SECURITIES AND EXCHANGE COMMISSION
                  WASHINGTON, D.C.  20549

                         FORM 10-KSB

(X) Annual Report pursuant to Section 13 or 15(d) of the 
    Securities and Exchange Act of 1934 for the fiscal year 
    ended November 30, 1997.

( ) Transition Report pursuant to Section 13 or 15(d) of the 
    Securities and Exchange Act of 1934 for the transition 
    period from ___________ to __________ .
 
               Commission File Number 0-16354

                    EXTEN INDUSTRIES, INC.
                    ----------------------
   (Exact name of registrant as specified in its charter)

            DELAWARE                      52-1412493
   -----------------------------      ------------------
  (State or other jurisdiction of    (IRS Employer ID No.)
   incorporation or organization)

              9625 BLACK MOUNTAIN ROAD, SUITE 218
                 SAN DIEGO, CALIFORNIA 92126
            --------------------------------------
           (Address of principal executive offices)

                       (619) 578-9784
        ------------------------------------------------  
      (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
                Common Stock $0.01 per share

  Securities registered pursuant to Section 12(g) of the 
Act:
                           None

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

Check if there is no disclosure of delinquent filers in 
response to Item 405 of Regulation S-B is not 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 [_]
State issuer's revenues for its most recent fiscal year: 
$ 0.

State the aggregate market value of the voting and non-
voting common equity held by non-affiliates computed by 
reference to the price at which the common equity was, or 
the average bid and asked prices of such common equity, as 
of a specified date within the past 60 days. (See definition 
of affiliate in Rule 12b-2 of the Exchange Act). As of March 
31, 1998: 
$2,023,933. As of March 31, 1998, there were 40,718,762 
shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, 
briefly describe them and identify the part of the Form 10-
KSB into which the document is incorporated: (1) any annual 
report to security holders; (2) any proxy or information 
statement; and (3) any prospectus filed pursuant to Rule 
424(b) or (c) of the Securities Act of 1933 (the "securities 
Act").  The listed documents should be clearly described for 
identification purposes.  
None.

Transitional Small Business Disclosure Format (check one):  
Yes ____  No __X_ 

<PAGE 1>

EXTEN INDUSTRIES, INC.
FORM 10-KSB



INDEX
                                                        Page
PART I

Item 1.  DESCRIPTION OF BUSINESS                          3
         Background of the Company                        3
         Factors Which May Affect Future Results          3
         Business of Exten Industries, Inc.               7
         Business of Xenogenex, Inc.                      7
         Business of Xenogenics, Corporation              8
         Patents & Proprietary Technology                 8
         Intense Competition                              8
         Government Regulation                            8
         Therapeutic Products                             8
         Prior Agreements for SYBIOLR Development         9
         St. Louis University Health Sciences Center      9
         China Joint Venture                              9
         Possible Acquisitions & Merger Transactions     10
         Employees                                       13
Item 2.  DESCRIPTION OF PROPERTY                         13
Item 3.  LEGAL PROCEEDINGS                               14
Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
         HOLDERS                                         14

PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK 
         AND RELATED STOCKHOLDER MATTERS                 14
Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         OR PLAN OF OPERATIONS                           15
         Results of Operations                           15
         Liquidity and Capital Resources                 17
Item 7.  FINANCIAL STATEMENTS                            18
Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 
         ON ACCOUNTING AND FINANCIAL DISCLOSURE          18

PART III

Item 9.   DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS
          AND CONTROL PERSONS;REGISTRANT COMPLIANCE 
          WITH SECTION 16(a) OF THE EXCHANGE ACT         19
Item 10.  EXECUTIVE COMPENSATION                         20
          Non-Cash Compensation                          20
Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT                          21
          Stock Options Outstanding                      22
Item 12.  CERTAIN RELATIONSHIPS AND RELATED
          TRANSACTIONS                                   22
Item 13.  EXHIBITS,FINANCIAL STATEMENTS, SCHEDULES AND
          REPORTS ON FORM 8-K                            23
          Reports on Form 8-K                            23

          CONSOLIDATED FINANCIAL STATEMENTS             F-1

          SIGNATURES                                     24
<PAGE 2>

PART I

Item 1. DESCRIPTION OF BUSINESS

This Report on Form 10-KSB contains forward-looking 
statements that involve risks and uncertainties. The 
Company's actual results may differ significantly from the 
results discussed in the forward-looking statements. Factors 
that might cause such a difference include, but are not 
limited to, those discussed in Item 1a the section entitled 
"Factors Which May Affect Future Results."

Forward-Looking Information - General

     This report contains a number of forward-looking 
statements which reflect the Company's current views with 
respect to future events and financial performance including 
statements regarding the Company's strategy, product under 
development and plans for operations. These forward-looking 
statements are subject to certain risks and uncertainties 
that could cause actual results to differ materially from 
historical results or those anticipated. In this report, the 
words "anticipates," "believes," "expects," "intends," 
"future," "plans," "targets" and similar expressions 
identify forward-looking statements. Readers are cautioned 
to consider the risk factors described below under the 
heading "Factors Which May Affect Future Results," and not 
to place undue reliance on the forward-looking statements 
contained herein, which speak only as of the date hereof. 
The Company undertakes no obligation to publicly revise 
these forward-looking statements, to reflect events or 
circumstances that may arise after the date hereof.

Additionally, these statements are based on certain 
assumptions that may prove to be erroneous and are subject 
to certain risks including, but not limited to, the 
Company's ability to introduce new products, the Company's 
ability to manage its expected growth, its limited 
protection of technology and trademarks, the Company's 
dependence on limited cash resources, and its dependence 
on certain key personnel within the Company. Accordingly, 
actual results may differ, possibly materially, from the 
predictions contained herein.

BACKGROUND OF THE COMPANY

Between 1985 and 1990 Exten Industries, Inc. (the Company) 
provided merchant banking services for small businesses. As 
compensation for these services the Company received both 
cash and common stock in the companies receiving these 
services.  The Company distributed shares of common stock in 
these companies to its shareholders as dividends in kind. In 
October of 1990, due to the difficulty of raising capital 
for its small business merchant banking clients, the 
Company's Board of Directors decided to change its business 
emphasis. The merchant banking business would be combined on 
a smaller scale with more substantial companies. The 
Company's merchant banking experience would be directed to 
the acquisition of varied business for the Company.

In September of 1991 the Company acquired all of the 
outstanding stock of Xenogenex, Inc., a California 
corporation, ("Xenogenex"), formerly known as Ascot Close 
Research Institute, Ltd. At that time Xenogenex was funding 
research on xenogeneic transplants and the development of an 
artificial liver (synthetic bio-liver) with a major West 
Coast medical center. Xenogenex had the rights to the 
commercial development of the research work being performed 
by that medical center. In July 1996 all right, title and 
interest in the artificial liver technology was transferred 
to the Company.

