated as treasury shares, recorded at zero cost,
and subsequently retired.









                                 Continued
                                    F-19


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

11.  Going Concern Considerations
     ----------------------------
     Since its inception, as a development stage enterprise, the Company
has not generated any revenue and has been dependent on debt and equity
raised from individual investors to sustain its operations.  During the
years ended December 31, 2000 and 1999, the Company incurred net losses of
$(1,050,306) and $(547,742), respectively, and negative cash flows from
operations of $(829,440) and $(509,165), respectively.  These factors raise
substantial doubt about the Company's ability to continue as a going
concern.

     In order to address its liquidity situation, during 2000 management
issued 1,875,000 shares of its common stock to the Investors under a
private placement agreement.  Management believes these funds received in
the private placement will sustain the Company until the third quarter of
2001 and that the Company will need to raise additional working capital at
that time.  Management will seek to leverage the Company's comprehensive
non-viral gene modification platform and license for gene repair in order
to establish strategic alliances with leading biotechnology and
pharmaceutical companies.  Management eventually plans, as its research and
development progresses, to seek a relationship with a major pharmaceutical
company in order to take its technology through the required government
regulatory process and FDA approval.

     There can be no assurances that the Company's current cash reserves
will be adequate to sustain its operations, that the Company can raise
additional cash through private placement of its common stock, nor that the
Company can establish a relationship with a major pharmaceutical company.
There can also be no assurances that the Company will ever obtain FDA
approval of gene therapeutics based upon its DNA microinjection technology
nor that it can attain profitability.  The Company's long-term viability as
a going concern is dependent upon three key factors, as follows:

     -    The Company's ability to obtain adequate sources of funding to
          continue the development of its proprietary DNA microinjection
          technology.

     -    The ability of the Company to take its DNA microinjection
          technology through the required government regulatory process and
          ultimately obtain FDA approval.


                                 Continued
                                    F-20


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

11.  Going Concern Considerations, continued
     ---------------------------------------

     -    The ability of the Company to ultimately commercialize gene
          therapeutics based upon its proprietary DNA microinjection
          technology and achieve adequate profitability and positive cash
          flows to sustain its operations.


12.  Non-Cash Investing and Financing Activities
     -------------------------------------------

     During the year ended December 31, 2000, the Company engaged in
certain non-cash investing and financing transactions as follows:

             Property and equipment acquired
               under capital lease obligations                  $  148,446

































                                    F-21