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, 2001
                                    --------------------------------

[ ]       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)

  8606 Arranmore Lane, Houston, Texas                               77095
----------------------------------------                         ----------
(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: $-0-.

The aggregate market value of the issuer's voting stock held as of December
31, 2001, by non-affiliates of the issuer was approximately $1,767,644.

As of April 10, 2002, issuer had 19,653,412 shares of its $.001 par value
common stock outstanding.

Transitional Small Business    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, 2001

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

TABLE OF CONTENTS

--------------------------------------------------------------------------
PART I

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

ITEM 2    DESCRIPTION OF PROPERTY. . . . . . . . . . . . . . . . . . . . 13

ITEM 3    LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 14

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS. . . . . 14

PART II

ITEM 5    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . 15

ITEM 6    PLAN OF OPERATION. . . . . . . . . . . . . . . . . . . . . . . 17

ITEM 7    FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 19

ITEM 8    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . . 40

PART III

ITEM 9    DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS,
          AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
          OF THE EXCHANGE ACT. . . . . . . . . . . . . . . . . . . . . . 40

ITEM 10   EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . 43

ITEM 11   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT. . . . . . . . . . . . . . . . . . . . . 43

ITEM 12   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . 45

PART IV

ITEM 13   EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . 46

          SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 47



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.


                                     3

     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.

     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.


                                     4


     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.

     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 has
been published in BLOOD 95:437-444, 2000; Current Opinion in Molecular
Therapuetics 2: 412-419, 2000; and most recently in Gene Therapy 9:118-126,
2002.  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.



                                     5


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.

Diseases Potentially Treatable by Blood Stem Cell Gene Therapy

<Table>
<Caption>


Disease             Sickle Cell         a Thalassemia       b Thalassemia
------------------  ------------------  ------------------  ------------------
<S>                 <C>                 <C>                 <C>
# of Patients (US)  40,000 - 60,000         100,000 new cases/year worldwide
------------------  ------------------  ------------------  ------------------
Gene Affected       B-globin            a -globin           B -globin
------------------  ------------------  ------------------  ------------------
More Common Gene    Point mutations     Deletions of gene   Point mutations
Defects                                 (-80% of cases)     (-6 mutations
                                        Point mutations     responsible for
                                                            90% of cases in
                                                            each racial group
------------------  ------------------  ------------------  ------------------
Results of Defect   Crescent shaped     Poor oxygen         Crescent shaped
                    red blood cells,    treatment           red blood cells,
                    poor oxygen                             poor oxygen
                    transport heart                         treatment
                    trouble, etc.
------------------  ------------------  ------------------  ------------------
Current Treatment   Blood transfusion   Regular blood       Regular blood
                    Hydroxyurea         transfusions        transfusions
                    therapy             Chelatin therapy    Chelation therapy
------------------  ------------------  ------------------  ------------------
GCI Gene Therapy    Gene repair         Gene Delivery of    Gene repair
Treatment                               a-globin; Gene
                                        repair of point
                                        mutation
------------------  ------------------  ------------------  ------------------
RESULTS             Corrected B-globin  Corrected a-globin  Corrected B-globin
                    in red blood cells  in red blood cells  in red blood cells
------------------  ------------------  ------------------  ------------------
</Table>

*Thalassemia occurs most frequently in people of Italian, Middle Eastern,
African, Greek and Southeast ancestry.


                                     6


Diseases Potentially Treatable by Muscle/Bone Stem Cell Gene Therapy

<Table>
<Caption>
                                                Duchenne
                Osteogenesis    Ehlers-Danlos   Muscular         Marfan
Disease         Imperfecta      Syndrome        Dystrophy        Syndrome
--------------  --------------  --------------  --------------   --------------
<S>             <C>             <C>             <C>              <C>
# of US
Patients US     12,500          50,000          12,500           12,500-25,000
--------------  --------------  --------------  --------------   --------------
Gene Affected   Collagen        Collagen;       Dystrophy        Fibrillin
                                Lysyl
                                hydroxylase
--------------  --------------  --------------  --------------   --------------
More Common     Point           Point           Large            Point
Gene Defects    mutations       mutations       deletions        mutations
                small           small
                deletions       deletions
--------------  --------------  --------------  --------------   --------------
Results of      Brittle         Joint problems  Muscle           Skeletal &
Gene Defect     bones           Extreme         weakening        heart problems,
                Continuous      bruising and    Progressive      Reduced
                fractures/      bleeding        scoliosis        vision
                breaks
--------------  --------------  --------------  --------------   --------------
Current         Ineffective.    None.           Glucocorticoid   None. Surgical
Treatment/      Continued       Continued       therapy          replacement/
Prognosis       surgery and     surgical joint  slows            repair of
                physiotherapy   repair,         progression up   aorta, etc.,
                                bleeding        to 3 years       adrenergic
                                disorders       (only in some    agents
                                                patients)
--------------  --------------  --------------  --------------   --------------
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     defectives in    and cardiac
                osteoclasts     and             skeletal         muscles
                                osteoclasts     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.

                                     7

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

     Since the beginning of the fourth quarter of fiscal 2001, the Company
has not had sufficient funds to continue, in earnest, its ongoing research
activities.  As a consequence, laboratory operations were suspended in the
fourth quarter of fiscal 2001.  During the first quarter of fiscal 2002,
the Company sold certain equipment it owned as well as laboratory
supplies/reagents in order to resolve delinquent payments to equipment
leasing companies.  The equipment and laboratory supplies were sold to the
Malcolm Hewitt Wiener Foundation for $45,000.

      The Company has borrowed approximately $176,726 from shareholders,
management, and key employees throughout fiscal 2001, none of which has
been re-paid.  The borrowed funds have been used for ongoing activities of
the Company since October 2001(e.g., fund raising and searching for
collaborative partnership opportunities).  In addition, management and key
employees have continued to work for the Company since October 2001 without
cash compensation.  The Company's monthly lease expenses for its lab
equipment is currently being paid by the Fund for Inherited Disease
Research.  In exchange for paying these obligations for the Company, the
Fund for Inherited Disease Research uses the Company's equipment as needed.