During the year ending November 30, 1997 the Company formed 
a new Subsidiaries, Xenogenics Corporation, a Nevada 
corporation, ('Xenogenics') for the express purpose of 
holding and developing the Sybiol technology.

Item 1a.  FACTORS WHICH MAY AFFECT FUTURE RESULTS
 
An investment in the Common Stock of the Company involves a 
high degree of risk. In addition to the other information 
contained in this Form 10-KSB, prospective investors should 
carefully consider the following risk factors:

1. Significant and Repeated Losses. During fiscal 1997, the 
Company's most recent fiscal year, the Company's losses were 

<PAGE 3>

($104,834) compared to losses of ($950,222)incurred during 
fiscal 1996. The Company faces all the risks inherent in a 
new business. The Company's Xenogenics subsidiaries is 
without any record of earnings and sales. There can be no 
assurance that any of the Company's business activities will 
result in any operating revenues or profits. Investors 
should be aware that they might lose all or substantially 
all of their investment.

2. Qualified Opinion. The Company's independent public 
accountants issued a qualified opinion on the Company's 
financial statements for the years ended November 30, 1997 
and 1996 with respect to uncertainties concerning the 
Company's ability to continue as a going concern.

3. Lack of Revenues. The Company's only active business is 
the research and development activities from which the 
Company currently generates no stream of revenues and there 
can be no assurance that the Company will ever generate any 
revenues in the near future. As a result, the Company may 
continue to incur losses and any investor who purchases or 
acquires any shares of the Company's Common Stock will 
likely incur further substantial dilution and loss in the 
value of their investment.

4. Significant and Increasing Current Liabilities & Default. 
As of November 30, 1997, the Company had $515,266 in current 
debts and other obligations that are due and payable on or 
before November 30, 1998. Included in the amounts due by 
November 30, 1998 is $160,072 in notes payable currently in 
default together with other current liabilities of $355,194. 
Further, as of November 30, 1997, the Company had over 22 
times as many current liabilities as it had current assets. 
In the event that the Company is not able to generate 
sufficient cash resources to pay these and other current 
liabilities on or before their due date, the Company will 
likely incur substantial additional costs and expenses and 
otherwise risk whatever claims creditors may assert against 
the Company in connection with any default thereby. This 
may result in an investor losing all or substantially all 
of their investment.

5. Need for Additional Financing & Lack of Underwriting 
Commitment. The Company's management recognizes that the 
Company needs to obtain additional external financing from 
the sale of the Company's debt, common stock, or preferred 
stock in order to support the Company and otherwise meet the 
Company's growing financial obligations. While the Company 
may attempt to obtain a commitment from an underwriter for 
a private placement or public offering of the Company's 
securities, there can be no guarantee that the Company will 
be successful. If the Company is not successful, the Company 
may suffer additional and continuing financial difficulties 
with consequent loss to any investor acquiring the Company's 
common stock.

6. Negative Working Capital & Negative Cash Flow. As of 
November 30, 1997, the Company had Total Current Liabilities 
of $515,266 and Total Current Assets of $22,915 with the 
result that the Company had negative working capital of 
($492,351) as Total Current Liabilities exceeded Total 
Current Assets by that amount. While the Company's 
management continues to seek additional financing for the 
Company to complete its business plan, there can be no 
assurance that the Company will obtain any additional 
financing or, if it is obtained, that it can be obtained on 
terms reasonable in view of the Company's current 
circumstances. In addition, the Company has experienced 
negative cash flow for the 1996 and 1997 fiscal years. 

7. Potential Dilution. Funding of the Company's proposed 
business plan would result in substantial and on-going 
dilution of the Company's existing stock-holders. During 
1997, the Company issued 7,374,210 additional shares of its 
common stock in connection with its operations while 
incurring continuing and ever-increasing financial losses. 
While there can be no guarantee that the Company will be 
successful in raising additional capital, if the Company is 
successful in obtaining any additional capital, existing 
stockholders will incur substantial dilution.

8. Default on Indebtedness. The Company was in default on 
its repayment of a certain loan totaling $150,000 (as of 
November 30, 1997) with a former officer of the Company, 
Robert H. Goldsmith, and certain attorneys for past 
services. In addition, the Company had over $365,266 in 
other liabilities all due and payable on or before 
November 30, 1997. In the event that the Company is not able 
to generate additional cash from the sale of the Company's

<PAGE 4>

securities or otherwise obtain funds on some other basis, 
the Company will remain in default on its obligations and 
likely default on obligations to other creditors with the 
result that any investor in the Company's common stock will 
lose all or substantially all of their investment.

9. Government Regulation and Product Approvals. The 
Company's research, testing, preclinical development, 
clinical trials, manufacturing, and marketing of its 
proposed therapeutic products is subject to extensive and 
ever-changing regulation by numerous governmental 
authorities in the United States and other countries. 
Clinical trials, manufacturing, and marketing of products in 
the US will be subject to the rigorous testing and approval 
processes of the US Food and Drug Administration (the "FDA") 
and by comparable regulatory authorities in foreign 
countries. The testing and regulatory approval process will 
likely take several years and require the expenditure of
substantial resources. Any testing of the Company's proposed 
products might not support the safety and efficacy of the 
Company's products. There can be no assurance that the 
Company will gain any regulatory approvals for the Company's 
proposed products or, if such approvals are obtained that 
such approvals may be limited and far narrower than those 
sought by the Company. To the extent that the above 
information describes statutory or regulatory provisions, 
it is qualified in its entirety by reference to the 
particular statutory and regulatory provisions currently in 
effect. Any change in applicable law or regulation may have 
a material effect on the business and prospect of the 
Company.

10. Lack of Independent Evaluation of Technology & 
Commercial Viability. The Company's current management does 
not possess any studies performed by an independent third 
party, which demonstrate that the synthetic bio-liver 
technology has ever been rigorously evaluated. There can be 
no assurance that this technology offers safe, efficacious, 
and cost-effective therapeutic attributes relative to those 
provided by competing technologies or, if it does that the 
technology is commercially viable.

11. Limited Management. The Company currently has only one 
full time officer and one full-time employee. The Company's 
limited cash flow and financial resources do not allow the 
Company to increase or add to the Company's full time 
management and there can be no guarantee that the Company's 
cash flow and financial resources will increase in the near 
future. As a result, the Company continues to rely upon 
consultants and others for a large part of its operations 
and the research and development work.

12. Lack of Dividends. The Company has never paid any cash 
dividends on its common stock. The Company's board of 
directors intends to retain profits, if any, to finance the 
Company's business.

13. Limited Market for Common Stock. The Company's Common 
Stock, traded on the Electronic Bulletin Board (OTC), has 
experienced significant price fluctuations and will likely 
remain highly volatile in the future. There can be no 
assurance that a meaningful trading market for the Company's 
Common Stock will be established, or, if established that it 
can be maintained for any significant period.

14. Valuations & Prior Asset Acquisitions. The Company's 
current management has determined that the values accorded 
certain assets acquired in prior years be revalued to 
reflect lower carrying values in light of current market 
circumstances. While management believes that current 
carrying values for these assets more accurately reflect 
likely recovery values, there can be no assurance that the 
Company will not later revalue the Company's assets further.

15. Possible Rule 144 Stock Sales. As of November 30, 1997, 
the Company had shares of the Company's outstanding Common 
Stock as "restricted securities" which may be sold only in 
compliance with Rule 144 adopted under the Securities Act of 
1933 or other applicable exemptions from registration. 
Rule 144 provides that a person holding restricted 
securities for a period of one year may thereafter sell in 
brokerage transactions, an amount not exceeding in any three 
month period the greater of either (i) 1% of the Company's 
outstanding Common Stock, or (ii) the average weekly trading
volume during a period of four calendar weeks immediately 
preceding any sale. Persons who are not affiliated with the 
Company and who have held their restricted securities for at 
least three years are not subject to the volume limitation. 
Possible or actual sales of the Company's Common Stock by 
present shareholders under Rule 144 may have a depressive 
effect on the price of the Company's Common Stock if any 
liquid trading market develops.

16. Possible Stock Sales - Regulation S & Form S-8 
Registration Statement. The Company has periodically issued 
shares to non-US. citizens under Regulation S. In addition,

<PAGE 5>

the Company has utilized the services of consultants and, in
this connection; the Company has issued shares of the 
Company's Common Stock and registered these shares for sale 
on Form S-8. The shares issued under Regulation S become 
freely tradable one year after issuance. The shares 
registered on Form S-8 are immediately freely tradable. As a 
result, the Company's issuance of shares pursuant to 
Regulation S and Form S-8 likely depresses the market price 
of the Company's Common Stock. While the Company's 
management intends to carefully evaluate the need to issue 
shares of the Company's Common Stock on this basis, the 
Company's meager financial resources will likely prevent the 
Company from limiting its use of Regulation S and Form S-8, 
with the result that the market price of Company's Common 
Stock will likely be depressed by the registration and sale 
of shares on an on-going basis.

17. Risks of Low Priced Stocks. Trading in the Company's 
Common Stock is limited. Consequently, a shareholder may 
find it more difficult to dispose of, or to obtain accurate 
quotations as to the price of, the Company's securities. In 
the absence of a security being quoted on NASDAQ, or the 
Company having $2,000,000 in net tangible assets, trading in 
the Common Stock is covered by Rule 3a51-1 promulgated under 
the Securities Exchange Act of 1934 for non-NASDAQ and 
non-exchange listed securities. 

Under such rules, broker/dealers who recommend such 
securities to persons other than established customers and 
accredited investors (generally institutions with assets in 
excess of $5,000,000 or individuals with net worth in excess 
of $1,000,000 or an annual income exceeding $200,000 or 
$300,000 jointly with their spouse) must make a special 
written suitability determination for the purchaser and 
receive the purchaser's written agreement to a transaction 
prior to sale. Securities are also exempt from this rule if 
the market price is at least $5.00 per share, or for 
warrants, if the warrants have an exercise price of at least 
$5.00 per share. The Securities Enforcement and Penny Stock 
Reform Act of 1990 requires additional disclosure related to 
the market for penny stocks and for trades in any stock 
defined as a penny stock. 

The Commission has recently adopted regulations under such 
Act which define a penny stock to be any NASDAQ or non-
NASDAQ equity security that has a market price or exercise 
price of less than $5.00 per share and allow for the 
enforcement against violators of the proposed rules. 

In addition, unless exempt, the rules require the delivery, 
prior to any transaction involving a penny stock, of a 
disclosure schedule prepared by the Commission explaining 
important concepts involving a penny stock market, the 
nature of such market, terms used in such market, the 
broker/dealer's duties to the customer, a toll-free 
telephone number for inquiries about the broker/dealer's 
disciplinary history, and the customer's rights and remedies 
in case of fraud or abuse in the sale. 

Disclosure also must be made about commissions payable to 
both the broker/dealer and the registered representative, 
current quotations for the securities, and, if the 
broker/dealer is the sole market maker, the broker/dealer 
must disclose this fact and its control over the market.

Monthly statements must be sent disclosing recent price 
information for the penny stock held in the account and 
information on the limited market in penny stocks. While 
many NASDAQ stocks are covered by the proposed definition of 
penny stock, transactions in NASDAQ stock are exempt from 
all but the sole market-maker provision for (i) issuers who 
have $2,000,000 in tangible assets ($5,000,000 if the issuer 
has not been in continuous operation for three years), 
(ii) transactions in which the customer is an institutional 
accredited investor and (iii) transactions that are not 
recommended by the broker/dealer. In addition, transactions 
in a NASDAQ security directly with the NASDAQ market maker 
for such securities, are subject only to the sole 
market-maker disclosure, and the disclosure with regard to 
commissions to be paid to the broker/dealer and the 
registered representatives.

Finally, all NASDAQ securities are exempt if NASDAQ raised 
its requirements for continued listing so that any issuer 
with less than $2,000,000 in net tangible assets or 
stockholder's equity would be subject to delisting. 

<PAGE 6>

These criteria are more stringent than the proposed increase 
in NASDAQ's maintenance requirements. The Company's 
securities are subject to the above rules on penny stocks 
and the market liquidity for the Company's securities could 
be severely affected by limiting the ability of 
broker/dealers to sell the Company's securities.
 
18. Competition. The Company is engaged in businesses 
characterized by extensive research efforts, rapid 
technological change, and intense competition. Competition 
can be expected to increase as technological advances are 
made and commercial applications broaden. The industries in 
which the Company seeks to compete are characterized by 
substantial competition involving biotechnology and major 
bio-pharmaceutical, chemical and biological testing 
companies. Many of the Company's existing and potential 
competitors have substantially greater financial, research 
and development, clinical, regulatory, marketing and 
production resources than those of the Company and may be 
better equipped than the Company to develop, manufacture and 
market competitive therapeutic products or testing services. 
These companies may develop and introduce products and 
services competitive with, superior to, or less costly than 
those of the Company, thereby rendering some of the 
Company's technologies and products and services under 
development less competitive or obsolete. 

Business of Exten Industries, Inc.