     Although the Company is actively seeking bridge financing and
additional funding, it has been unsuccessful in securing such financing
and/or funding.  The Company is in immediate need of additional capital to
continue operations.  At the present time, there is no way to predict when,
or if, any contributions may be made.  There is no assurance that the
Company will be successful in obtaining additional funding on attractive
terms or at all.  If the Company is unsuccessful in obtaining significant
additional funding by the end of the second quarter of 2002, it is unlikely
the Company will be able to continue any operations.

     It is customary for biotech companies at a certain stage of research
to actively pursue partnerships and/or licensing agreements with larger
biopharmaceutical companies.  Given the Company's current financial
situation, it is seeking such a  relationship with another company.  The
potential relationship referred to is in the early stages of development
and there can be no assurance that any relationship will ever fully develop
with this company.  Future partnership(s)/investment(s) with a
pharmaceutical/large biotechnology company, if any, 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 could 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.

                                     8

     In addition, licensing agreements and/or partnerships with various
pharmaceutical firms relating to gene function studies may 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 would 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 contracts with certified firms to dispose
of its human blood products.

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

     If the Company is able to continue its research and development, it
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 would carry out the ex vivo modification
and processing of cells at facilities under its own control.

                                     9

     Before obtaining regulatory clearance for commercial sale of any
potential products or services/therapies under development, the Company
would have to 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 would demonstrate sufficient safety and
efficacy  to obtain the requisite regulatory clearance or would 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.



                                     10


     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.  Assuming the Company can obtain sufficient additional funding,
before applying for FDA approval 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 have to 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 would then likely 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
----------------------

     Provided that additional investment is forthcoming, 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,$788,883 in 2000, and
$1,069,724 in 2001 on research and development.  Any research and
development activities in 2002 will require a significant influx of new
investment monies.  The Company has established working research and
development relationships with investigators at several universities and
other biotechnology companies.

     The Company believes that gene repair is a powerful technique that
exploits the inherent repair capabilities of the cell. The gene repair
programs employed by the Company take advantage of a cell's endogenous
proteins that protect the integrity of the genome.  Several copies of small
molecules of DNA carrying the correct sequence for the gene of interest are
introduced into the cell via microinjection.  These DNAs are highly similar
to the region surrounding the genetic mutation, except the introduced DNA
contains the corrected DNA sequence.  Naturally occurring cellular
processes 'cut out' the defective genomic sequence and 'paste in' the
corrected sequence, incorporating the corrected region into the genome. The
cell's own proteins repair the defect, maintaining the corrected DNA in a
natural state and insuring appropriate gene regulation and function.

     The Company also believes that gene repair is best suited to diseases
arising from a known minor change in the DNA sequence and that gene repair
cannot be easily accomplished with viruses, due to the specialized nature
of both the DNA and the repair process.  The Company, together with its
partners and collaborators, is initially targeting this strategy for the
gene therapy of blood disorders. In addition, the Company has obtained
exclusive rights to specialized repair molecules, which it is currently
assessing for gene therapy of sickle cell disease.

                                     11

     In 2001, the Company made significant progress in demonstrating
significant levels of conversion of normal or healthy b-globin sequence to
sickle or unhealthy b-globin sequence in normal blood stem/progenitor cells
and their progeny using DNA repair molecules.  The blood stem/progenitor
cells were microinjected with targeted gene repair molecules designed to
introduce the sickle mutation in the b-globin sequence.  This demonstration
of the normal to sickle conversion was an essential first step in the
ultimate utilization of gene repair technology as a genetic therapy.  The
Company first demonstrated, together with its collaborators, at the
University of Texas Medical Branch, Galveston and the University of
Delaware,  that microinjection-mediated delivery of the 1st generation
repair molecules (RNA-DNA hybrids) to human blood stem/progenitor cells
achieved genetic conversion rates as high as 10-15% in 11% of experimental
samples.  Given that as few as 10% normal hematopoietic cells are
sufficient to keep patients free of sickle cell disease, the level of
conversion achieved in some samples may be of therapeutic benefit in
patients with sickle cell disease.  These results were published earlier
this year in Gene Therapy 9:118-126, 2002.

     In collaboration with investigators at the University of Vermont, the
Company demonstrated highly efficient conversion in blood stem/progenitor
cells microinjected with Small Fragment Homologous Replacement [SFHR]
molecules.  These results were reported in the 4th quarter of 2001 at an
international scientific conference in Rome, Italy (Genome Medicine: Gene
Therapy for the Millennium Conference; Abstract: 'Application of SFHR to
gene therapy of monogenic disorders').  The Company devoted significant
effort in 2001 in order to demonstrate that the normal to sickle genetic
conversion occurs in SFHR microinjected blood stem cells as assayed by
transplantation into immune-deficient mice.  The promising results obtained
from these experiments are presently being written up for scientific
publication.  The next step in these studies will be demonstrating the
sickle to normal globin conversion in defective blood stem/progenitor cells
obtained from patients with sickle cell disease.

     In March of 2001, the Company entered an agreement with Technobotics,
Inc. ("TI"), a Texas robotics corporation, to combine efforts with TI to
research and develop an Automated Microinjection Workstation ("AMW") that
will enable rapid and efficient microinjection of cells for clinical and
commercial functional genomics applications.  The AMW platform represents,
to the knowledge of the Company, the best technology available for genetic
modification of human blood stem cells.  A Phase I prototype has been
completed and tested at the Company.  In fact, this prototype was critical
to the extensive animal experiments referred to above. Significant progress
was also made on a Phase II prototype with significant additional
capabilities.  The Company will share both costs and benefits of such
research and development efforts.  TI brings expertise in automation and
computer vision processing that are vital to the successful development of
an AMW.