As of November 30, 1997, the Company's only active business 
is the proposed research and development activities of 
SYBIOLR artificial liver technology.

Business of Xenogenex, Inc.

Xenogenex, Inc. ("Xenogenex") was incorporated in California 
on July 30, 1991 for the purpose of funding biotech 
research. On September 11, 1991 the Company signed a 
research contract with Cedars-Sinai Medical Center in Los 
Angeles, California. The research contract was for the 
genetic manipulation of human to pig target antigens and 
xenogeneic transplants. Xenogeneic transplants involve the 
use of donor organs from species other than humans. The 
major objective of the research at that time was to discover 
a way to transplant organs (heart, liver, lung and kidney) 
from a pig into a human.

In March of 1993 Xenogenex received all the rights to a 
synthetic bio-liver, SYBIOLR developed for Xenogenex under 
contract with Cedars-Sinai Medical Center. 

In July of 1996, Xenogenex transferred all assets and rights 
to the Sybiol synthetic bio-liver technology to Exten 
Industries, Inc., in exchange for the assumption of certain 
of its debts.

Business of Xenogenics Corporation

Xenogenics Corp. ("Xenogenics") was incorporated in Nevada 
on April 30, 1997 for the purpose of funding and conducting 
biotech research. 

In June 1997, Exten Industries, Inc. transferred all assets 
and rights to the Sybiol synthetic bio-liver technology to 
the new Xenogenics Corporation, a wholly owned subsidiaries. 

A patent application is presently pending on the process 
utilized by the SYBIOLR artificial liver device. The Company 
has received notice that the Sybiol trademark (US Trademark 
Application Serial No. 74/522,603) has been registered by 
the United States Patent and Trademark Office.

Xenogenics is in the process of selling up to 20% of its 
Common Stock to raise up to $1,000,000 in venture capital 
financing.  If Xenogenics were successful in raising this 
additional capital, the Company's ownership interests would 
be reduced accordingly.

<PAGE 7>

In addition to the other information contained in this 
Form 10-KSB, prospective investors should carefully consider 
the following risk factors:

1. Patents and Proprietary Technology. Any proprietary 
protection that the Company can obtain and maintain will be 
important to its proposed business. The Company has 
exchanged its US patent application for a P.C.T. filing and 
has filed a patent application in China. The patent 
positions of bio-pharmaceutical and biotechnology firms, as 
well as academic and other research institutions, are 
uncertain and involve complex legal and factual questions. 
Accordingly, no firm predictions can be made regarding the 
bio-pharmaceutical and biotechnology patents or whether the 
Company will have the financial resources to aggressively 
protect its rights.

2. Intense Competition. Competition from other biotechnology 
and pharmaceutical companies and from research and academic 
institutions is intense and is expected to increase. 
Competitors or potential competitors of the Company have 
filed applications for, or have been issued, certain 
patents, and may obtain additional patents and proprietary 
rights, relating to technologies competitive with those of 
the Company. Accordingly, there can be no assurance that the 
Company's patent applications will result in patents being 
issued or that, if issued, such patents will provide 
protection against competitive technology that circumvents 
such patents or will be held valid by a court of competent 
jurisdiction; nor can there be any assurance that others 
will not obtain patents that the Company would need to 
license or circumvent. Furthermore, there can be no 
assurance that licenses that might be required for the 
Company's processes or products would be available on 
reasonable terms, if at all. The Company also intends to 
rely upon unpatented trade secrets, know-how and continuing 
technological innovation to develop and maintain its 
competitive position. No assurance can be given that others 
will not independently develop substantially equivalent 
proprietary information and technology, or otherwise gain 
access to the Company's trade secrets or disclose such 
technology, or that the Company can meaningfully protect its 
rights to its unpatented trade secrets.

3. Government Regulation. The Company's present and proposed 
activities are subject to regulation by numerous 
governmental authorities in the United States and other 
countries. To the extent that the following information 
describes statutory or regulatory provisions, it is 
qualified in its entirety by reference to the particular 
statutory and regulatory provisions currently in effect. Any 
change in applicable law or regulation may have a material 
effect on the business and prospects of the Company.

4. Therapeutic Products. The Company's products will be 
subject to regulation in the US by the Food and Drug 
Administration ("FDA") and by comparable regulatory 
authorities in foreign jurisdictions. The products produced 
will be classified as "biologics" regulated under the Public 
Health Service Act and the Federal Food, Drug and Cosmetic 
Act. Development of a therapeutic product for human use is a 
multi-step process. First, animal or in vitro testing must 
establish the potential safety and efficacy of the 
experimental product in a given disease. Once the product 
has been found to be reasonably safe and potentially 
efficacious in animals, suggesting that human testing 
would be appropriate, an Investigational New Drug ("IND") 
application is submitted to the FDA. FDA approval is 
necessary before commencing clinical investigations. That 
approval may, in some circumstances, involve substantial 
delays.

Clinical investigations typically involve three phases. 
Phase I is conducted to evaluate the safety of the 
experimental product in humans, and if possible, to gain 
early evidence of effectiveness. Phase I studies also 
evaluate various routes, dosages and schedules of product 
administration. The demonstration of therapeutic benefit is 
not required in order to complete Phase I successfully. If 
acceptable product safety is demonstrated, the Phase II 
studies are initiated. The Phase II trials are designed to 
evaluate the effectiveness of the product in the treatment 
of a given disease and, typically, are well controlled 
closely monitored studies in a relatively small number of 
patients. 

<PAGE 8>

The optimal routes and schedules of administration are 
determined in these studies. As Phase II trials are 
successfully completed, Phase III studies will be commenced. 
Phase III studies are expanded, controlled and uncontrolled 
trials which are intended to gather additional information 
about safety and efficacy in order to evaluate the overall 
risk/benefit relationship of the experimental product and 
provide an adequate basis for physician labeling. These 
studies also may compare the safety and efficacy of the 
experimental device with currently available products. It 
is not possible to estimate the time in which Phase I, II 
and III studies will be completed with respect to a given 
product, although the time period is often as long as 
several years.

Following the successful completion of these clinical 
investigations, the preclinical and clinical evidence that 
has been accumulated is submitted to the FDA as part of a 
product license application ("PLA"). Approval of the PLA 
or IND is necessary before a company may market the product. 
The approval process can be very lengthy and depends upon 
the time it takes to review the submitted data and the FDA's 
comments on the application and the time required to provide
satisfactory answers or additional clinical data when 
requested.

In addition to the regulatory framework for product 
approvals, the Company is and may be subject to regulation 
under state and federal law, including requirements 
regarding occupational safety, laboratory practices, the 
use, handling and disposition of radioactive materials, 
environmental protection and hazardous substance control, 
and may be subject to other present and possible future 
local state, federal and foreign regulation, including 
future regulation of the biotechnology field.

Prior Agreements for SYBIOL Development

A. St. Louis University Health Sciences Center

The Company, through its Xenogenex subsidiaries, entered 
into a sponsored research agreement with the St. Louis 
University Health Sciences Center to direct and document the 
research and development of its synthetic bio-liver, SYBIOL, 
into a clinical system. 

Dr. Li was the Director of the Surgical Research Institute 
at St. Louis University and an internationally renowned 
expert in liver cell biology, toxicology and drug 
metabolism. Prior to joining SLU, he headed the Liver 
Biology Department at Monsanto Company in St. Louis. Dr. Li 
also served as Chief Scientific Officer of Xenogenex. St. 
Louis University Health Sciences Center is known for its 
excellence in providing medical care and medical research, 
especially in organ transplantation and artificial internal 
organ research. The medical center is one of the few 
institutions with a research institute dedicated to surgical 
research. 

On November 30, 1995, the Company terminated its agreement 
with the St. Louis University Health Sciences Center (the 
"Center") and Dr. Albert Li. During the period of the 
sponsored research agreement, the Company spent 
approximately $452,000 on research and laboratory equipment. 

B. China Joint Venture

The Company and a Hong Kong business group formed a Hong 
Kong corporation, TECA International, Ltd. ("TECA") under a 
joint venture agreement. TECA, which at the time was 40% 
owned by the Company, was required to provide funding for 
the next five years. TECA was licensed to produce and sell 
Xenogenex's synthetic bio-liver in Asia, Australia, and New 
Zealand. Prior to the close of the 1997 fiscal year and 
after discussions with counsel, the Company terminated the 
License Agreement with TECA for non-performance. 

<PAGE 9>

The Company determined that the viability of the project 
and the realization of any further studies and efforts were
going to be minimal with respect to the SYBIOL technology 
and has written off the equity in the joint venture and the
costs and other associated expenditures with TECA.

Possible Acquisitions & Merger Transactions

In addition to the Company's plans for Xenogenics, the 
Company continues to seek a possible merger or acquisition 
with comparable business entities. The Company has not 
identified any business entity for acquisition or merger and 
does not intend to limit potential acquisition candidates to 
any particular field or industry, but does retain the right 
to limit various acquisition or merger candidates, if it so 
chooses, to a particular field or industry. The Company's 
plans are in the conceptual stage only.

Plan of Operation - General

While the Company seeks financing for its subsidiary, 
Xenogenex, the Company is currently seeking potential 
candidates to acquire via a merger. The Company will not 
restrict its search to any specific business, industry or 
geographical location, and the Company may participate in 
a business venture of virtually any kind or nature. The 
discussion of the proposed business under this caption and 
throughout this Form 10-KSB is purposefully general and is 
not meant to be restrictive of the Company's virtually 
unlimited discretion to search for and enter into potential 
business opportunities.

The Company intends to obtain funds in one or more private 
placements to finance the operation of any acquired 
business. Persons purchasing securities in these placements 
and other shareholders will likely not have the opportunity 
to participate in the decision relating to any acquisition. 
Consequently, the Company's potential success is heavily 
dependent on the Company's management, which will have 
virtually unlimited discretion in searching for and entering 
into a business opportunity. The officers and directors of 
the Company may not have any experience in the proposed 
business of the Company. There can be no assurance that 
the Company will be able to raise any funds in any private 
placements. 

Management anticipates that it will participate in only a 
few potential business ventures. This lack of 
diversification should be considered a substantial risk in 
investing in the Company because it will not permit the 
Company to offset potential losses from one venture against 
gains from another.

The Company may seek a business opportunity with a firm 
which only recently commenced operations, or a developing 
company in need of additional funds for expansion into new 
products or markets, or seeking to develop a new product or 
service, or an established business which may be 
experiencing financial or operating difficulties and is in 
the need for additional capital which is perceived to be 
easier to raise by a public company. In some instances, a 
business opportunity may involve the acquisition or merger 
with a corporation which does not need substantial 
additional cash but which desires to establish a public 
trading market for its common stock. The Company may 
purchase assets and establish wholly owned subsidiaries in 
various businesses or purchase existing businesses as 
subsidiaries.

The Company anticipates that the selection of a business 
opportunity in which to participate will be complex and 
extremely risky. Because of general economic conditions, 
rapid technological advances being made in some industries, 
and shortages of available capital, management believes that 
there are numerous firms seeking the benefits of a publicly 
traded corporation. Such perceived benefits of a publicly 
traded corporation may include facilitating or improving the 
terms on which additional equity financing may be sought, 
providing liquidity for the principals of a business,
creating a means for providing incentive stock options or 
similar benefits to key employees, providing liquidity 

<PAGE 10>

(subject to restrictions of applicable statutes) for all 
shareholders, and other factors. Potentially available 
business opportunities may occur in many different 
industries and at various stages of development, all of 
which will make the task of comparative investigation 
and analysis of such business opportunities extremely 
difficult and complex.

As is customary in the industry, the Company may pay a 
finder's fee for locating an acquisition prospect. If any 
such fee is paid, it will be approved by the Company's Board 
of Directors and will be in accordance with the industry 
standards. Such fees are customarily between 1% and 10% of 
the size of the transaction, based upon a sliding scale of 
the amount involved. Management has adopted a policy that 
such a finder's fee or real estate brokerage fee could, in 
certain circumstances, be paid to any employee, officer, 
director or 5% shareholder of the Company.

The Company has, and may continue to have, insufficient 
capital with which to provide the owners of business 
opportunities with any significant cash or other assets. 
However, management believes the Company may offer owners of 
business opportunities the opportunity to acquire a 
controlling ownership interest in a public company at 
substantially less cost than is required to conduct an 
initial public offering. The owners of the business 
opportunities will, however, incur significant post-merger 
or acquisition registration costs in the event they wish to 
register a portion of their shares for subsequent sale. The 
Company will also incur significant legal and accounting 
costs in connection with the acquisition of a business 
opportunity including the costs of preparing post-effective 
amendments, Forms 8-K, agreements and related reports and 
documents, nevertheless, the officers and directors of 
the Company have not conducted market research and are not 
aware of statistical data which would support the perceived 
benefits of a merger or acquisition transaction for the 
owners of a business opportunity.

The Company does not intend to make any loans to any 
prospective merger or acquisition candidates or to 
unaffiliated third parties.