     In summary, the Company's product is a biotechnology platform
consisting of five components: 1) unique microinjection needles; 2) cell
attachment/detachment technologies; 3) a robotics workstation that enables
rapid and efficient microinjection; 4) genetic material and various gene
repair and gene compensation technologies; and 5) somatic stem cell
isolation and expansion.  The Company has licensing rights to patents
granted relating to gene repair and gene compensation and has also filed
continuation-in-part patent applications during the first quarter of fiscal
2001 (component 4).  The Company also has patents pending on components 1
and 2, and plans to submit patents covering hardware and software contained
in component 3.


                                     12


Number of Employees
-------------------

     The Company currently has four Ph.D. trained scientists working as
part-time employees. The Company will not consider increasing the part-time
employees to a full-time status and/or hiring additional employees in 2002
unless the Company is successful in securing additional funding.  Since
October 2001, the Company has had insufficient funds to pay salaries or
other cash compensation to its employees.   If the Company is unable to
raise significant additional funds it will not be able to continue to
retain the services of its four part-time employees.

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

     In March of 2002, the Company relocated its laboratory equipment from
Houston, Texas to Newtown, Pennsylvania where it will share facilities
operated by the Fund for Inherited Disease Research, subject to
availability of funds.  The Company vacated its facilities located in
Houston on or about March 15, 2002, due in part to its lack of funding.
The Company is seeking to terminate the remainder of its lease which
extends though December 2003.

     The Company leases office equipment at a rate of $1,868 per year
through 2002 which  lease agreements conclude early in 2003 with $156 due
for fiscal year 2003.  The Company also leases lab equipment through
several leasing agreements for a total of $92,579 in 2001, $160,346 in
2002, and $101,221 in 2003.  Most of the agreements expire at various times
in 2003 and 2004.  The monthly lease expenses for lab equipment is
currently being paid by the Fund for Inherited Disease Research, in
exchange for the ability of the Fund for Inherited Disease Research to use
the equipment as needed.

                                     13


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

     Short Fragment Homologous                                  60/350,161
     Recombination to Effect Targeted
     Genetic Alterations in Plants

     SFHR- Mediated Targeted Gene                               09/715,504
     Repair and Modification and Uses Thereof

     Single-Stranded End-Capped                                 09/767,775
     Oligonucleotide Mediated Targeted Gene
     Repair and Modification and Uses Thereof

     Nucleic Acid Constructs and Uses             Australian Patent #733715
     Thereof for Direct Nucleic Acid
     Incorporation into Cells

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 arose and sufficient funds were available.  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.

     To the knowledge of the Company, it 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.

                                     14


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 31,2001 the
Company had approximately 99 shareholders holding 19,653,412 shares of
common stock.  Of the issued and outstanding common stock approximately
8,821,713 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.

<Table>
<Caption>
                                   CLOSING BID         CLOSING ASK

                                   HIGH      LOW       HIGH      LOW
                                   -------   -------   -------   -------
<S>                                <C>       <C>       <C>       <C>
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

2001
First Quarter                      0.59375   0.4375    0.6875    0.5625
Second Quarter                     0.46      0.33      0.5625    0.35
Third Quarter                      0.40      0.13      0.50      0.16
Fourth Quarter                     0.29      0.13      0.37      0.16

</Table>
     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 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.


                                     15

     The Company has granted the following Options, none of which have been
exercised:

     Employee Stock Option Grants
     ----------------------------

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

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

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

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

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

     David Brown, an employee of the Company, received options to purchase
up to1,378 shares of common stock on April 1, 2001 and up to 919 shares of
common stock on June 1, 2001.

     Victor Carsrud, an employee of the Company, received options to
purchase up to 3,750 shares of common stock on April 1, 2001 and up to
3,750 shares of common stock on June 1, 2001.

     Barbara Chow, an employee of the Company, received options to purchase
up to 3,750 shares of common stock on April 1, 2001 and up to 3,750 shares
of common stock on June 1, 2001.

     Brian Davis, an employee of the Company, received options to purchase
up to 3,750 shares of common stock on April 1, 2001 and up to 3,750 shares
of common stock on June 1, 2001.

     Nicole Prokopishyn, an employee of the Company, received options to
purchase up to 3,750 shares of common stock on April 1, 2001 and up to
3,750 shares of common stock on June 1, 2001.

     Tamara Tsulaia, an employee of the Company, received options to
purchase up to 3,750 shares of common stock on April 1, 2001 and up to
2,813 shares of common stock on June 1, 2001.

     Judith Yannariello Brown, an employee of the Company, received options
to purchase up to 3,750 shares of common stock on April 1, 2001 and up to
3,375 shares of common stock on June 1, 2001.

     Aqing Yao, an employee of the Company, received options to purchase up
to 938 shares of common stock on April 1, 2001.

     Hong Liu, an employee of the Company, received options to purchase up
to 638 shares of common stock on April 1, 2001.

                                     16


     Each Employee Stock Option Grant listed below vest at 25% upon the
grant date and then an additional 25% per year on the anniversary of the
grant date and become fully vested after three years from the date of
grant.  All options listed below are exercisable, upon vesting, at a price
of $0.35 per share for a period of ten years beginning at the grant date.

     Brian Davis, an officer and director of the Company, received options
to purchase up to 550,000 shares of common stock on August 25, 2001.

     Michael Davis, an officer of the Company, received options to purchase
up to 100,000 shares of common stock on August 25, 2001.

     David Brown, an officer of the Company, received options to purchase
up to 120,000 shares of common stock on August 25, 2001.

     Gunther Soraperra, a director of the Company, received options to
purchase up to 100,000 shares of common stock on August 25, 2001.

     Tom Kubota, a director of the Company, received options to purchase up
to 100,000 shares of common stock on August 25, 2001.

     Judith Yannariello-Brown, an employee of the Company, received options
to purchase up to 225,000 shares of common stock on August 25, 2001.