Evaluation of Opportunities

The analysis of new business opportunities will be 
undertaken by or under the supervision of the officers and 
directors of the Company. Management intends to concentrate 
on identifying prospective business opportunities which may 
be brought to its attention through present associations 
with management. In analyzing prospective business 
opportunities, management will consider such matters as the 
available technical, financial and managerial resources; 
working capital and other financial requirements; history of 
operation, if any; prospects for the future; present and 
expected competition; the quality and experience of 
management services which may be available and the depth 
of that management; the potential for further research, 
development or exploration; specific risk factors not now 
foreseeable but which then may be anticipated to impact the 
proposed activities of the Company; the potential for growth 
or expansion; the potential for profit; the perceived public 
recognition or acceptance of products, services or trades; 
name identification; and other relevant factors. Officers 
and directors of each Company will meet personally with 
management and key personnel of the firm sponsoring the 
business opportunity as part of their investigation. To the 
extent possible, the Company intends to utilize written 
reports and personal investigation to evaluate the above 
factors. The Company will not acquire or merge with any 
company for which audited financial statements cannot be 
obtained.


It may be anticipated that any opportunity in which the 
Company participates will present certain risks. Many of 
these risks cannot be adequately identified prior to 
selection of the specific opportunity, and the Company's
shareholders must, therefore, depend on the ability of 
management to identify and evaluate such risk. In the case 
of some of the opportunities available to the Company, it 
may be anticipated that the promoters thereof have been 
unable to develop a going concern or that such business 

<PAGE 11>

is in its development stage in that it has not generated 
significant revenues from its principal business activities 
prior to the Company's participation. There is a risk, even 
after the Company's participation in the activity and the 
related expenditure of the Company's funds, that the 
combined enterprises will still be unable to become a going 
concern or advance beyond the development stage. Many of the 
opportunities may involve new and untested products, 
processes, or market strategies that may not succeed. Such 
risks will be assumed by the Company and, therefore, its 
shareholders.

The Company will not restrict its search for any specific 
kind of business, but may acquire a venture which is in its 
preliminary or development stage, which is already in 
operation, or in essentially any stage of its corporate 
life. It is currently impossible to predict the status of 
any business in which the Company may become engaged, in 
that such business may need additional capital, may merely 
desire to have its shares publicly traded, or may seek 
other perceived advantages which the Company may offer.

Acquisition of Opportunities

In implementing a structure for a particular business 
acquisition, the Company may become a party to a merger, 
consolidation, reorganization, joint venture, franchise or 
licensing agreement with another corporation or entity. It 
may also purchase stock or assets of an existing business. 
On the consummation of a transaction, it is possible that 
the present management and shareholders of the Company will 
not be in control of the Company. In addition, a majority or 
all of the Company's officers and directors may, as part of 
the terms of the acquisition transaction, resign and be 
replaced by new officers and directors without a vote of 
the Company's shareholders.

It is anticipated that any securities issued in any such 
reorganization would be issued in reliance on exemptions 
from registration under applicable federal and state 
securities laws. In some circumstances, however, as a 
negotiated element of this transaction, the Company may 
agree to register such securities at the time the 
transaction is consummated, under certain conditions or at a 
specified time thereafter. The issuance of substantial 
additional securities and their potential sale into any 
trading market that may develop in the Company's Common 
Stock may have a depressive effect on such market. While 
the actual terms of a transaction to which the Company 
may be a party cannot be predicted, it may be expected that
the parties to the business transaction will find it 
desirable to avoid the creation of a taxable event and 
thereby structure the acquisition in a so called "tax free" 
reorganization under Sections 368(a)(1) or 351 of the 
Internal Revenue Code of 1986, as amended (the "Code"). In 
order to obtain tax-free treatment under the Code, it may be 
necessary for the owners of the acquired business to own 80% 
or more of the voting stock of the surviving entity. In such 
event, the shareholders of the Company, including investors 
in this offering, would retain less than 20% of the issued 
and outstanding shares of the surviving entity, which could 
result in significant dilution in the equity of such 
shareholders.

As part of the Company's investigation, officers and 
directors of the Company will meet personally with 
management and key personnel, may visit and inspect material 
facilities, obtain independent analysis or verification of 
certain information provided, check reference of management 
and key personnel, and take other reasonable investigative 
measures, to the extent of the Company's limited financial 
resources and management expertise.

The manner in which each Company participates in an 
opportunity will depend on the nature of the opportunity, 
the respective needs and desires of the Company and other 
parties, the management of the opportunity, and the relative 
negotiating strength of the Company and such other 
management. 

With respect to any mergers or acquisitions, negotiations 
with target company management will be expected to focus on 
the percentage of the Company which target company 
shareholders would acquire in exchange for their 
shareholdings in the target company. Depending upon, among 
other things, the target company's assets and liabilities, 
the Company's shareholders will in all likelihood hold a 
lesser percentage ownership interest in the Company 
following any merger or acquisition. The percentage

<PAGE 12>

ownership may be subject to significant reduction in the 
event the Company acquires a target company with substantial 
assets. Any merger or acquisition effected by the Company 
can be expected to have a significant dilative effect on the 
percentage of shares held by the Company's then 
shareholders, including purchasers of the Company's Common 
Stock.

The Company will not have sufficient funds (unless it is 
able to raise funds in a private placement) to undertake 
any significant development, marketing and manufacturing 
of any products which may be acquired. Accordingly, 
following the acquisition of any such product, the Company 
will, in all likelihood be required to either seek debt or 
equity financing or obtain funding from third parties, in 
exchange for which the Company would probably be required 
to give up a substantial portion of its interest in any 
acquired product. There is no assurance that the Company 
will be able either to obtain additional financing or 
interest third parties in providing funding for the further 
development, marketing and manufacturing of any products 
acquired.

It is anticipated that the investigation of specific 
business opportunities and the negotiation, drafting and 
execution of relevant agreements, disclosure documents and 
other instruments will require substantial management time 
and attention and substantial costs for accountants, 
attorneys and others. If a decision were made not to 
participate in a specific business opportunity, the costs 
therefore incurred in the related investigation would not 
be recoverable. Furthermore, even if an agreement is 
reached for the participation in a specific business 
opportunity, the failure to consummate that transaction 
may result in the loss of the Company of the related 
costs incurred.

Competition

The Company is an insignificant participant among firms 
which engage in business combinations with, or financing of, 
development stage enterprises. There are many established 
management and financial consulting companies and venture 
capital firms which have significantly greater financial and 
personnel resources, technical expertise and experience than 
the Company. In view of the Company's limited financial 
resources and management availability, the Company will 
continue to be at significant competitive disadvantage 
vis-a-vis the Company's competitors.

Employees

Exten. As of March 31, 1998, Exten had no employees. Its 
officers and directors manage the Company.

Xenogenics. As of March 31, 1998, Xenogenics had no 
employees. Its officers and directors manage the Company. 