     Nicole L. Prokipishyn, an employee of the Company, received options to
purchase up to 225,000 shares of common stock on August 25, 2001.

     Barbara L. Chow, an employee of the Company, received options to
purchase up to 75,000 shares of common stock on August 25, 2001.

     N.D. Victor Carsrud, an employee of the Company, received options to
purchase up to 75,000 shares of common stock on August 25, 2001.

     Gina L. Barron, an employee of the Company, received options to
purchase up to 8,600 shares of common stock on August 25, 2001.

     Non-employee Stock Option Grants
     --------------------------------

     Each Stock Option Grant listed below vests immediately at the grant
date.  All options listed below are exercisable at a price of $1.00 for a
period of seven years beginning at the grant date.

     Technobotics, Inc., a Texas corporation, received options to purchase
up to 75,000 shares of common stock on March 12, 2001.

Item 6.   Plan of Operations

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.


                                     17


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

     As of December 31, 2001, the Company had an accumulated deficit of
($4,844,712) funded by paid-in capital.  During the year ended December 31,
2000, the Company had an accumulated deficit of ($3,365,974).  During the
years ended December 31, 2000 and 1999, the Company had losses from
operations of ($1,050,306) and ($547,742), respectively.  The Company had
losses of approximately ($1,478,738) for the year ending December 31, 2001.
 The Company does not expect to make any major capital expenditures in the
foreseeable future, 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.

     Since the fourth quarter of fiscal 2001, the Company has had
insufficient funds to continue its ongoing research and development
activities.  As a consequence, laboratory operations were suspended in the
fourth quarter of fiscal 2001.  In fiscal 2001 the Company borrowed
approximately $176,726 from shareholders, management, and key employees,
none of which have been re-paid.  During the first quarter of fiscal 2002,
the Company sold certain equipment it owned as well as laboratory
supplies/reagents in order to resolve delinquent payments to equipment
leasing companies.  The equipment and laboratory supplies were sold to the
Malcolm Hewitt Wiener Foundation for $45,000.

     There has been a significant reduction in the Company's scientific
staff since September 2001 because of the Company's lack of working
capital.  Since October 2001 the ongoing activities of the Company (e.g.
fund raising and searching for collaborative partnership opportunities)
have been primarily funded by loans to the Company from management, key
employees and through the sale of its equipment.  In addition, management
and key employees have continued to work for the Company since October 2001
without cash compensation.  The monthly lease expense for lab equipment is
currently being paid by the Fund for Inherited Disease Research in exchange
for the ability for the Fund for Inherited Disease Research to use the
equipment as needed.

     Although the Company is actively seeking bridge financing and
additional funding, it has been unsuccessful in securing such financing
and/or funding. The Company is in immediate need of additional capital to
continue operations.  At the present time, there is no way to predict when,
and if, any contributions may be made.  There is no assurance that the
Company will be successful in obtaining additional funding on attractive
terms or at all.  If the Company is unsuccessful in obtaining significant
additional funding by the end of the second quarter of 2002, it is unlikely
the Company will be able to continue any operations.

     To the extent the Company is able to raise sufficient funding to
continue operations, its 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.


                                     18


     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".

Item 7.   Financial Statements









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




                            FINANCIAL STATEMENTS
                   WITH REPORT OF INDEPENDENT ACCOUNTANTS
              for the years ended December 31, 2001 and 2000,
           and for the period from inception, December 12, 1996,
                            to December 31, 2001



































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

                                                                      Page

Report of Independent Accountants                                      1

Financial Statements:

  Balance Sheet as of December 31, 2001                                2

  Statement of Operations for the years ended
    December 31, 2001 and 2000, and for the period
    from inception, December 12, 1996, to December 31,
    2001                                                               3

  Statement of Stockholders' Equity for the years
    ended December 31, 2001 and 2000, and for the
    period from inception, December 12, 1996, to
    December 31, 2001                                                  4

  Statement of Cash Flows for the years ended
    December 31, 2001 and 2000, and for the period
    from inception, December 12, 1996, to
    December 31, 2001                                                  6

Notes to Financial Statements                                          7
































/Letterhead/




                     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, 2001, and the
related statements of operations, stockholders' equity and cash flows for
the years ended December 31, 2001 and 2000, and for the period from
inception, December 12, 1996, to December 31, 2001.  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, 2001, and the results of its operations and its cash flows for
the years ended December 31, 2001 and 2000, and for the period from
inception, December 12, 1996, to December 31, 2001, 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 12, 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 12.  These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.


                                             /s/ Ham, Langston & Brezina, L.L.P.



April 8, 2002
Houston, Texas


                                    -1-

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                               BALANCE SHEET
                             December 31, 2001
                                 __________

<Table>
<S>                                                                 <C>
     ASSETS
     ------

Current assets:
  Cash and cash equivalents                                         $     -
                                                                    ----------
    Total current assets                                                  -
                                                                    ----------
Laboratory equipment, net                                              307,931
Deposits                                                                 9,605
                                                                    ----------
      Total assets                                                  $  317,536
                                                                    ==========


LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
  Notes payable                                                     $  124,000
  Notes payable to stockholders                                        176,726
  Current portion of capital lease obligations             107,326
  Accounts payable and accrued liabilities                             240,582
                                                                    ----------
    Total current liabilities                                          648,634

Capital lease obligations, net of current portion           74,827
                                                                    ----------
      Total liabilities                                                723,461
                                                                    ----------
Commitment and contingencies

Stockholders' deficit:
  Common stock, $.001 par value, 100,000,000 shares
    shares authorized, 19,653,412 shares issued and
    outstanding                                                         19,653
  Additional paid-in capital                                         4,419,134
  Losses accumulated during the development stage       (4,844,712)
                                                                    ----------
    Total stockholders' deficit                                       (405,925)
                                                                    ----------
      Total liabilities and stockholders' deficit       $  317,536
                                                                    ==========