Item 2. DESCRIPTION OF PROPERTY

Exten 

Lease. Exten leases approximately 1,494 square feet of 
space, at $1195 per month, in a modern office building. 
Exten's lease continues to run from month to month. The 
Company believes these facilities are adequate for the near 
future.

Arizona. On February 28, 1992 the Company exchanged 170,000 
shares of common stock and 170 shares of preferred stock, 
convertible into 170,000 shares of common stock, for real 
estate in Arizona comprised of 240 undeveloped lots 
approximately 70 miles south of the Grand Canyon. In 1994 
the Company sold four of these lots to pay property taxes. 
As of November 30, 1997, the Company owned 236 of these 
lots. The Company is seeking to sell the Arizona property.

<PAGE 13>

Xenogenics

During the fiscal year ending November 30, 1997, Xenogenics 
was provided offices and clerical services by its parent, 
Exten and did not have separate offices.

In April 1997, the Company contributed all of the Sybiol 
assets and liver technology in exchange for the Xenogenic's 
assumption of certain of the outstanding debt of the 
Company, cash and 1.5 million shares of Common Stock.

Item 3. LEGAL PROCEEDINGS

On February 9, 1998 the law firm of Meisenheimer and Herron 
filed a lawsuit against the Company to recover $4,519.16 in 
legal fees. The Company had contested these fees through 
the San Diego County Bar Association fee arbitration 
procedure and lost.

There was no other pending legal proceedings involving the 
Company.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No meeting of the Company's shareholders was held in 1997.

PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK 
AND RELATED STOCKHOLDER MATTERS

From June 14, 1994 to the present, the Company's Common 
Stock has traded OTC (Electronic Bulletin Board). 

The table below shows closing sales price for Exten Common 
Stock as reported by the exchange.

 Calendar Year ended December 31,     High      Low 
 -------------------------------      ----      ----
 1996
 First quarter                         .12      .06
 Second quarter                        .08      .04 
 Third quarter                         .13      .06 
 Fourth quarter                        .09      .03 

 1997
 First quarter                         .06      .04
 Second quarter                        .06      .04 
 Third quarter                         .06      .04 
 Fourth quarter                        .12      .04 

No cash dividends have been paid on Exten Common Stock and 
no change of this policy is under consideration by the 
Board of Directors. 

<PAGE 14>

The payment of cash dividends in the future will be 
determined by the Board of Directors in light of conditions 
then existing, including the Company's earnings, financial 
requirements, and condition, opportunities for reinvesting 
earnings, business conditions, and other factors. The number 
of shareholders of the Company's Common Stock on 
November 30, 1997 was approximately 3,000.

The following Securities were sold by the Company without 
registering the securities under the Securities Act of 1933 
under the claim of exemption stated within the previous 
twenty-four months.

On December 1, 1996, the Company issued 1,000,000 shares of 
its Common Stock ($.001 par value) (the "Shares") on a 
private placement basis. These Shares were sold to a 
corporation domiciled in the Bahamas pursuant to the 
exemption allowed under Regulation S of the Securities 
Act of 1933. These Shares were sold by the Company without 
the assistance of any underwriter or broker-dealer at a 
price of five cents ($.05) each which resulted in the 
Company receiving $50,000 in gross proceeds before legal, 
accounting and related offering costs.

On November 12, 1997, the Company issued 120,000 shares of 
its Common Stock ($.001 par value) (the "Shares") on a 
private placement basis pursuant to the exemption allowed 
under Section 4(2) of the Securities Act of 1933. These 
Shares were sold to an investor by the Company without 
the assistance of any underwriter or broker-dealer at a 
price of five cents ($.05) each which resulted in the 
Company receiving $6,000 gross proceeds before legal, 
accounting and related offering costs.

On March 14, 1997, The Company issued 1,000,000 shares of 
Common Stock (($.001 par value) (the "Shares") on a private 
placement basis pursuant to the exemption allowed under 
Section 4(2) of the Securities Act of 1933. These shares 
were issued in exchange for $50,000 of debt owed to a former 
officer and director of the Company as part of a Settlement 
Agreement.

On December 10, 1997, The Company issued 750,000 shares of 
Common Stock (($.001 par value) (the "Shares") on a private 
placement basis pursuant to the exemption allowed under 
Section 4(2) of the Securities Act of 1933. These shares 
were issued as part of a Settlement Agreement  with a law 
firm.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF 
OPERATIONS

During 1997 the Company formed a new subsidiary, Xenogenics 
Corporation. With the formation of the subsidiary the 
Company contributed the SYBIOL technology and certain debts 
so as to continue the focus on the research with the 
artificial liver technology. 

Results of Operations 
 
Fiscal 1997 versus Fiscal 1996

During the years ended November 30, 1997 ("Fiscal 1997") and 
November 30, 1996 ("Fiscal 1996") the Company recorded no 
revenues. The Company does not anticipate generating any 
significant revenues in the near future. 
 
However, during Fiscal 1997, the Company incurred $115,232 
in Consulting Fees, which were incurred due to the Company's 
continued use and reliance on professional services from 
outside the Company.  This amount compares to $386,292 in 
Consulting Fees incurred in Fiscal 1996.
 
During Fiscal 1997, the Company also incurred $226,154 in 
General and Administrative Expenses. This decreased by 
nearly 42% from Fiscal 1996's level of $390,561.  The 
decline was primarily due to decreased administrative, 
legal and accounting and other regulatory expenses.  The 

<PAGE 15>

Company's current management has continued its efforts to 
control costs for the future as well as currently.

As a result, Operating Expenses in Fiscal 1997 were $376,600 
compared to Operating Expenses of $793,179 in Fiscal 1996.  
This resulted in the Company recording a Loss from 
Operations of ($376,600) in Fiscal 1997 compared to a Loss 
from Operations of ($793,179) in Fiscal 1996, a decrease of 
53% from the year before.

For Fiscal 1997, the Company recorded interest expense of 
$31,234 compared to $273 during Fiscal 1996. During Fiscal 
1996, the Company also recorded $110,288 in losses on 
disposition of assets.  This loss was the result of the 
Company's sale of certain assets below their acquisition 
cost. The Company also recorded a $60,000 loss on the 
recission of a technology license to GroupMed International 
during Fiscal 1996 after previously recording a $60,000 
asset in connection with the sale of the license to them in 
Fiscal 1995. 

The Company also wrote off its investment in TECA with a 
$133,670 charge to operations. The Company's Fiscal 1996 
operations were greatly impacted by certain Other Income 
and Expenses. In Fiscal 1997, the Company recorded an 
extraordinary gain of $303,000 in connection with the 
satisfaction of certain indebtedness. This compares to 
$147,188 in extraordinary gains recognized in Fiscal 1996 
resulting from similar re-negotiations and reductions of 
certain indebtedness. 