</Table>









                          See accompanying notes.
                                    -2-

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                          STATEMENT OF OPERATIONS
             for the years ended December 31, 2001 and 2000 and
   for the period from inception, December 12, 1996, to December 31, 2001
                                 __________
<Table>
<Caption>

                                       Year Ended    Year Ended   Inception to
                                      December 31,  December 31,  December 31,
                                          2001          2000          2001
                                      ------------  ------------  ------------
<S>                                   <C>           <C>           <C>
Operating, general and administrative
  expenses                            $   377,753   $   227,311   $ 1,288,037
Research and development costs          1,069,724       788,883     3,431,454
                                      ------------  ------------  ------------
     Loss from operations              (1,447,477)   (1,016,194)   (4,719,491)

Interest income                             7,603        15,366        39,826
Interest expense                          (38,864)      (49,478)     (165,047)
                                      ------------  ------------  ------------
Net loss                              $(1,478,738)  $(1,050,306)  $(4,844,712)
                                      ============  ============  ============

Weighted average shares outstanding    19,653,412    17,870,878
                                      ============  ============
Basic and diluted loss
 per common share                     $     (0.08)  $     (0.06)
                                      ============  ============

</Table>

























                             See accompanying notes.
                                       -3-

                                GENE-CELL, INC.
                   (A CORPORATION IN THE DEVELOPMENT STAGE)
                       STATEMENT OF STOCKHOLDERS' EQUITY
          for the years ended December 31, 2001 and 2000, and for the
         period from inception, December 12, 1996 to December 31, 2001
                                  __________
<Table>
<Caption>
                                                                   Losses
                                                              Accumulated
                                 Common Stock      Additional   Subscri-  During the
                           ---------------------      Paid-In     ption   Development
                   Shares     Amount     Capital   Receivable       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

Recapital-
 ization
 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

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

                               See accompanying notes.
                                         -4-



                                   GENE-CELL, INC.
                       (A CORPORATION IN THE DEVELOPMENT STAGE)
                     STATEMENT OF STOCKHOLDERS' EQUITY, Continued
             for the years ended December 31, 2001 and 2000, and for the
            period from inception, December 12, 1996 to December 31, 2001
                                      __________
<Caption>
                                                                   Losses
                                                              Accumulated
                                 Common Stock      Additional   Subscri-  During the
                           ---------------------      Paid-In     ption   Development
                   Shares     Amount     Capital   Receivable       Stage       Total
               ---------- ---------- -----------  ----------- -----------  ----------
<S>           <C>        <C>        <C>          <C>         <C>          <C>
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 7)   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

Stock options
 issued as
 payment to
 a vendor             -          -        37,500          -           -        37,500

Net loss              -          -           -            -   (1,478,738) (1,478,738)
               ---------- ---------- -----------  ----------- -----------  ----------
Balance at
 December
 31, 2001      19,653,412   $ 19,653  $4,419,134  $       -  $(4,844,712)  $(405,925)
               ========== ========== ===========  =========== ===========  ==========

</Table>
                          See accompanying notes.
                                    -5-

                              GENE-CELL, INC.
                  (A CORPORATION IN THE DEVELOPMENT STAGE)
                           STATEMENT OF CASH FLOWS
            for the years ended December 31, 2001 and 2000, and
   for the period from inception, December 12, 1996, to December 31, 2001
                                 __________
<Table>

                                           Year Ended    Year Ended    Inception to
                                           December 31,  December 31,  December 31,
                                              2001          2000           2001
                                           ------------  ------------  ------------
<S>                                        <C>           <C>           <C>
Cash flows from operating activities:
  Net loss                                 $(1,478,738)  $(1,050,306)  $(4,844,712)
  Adjustments to reconcile net loss to
    net cash used in operating activities:
    Common stock and options issued as com-
      pensation or in payment of accounts
      payable                                   37,500          -          862,500
    Depreciation and amortization               96,100        60,289       253,406
    Changes in operating assets and
      liabilities:
      Decrease (increase) in deposits            5,380         3,337        (9,605)
      Increase in accounts payable and
        accrued liabilities                     72,724       157,240       240,582
                                           ------------  ------------  ------------
        Net cash used in
        operating activities                (1,267,034)     (829,440)   (3,497,829)
                                           ------------  ------------  ------------
Cash flows from investing activities:
  Purchase of equipment                        (30,000)         -          (30,000)
                                           ------------  ------------  ------------
        Net cash used in
        investing activities                   (30,000)         -          (30,000)
                                           ------------  ------------  ------------
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     1,500,000
  Payment of stock offering costs                 -             -          (64,100)
  Proceeds from notes payable                  236,726       213,000       567,613
  Payments on notes payable                    (30,000)     (183,000)     (253,000)
  Payments on capital lease obligations        (51,775)      (87,147)     (285,184)
                                           ------------  ------------  ------------
        Net cash provided by financing
          activities                           154,951     1,942,853     3,527,829
                                           ------------  ------------  ------------
Net increase (decrease) in cash and cash
  equivalents                               (1,142,083)    1,113,413          -

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


Supplemental disclosures:
  Cash paid for interest expense           $    31,642   $    49,478   $   157,825
                                           ============  ============  ============
</Table>
                          See accompanying notes.
                                    -6-
                                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.

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.

                                    Continued
                                       -7-

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

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

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 are outstanding, 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, 2001
and 2000.

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.

Risks and Uncertainties
-----------------------
The Company's future results of operations involve a number of risks and
uncertainties.  Factors that could affect future operating results and cause
actual results to vary materially from the Company's plan include, but are
not limited to, dependence upon the acceptance of the Company's
microinjection technology as a viable therapeutic platform, unforseen
difficulties that may be encountered in obtaining sources of debt or
equity funding and unforseen technologies or strategies employed by
established biotechnology or pharmaceutical companies that could
render our technology obsolete.






                                    Continued
                                       -8-


                                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
------------------------------
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations", and
No. 142, "Goodwill and Other Intangible Assets".  SFAS No. 141 requires all
business combinations initiated after June 30, 2001 be accounted for using the
purchase method.  In addition, companies are required to review goodwill and
intangible assets reported in connection with prior acquisitions, possibly
disagregate and report separately previously identified intangible assets, and
in certain cases reclassify certain intangible assets into goodwill.  SFAS No.
142 eliminates the amortization of goodwill and requires that goodwill be
reviewed annually for impairment.  SFAS No. 142 also requires that the useful
lives of previously recognized intangible assets be reassessed and the remaining
amortization periods be adjusted accordingly.  SFAS No. 142 is effective for
fiscal years beginning after December 15, 2001 and affects all goodwill and
other intangible assets recorded on the Company's balance sheet at that date,
regardless of when the assets were initially recorded.  The implementation of
SFAS No. 141 and SFAS No. 142 is not expected to have any impact on the
Company's results of operations or financial position.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations".  SFAS No. 143 addresses accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs.  This statement is effective for fiscal years beginning
after June 15, 2002.  The implementation of SFAS No. 143 is not expected to have
any impact on the Company's results of operations or financial position.

In July 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of Long-
Lived Assets", which is effective for fiscal years beginning after December 15,
2001.  The provisions of this statement provide a single accounting model for
impairment of long-lived assets.  The implementation of SFAS No. 144 is not
expected to have any impact on the Company's results of operations or financial
position.


2.   Laboratory Equipment
     --------------------
Laboratory equipment at December 31, 2001 consisted of the following:
<Table>
<Caption>
                                                      Accumulated
                                          Cost       Depreciation        Net
                                      ------------   ------------   ------------
     <S>                             <C>            <C>            <C>
       Laboratory equipment acquired
         under capital leases           $   94,000     $   18,800     $   75,200
       Laboratory equipment                468,721        235,990        232,731
                                       -----------   ------------   ------------
                                        $  562,721     $  254,790     $  307,931
                                       ===========   ============   ============
</Table>

                                    Continued
                                       -9-

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

3.   Notes Payable
     -------------
Notes payable at December 31, 2001 consisted of the following:

Note payable to a bank under a $60,000 revolving
  line of credit, bearing interest at 11.75% per
  year and due on demand.  This line of credit is
  collateralized by the guarantees of certain
  primary stockholders.                                          $   60,000

Note payable to an equipment manufacturer bearing
  interest at 10% per year and due upon demand.
  This note is collateralized by certain labora-
  tory equipment purchased with the proceeds.                        64,000
                                                                 ----------
    Total    $  124,000
                                                                 ==========
4.           Notes Payable to Stockholders
             -----------------------------
Notes payable to stockholders of $176,726 at December 31, 2001 consisted of
amounts due for cash advanced to the Company under informal loan agreements.
These loans bear interest at rates ranging from 7.0% to 9.0%, are due upon
demand, and are uncollateralized.

5.           Accounts Payable and Accrued Liabilities
             ----------------------------------------
Accounts payable and accrued liabilities at December 31, 2001 consisted of the
following:
               Accounts payable                                  $  152,765
               Accrued salaries                                      62,000
               Accrued interest                                       7,222
               Other accrued liabilities                             18,595
                                                                 ----------
                 Total                                           $  240,582
                                                                 ==========
6.           Income Taxes
             ------------
The composition of deferred tax assets and the related tax effects at December
31, 2001 were as follows:

             Liability
             ---------
               Book vs. tax basis of capital lease assets        $  (19,607)

             Asset
             -----
               Benefit from carryforward of net operating loss    1,353,972

               Less valuation allowance                          (1,334,365)
                                                                 ----------
                 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:

                                    Continued
                                      -10-

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


6.           Income Taxes, continued
             -----------------------
<Table>
<Caption>
                                           2001                          2000

                                             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 $  502,771        34.0%  $  357,104        34.0%

       Increase in valuation
         allowance               (502,771)       (34.0)   (357,104)       (34.0)
                               -----------  ----------- -----------  -----------
         Total                  $     -            -  %  $     -            -  %
                               ===========  =========== ===========  ===========
</Table>
At December 31, 2001, for federal income tax and alternative minimum tax
reporting purposes, the Company has approximately $3,900,000 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
2011 and 2021.  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.

7.   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
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.

                                    Continued
                                      -11-
                                 GENE-CELL, INC.
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                    NOTES TO FINANCIAL STATEMENTS, Continued
                                   __________

8.   Stock Warrants
     --------------
Following is a summary of stock warrant activity during the year ended December
31, 2001:
<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
       Cancelled                              -              -             -
       Exercised                              -              -             -
                                     -------------
     Warrants outstanding at
       December 31, 2000                 1,955,000       $2.00         $2.00

       Issued                                 -              -             -
       Cancelled                              -              -             -
       Exercised                              -              -             -
                                     -------------
     Warrants outstanding at
       December 31, 2001                 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.

9.   Lease Commitments
     -----------------
The Company acquired certain office and laboratory equipment under leases
accounted for as capital leases.  The Company's capital lease obligations
generally have three year terms and are guaranteed by certain
stockholders/officers of the Company.

The Company 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 $25,847 and $24,843 during the year ended December 31, 2001 and 2000,
respectively.

Minimum lease payments due under leases with original lease terms of greater
than one year and expiration dates subsequent to December 31, 2001 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>
   2002                         $  136,367   $   23,979  $    1,868   $  162,214
   2003                             77,242       23,979         156      101,377
   2004                              5,916         -           -            -
                               -----------  ----------- -----------  -----------
Total minimum leases               219,525   $   47,958  $    2,024   $  263,591
                               ===========  =========== ===========  ===========
Less amount representing
  interest                        (37,372)

Present value of minimum
  lease payments                   182,153

Less current portion             (107,326)
                               -----------
Long-term portion               $   74,827
                               ===========
</Table>
                                    Continued
                                      -12-

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

10.  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, 2001 and 2000, the Company matched deferrals
of up to 3% of compensation.  Company contributions to the Plan are
discretionary and totaled $8,719 and $5,046 for the years ended December 31,
2001 and 2000, 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 2001
and 2000:  risk-free interest rate of 5% and 6%, respectively; no dividend
yield; weighted average volatility factor of the expected market price of the
Company's common stock of 100% and 70%, respectively; and a weighted-average
expected life of the options of 5 years.

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.






                                    Continued
                                      -13-
                                 GENE-CELL, INC.
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                    NOTES TO FINANCIAL STATEMENTS, Continued
                                   __________

10.  Employee Benefit Plans, continued
     ---------------------------------

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, 2001,
the Company had granted options for 1,725,858 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
2001 and 2000, 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 for the
year ended December 31, 2001 and 2000 are as follows:
<Table>
<Caption>                                                 2001          2000
                                                      ------------  ------------
<S>                                                  <C>           <C>
Net loss, as reported                                 $(1,478,738)  $(1,050,306)

Proforma net loss                                     $(1,585,743)  $(1,052,290)

Basic and diluted net loss per common
  share, as reported                                  $     (0.08)  $     (0.06)

Proforma basic and diluted net loss
  per common share                                    $     (0.08)  $     (0.06)
</Table>
A summary of the Company's stock option activity and related information for the
years ended December 31, 2001 and 2000 follows:
<Table><Caption>
                                         Number of                      Weighted
                                            Shares                       Average
                                             Under         Exercise     Exercise
                                           Options            Price        Price
                                       -----------  ---------------  -----------
<S>                                   <C>          <C>              <C>
Outstanding-December 31, 1999               16,296            $1.00        $1.00
Granted                                      8,400            $1.00        $1.00
Exercised                                      -
Forfeited                                      -
                                       -----------
Outstanding-December 31, 2000               24,696            $1.00        $1.00

Granted                                  1,701,162   $0.35 to $1.00        $0.40
Exercised                                      -
Forfeited                                      -
                                       -----------
Outstanding-December 31, 2001            1,725,858   $0.35 to $1.00        $0.41
                                       ===========
The weighted-average fair value of options granted during the years ended
December 31, 2001 and 2000 was approximately $0.21 and $0.30, respectively.
</Table>                            Continued
                                      -14-
                                 GENE-CELL, INC.
                    (A CORPORATION IN THE DEVELOPMENT STAGE)
                    NOTES TO FINANCIAL STATEMENTS, Continued
                                   __________

10.  Employee Benefit Plans, continued
     ---------------------------------
Stock Option Plan, continued
----------------------------
A summary of outstanding stock options at December 31, 2001, follows:
<Table><Caption>
                                         Remaining
                                       Contractual
Number of Shares    Expiration Date   Life (Years) Exercise Price
----------------    ---------------   ------------ --------------
<S>                <C>               <C>          <C>
Exercisable at December 31, 2001:

     75,000              March 2008            6.3          $1.00
      8,144               June 2008            6.5          $1.00
      8,152               June 2009            7.5          $1.00
      5,600               June 2010            8.5          $1.00
      8,485              April 2011            9.3          $1.00
      7,369               June 2011            9.5          $1.00
    394,650             August 2011            9.6          $0.35

Non-exercisable at December 31, 2001:

      2,800               June 2010            8.5          $1.00
     16,970              April 2011            9.3          $1.00
     14,738               June 2011            9.5          $1.00
  1,183,950             August 2011            9.6          $0.35
 ----------
  1,725,858
 ==========
</Table>

11.  Related Party Transactions
     --------------------------
During the year ended December 31, 2001, certain stockholders/officers made
loans to the Company totaling $176,726 (See Note 4).  Certain
stockholders/officers also guarantee various note agreements and capital lease
obligations (See Notes 3 and 9).

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, 2001 and 2000, the
Company made or accrued 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:

                                    Continued
                                      -15-

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

11.  Related Party Transactions, continued
     -------------------------------------

     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.

12.  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, 2001 and 2000, the Company incurred net losses of $(1,478,738) and
$(1,050,306), respectively, and negative cash flows from operations of
$(1,267,034) and $(829,440), respectively.  These factors raise substantial
doubt about the Company's ability to continue as a going concern.

In order to address its liquidity problem, during 2000 management issued
1,875,000 shares of its common stock to the Investors under a private placement
agreement.  The funds received in that private placement sustained the Company
until the third quarter of 2001.  Since that time, the Company has relied upon
loans from officers/stockholders and employees to sustain its operations.
Payments on trade accounts payable have been delayed while the Company attempts
to complete another private placement of its common stock.

Management will seek to leverage the Company's comprehensive non-viral gene
modification/repair platform 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 certain key factors, as follows:

-    The Company's ability to obtain adequate sources of funding to continue the
     development of its proprietary DNA microinjection technology.  Sources of
     funding may not be available on terms that are acceptable to the Company
     and existing stockholders, or may include terms that will result in
     substantial dilution to existing stockholders.

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

                                    Continued
                                      -16-

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

12.  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.


13.  Non-Cash Investing and Financing Activities
     -------------------------------------------
During the year ended December 31, 2001 and 2000, the Company engaged in certain
non-cash investing and financing transactions as follows:
<Table><Caption>
                                                            2001         2000
                                                        -----------  -----------
     <S>                                               <C>          <C>
     Property and equipment acquired
       under capital lease obligations                   $  110,330   $  148,446

     Property and equipment acquired with
       directly related debt                                 64,000            -

</Table>





                                      -17-

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

          None.

PART III

Item 9.   Directors and Executive Officers, Promoters, and Control Persons;
Compliance with section 16(a) of the Exchange Act
<Table>
<Caption>
                                                            Director or
Name                  Age   Position                        Officer Since
--------------------- ----  ------------------------        --------------
<S>                   <C>   <C>                             <C>
Brian R. Davis        47    President, CEO, Director        January 1997

David B. Brown        48    Secretary, Director,            January 1997
                            Director of Microinjection
                            Development

Michael R. Davis      48    Treasurer, Director             January 1997

Tom Kubota            61    Chairman of the Board,          January 1997
                            Director

Gunther Soraperra     42    Director                        November 1997

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

     Brian R. Davis, Ph.D., President, CEO, Director.      Dr. Davis is a
co-founder of Gene-Cell. 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.

                                       40


     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 resource 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.

     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. In 2000, Mr. Soraperra
took over an international company specializing in sales of crystal.

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

     Judith I. Yannariello-Brown, Ph.D., Senior Scientist, Project Leader, and
Director of Operations.      Dr. Yannariello-Brown previously held the position
of Adjunct Assistant Professor, Department of Human Biological Chemistry and
Genetics, University of Texas Medical Branch (1993-2000), 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.

                                       41

     Nicole L. Prokopishyn, Ph.D., Lab Director, Senior 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.  Moreover, none of these key personnel has been
received cash compensation for services rendered to the Company since
October 2001.  It is unclear how much longer the Company will be able to
continue to retain the services of these key individuals without an infusion
of additional capital.

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 Operations, is married
to 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 either inadvertantly filed late or are
delinquent as of the date of this report:  Brian R. Davis, David Brown, Michael
Davis, Tom Kubota, and Gunther Soraperra  respective Form 4s and Form 5s for
2001.

                                       42




Item 10.  Executive Compensation
<Table>
<Caption>
                              SUMMARY COMPENSATION TABLE

                  Annual Compensation                       Long Term Compensation
                  -------------------                       ----------------------
                                                    Awards                  Payouts
                                                    ------                  -------
Name                                       Other    Restr                   All
and                                        Annual   icted                   Other
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. Davis    2001   $178,800   -0-    557,500  -0-     -0-     -0-     -0-
                  (1)                      (2)
President, CEO    2000   $77,329    -0-    -0-      -0-     -0-     -0-     -0-
                  1999   $33,000    -0-    -0-      -0-     -0-     -0-     -0-

David B. Brown    2001   $26,321    -0-    122,297  -0-     -0-     -0-     -0-
                                           (2)
Secretary         2000   $29,450    -0-    -0-      -0-     -0-     -0-     -0-
                  1999   $28,048    -0-    -0-      -0-     -0-     -0-     -0-

Michael R. Davis  2001   $12,000    -0-    100,000  -0-     -0-     -0-     -0-
                                           (2)
Treasurer         2000   $36,000    -0-    -0-      -0-     -0-     -0-     -0-
                  1999   -0-        -0-    -0-      -0-     -0-     -0-     -0-
</Table>
     The Company  provided an employee benefits program for its full time
employees which included Medical/Dental/Life Insurance and a simple IRA
with matching funds of up to 3% of salary through September of 2001.
Neither of these programs are currently in place due to absence of funds.

(1) The Company paid Mr. Davis $128,800 in cash.  He is still due $50,000.

(2) This number reflects stock options granted with an exercise price
between $0.35 and $1.00 vesting over the next three years with an
expiration date in approximately 2011.  None of the options have been
exercised as of the date of this report.

Compensation of Directors

     Tom Kubota and Gunther Soraperra each received a stock option grant of
100,000 shares in fiscal 2001.  These options have an exercise price of
$.35and are currently 25% vested.  There are however, no compensation plans
in place for directors of the Company.

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, 2001, 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.
                                     43

<Table>
<Caption>

Title of    Name and Address of         Amount and Nature of     Percentage
Class       Beneficial Owner            Beneficial Ownership(2)  of Class
----------  -------------------         -----------------------  ----------
<S>         <C>                         <C>                      <C>
Common      Brian R. Davis (1)(3)         2,200,450              11.20%
            8606 Arranmore Lane
            Houston, TX 77095

Common      David B. Brown (1)(4)         1,371,515               6.98%
            1111 W. Main St., #504,
            League City, TX 77573

Common      Michael R. Davis (1)(5)         875,000               4.45%
            22681 Sweet Meadow Lane,
            Mission Viejo, CA 92692

Common      Tom Kubota (1)(6)                25,000                0.13%
            6 Thomas Irvine,
            California 92618

Common      Gunther Soraperra (1)(7)        425,000               2.16%
            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

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       4,896,965              24.92%
            Nominees as a Group:
            5 persons
--------------------------------------------------------------------------

</Table>

                                     44


(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.

(3) This number reflects shares held by B.R. Davis Investment Ltd. which
holds approximately 1,879,000 shares and B.R. Davis IRA c/o Trust Co. of
America which holds approximately 179,000 shares.  This number also includes
stock options, that have or will vest in the next 60 days, to purchase up to
142,450 shares.

(4) This number reflects stock options, that have or will vest in the next 60
days, to purchase up to 31,515 shares.

(5) This number reflects stock options, that have or will vest in the next 60
days, to purchase up to 25,000 shares.

(6)  This number reflects stock options, that have or will vest in the next
60 days, to purchase up to 25,000 shares.

(7)  This number reflects stock options, that have or will vest in the next
60 days, to purchase up to 25,000 shares.

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

Item 12.  Certain Relationships and Related Transactions

     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.


                                     45

PART IV

Item 13.  Exhibits and Reports on Form 8-K

Reports on Form 8-K- None.

<Table>
<Caption>

Exhibit
Number     Title of Document                        Location
<S>        <C>                                      <C>
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*

12         1996 Stock Option Plan                   Incorporated by
                                                    reference*
</Table>
*Incorporated by reference from the Registrant's registration statement on
Form 10-SB, as amended, filed with the Commission, SEC File No. 0-27727.


                                     46


                                 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, 2002                       By: /s/ Brian R. Davis
                                     ------------------------
                                     President

April 12, 2002                       By: /s/ Michael R. Davis
                                     -------------------------
                                     Treasurer





                                     47