As a result, the Company recorded a Net Loss of ($104,834) 
in Fiscal 1997 compared to a Net Loss of ($950,222) in 
Fiscal 1996, a decrease of nearly 89%. Fiscal 1997 Losses 
Per Common Share (computed with Common Stock Equivalents 
and fully diluted) were ($0.00) compared to ($0.03) for the 
same period during Fiscal 1996.

During 1997, the Company filed patent applications in 15 
countries to protect its patent rights in the Sybiol 
artificial liver technology. During 1997, Dr. John Brems, 
Chairman of the Company's Scientific Advisory Board, left 
Scripps Clinic and Research Foundation in La Jolla, 
California to head up a new program at Loyola University 
in Chicago, Illinois. Dr. Brems will continue as Chairman 
of the Scientific Advisory Board. In addition to overseeing 
this institution's liver transplant program, Dr. Brems 
intends to establish a new program to develop an artificial 
liver. In this regard, Dr. Brems has recruited a team of the 
world's foremost liver doctors and scientists to Loyola. The 
scientific advisory board added four new members, Dr. Donald 
Cramer, BS, DVM, and Ph.D., director of the Transplantation 
Biology Research Laboratory at St. Vincent Medical Center 
in Los Angeles; Dr. Michael Ishitani, MD, FACS, of 
Cleveland; Dr. Daniel Salomon, MD, Director of 
Transplantation Research at the Scripps Clinic; and Dr. 
David Van Thiel, MD Director of Liver Transplantation at 
Loyola.  They will augment the  other existing advisory 
board members: Jim Considine, MD, who was appointed 
President of Xenogenics Corporation in 1997, Amy Friedman, 
MD of Yale University, and Kurt Gehlsen, Ph. D., former CEO 
of Trauma Products.

Fiscal 1996 versus Fiscal 1995

During the year ended November 30, 1996 ("Fiscal 1996") the 
Company recorded total revenues of $0 compared to $6,654 in 
revenues earned during the fiscal year ended November 30, 
1995 ("Fiscal 1995").  Fiscal 1995's revenues were composed 
of $96 in royalties, $5,388 in rents in rental revenues from 
real estate, and $1,170 in sales revenue.

During Fiscal 1996, the Company incurred $386,292 in 
Consulting Fees, which were incurred primarily due to the 
Company's continued use and reliance on professional 
services from outside the Company.
 
In Fiscal 1996, the Company also incurred $390,561 in 
General and Administrative Expenses. This decreased by 
nearly 63% from Fiscal 1995's level of $1,044,403 primarily 
due to decreased administrative staff and consulting 
expenses.

<PAGE 16>

Fiscal 1996 research and development costs declined to $0 
from $169,658 in Fiscal 1995 while depreciation and 
amortization expenses were $16,326 in Fiscal 1996 compared 
to $21,064 in Fiscal 1995. The decline in research and 
development costs during Fiscal 1996 reflected the Company's 
limited financial resources.

As a result, Total Operating Expenses in Fiscal 1996 were 
$793,179 compared to Total Operating Expenses of $1,844,704 
in Fiscal 1995. This resulted in the Company recording a 
Loss from Operations of ($793,179) in Fiscal 1996 compared 
to a Loss from Operations of ($1,838,050) in Fiscal 1995.

For Fiscal 1996, the Company recorded interest expense of 
$273 compared to $22,438 during Fiscal 1995. During Fiscal 
1996, the Company also recorded $110,288 in losses on 
disposition of assets compared to $214,167 in losses 
recorded upon disposition of assets during Fiscal 1995. 
The Company also recorded a $60,000 loss on the recission 
of a technology license to GroupMed International in Fiscal 
1996 after previously recording a $60,000 asset in 
connection with the sale of the license to them in Fiscal 
1995. The Company also wrote off its investment in TECA 
with a $133,670 charge to operations. 

The Company's Fiscal 1996 operations were greatly impacted 
by certain Other Income and Expenses.  In Fiscal 1996, the 
Company recorded an extraordinary gain of $147,188 in 
connection with the re-negotiation of certain indebtedness.  
This compares to $49,348 in extraordinary gains recognized 
in Fiscal 1995 resulting from similar re-negotiations and 
reductions of certain indebtedness. 

As a result, the Company recorded a Net Loss of ($950,222) 
in Fiscal 1996 compared to a Net Loss of ($3,580,087) in 
Fiscal 1995, a decrease of nearly 74%. Fiscal 1996 Losses 
Per Common Share (computed with Common Stock Equivalents 
and fully diluted) were ($0.03) compared to ($0.23) for the 
same period during Fiscal 1995.

Liquidity and Capital Resources - the Company

The Company completed several steps to reduce its 
liabilities, reduce cash requirements, and raise capital 
during Fiscal 1997.  The Company has successfully negotiated 
with a bank, vendors and certain creditors to settle its 
liabilities and certain litigation the Company had with a 
former officer and other litigation with a bank.  This 
served reduce prior debt and otherwise permit management to 
focus its energies on the Company's proposed business.  

And while the Company continues to seek additional financing 
through the offering and sale of the Company's securities, 
joint ventures, and other efforts, the Company has not 
received any indication that it will be successful in these 
efforts.  The Company may consider forming an alliance or 
completing a merger with one or more other entities. There 
can be no assurances that the Company will be successful in 
obtaining any additional financing or in otherwise 
completing any joint venture, alliance, merger, or other 
transaction or, if the Company is successful in completing 
any such transaction, that it can be completed on terms that 
are reasonable in view of the Company's current 
circumstances.

During Fiscal 1996 and 1997, the Company also took steps to 
control expenses and to reduce and re-negotiate outstanding 
indebtedness, particularly debts to a former officer, 
Robert H. Goldsmith.

The Company has also continued to pay directors fees, 
consulting fees, and in some cases, legal fees through the 
issuance of the Company's Common Stock with the subsequent 

<PAGE 17>

registration of the shares so issued on Form S-8. The 
Company has been forced to take these steps to conserve the 
Company's cash and liquid resources.

Item 7.  FINANCIAL STATEMENTS

The full text of the Company's audited consolidated 
financial statements for the fiscal years ended November 30, 
1997 and 1996 begins on PAGE F-1 of this Report.

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

Within the 24-month period prior to November 30, 1997, there 
was a change of accountants and on February 9, 1997 the 
Company changed its accountants from Harlan & Boettger to 
J.H. Cohn LLP, as its independent auditors. During this 
period, there has been no reported disagreement with 
accountants on any matter of accounting principles or 
practices or financial statement disclosure.

<PAGE 18>

PART III

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

The Directors and Executive Officers of the Company were as 
of November 30, 1997:
                                                    Date
Name of Person         Age  Position              elected
--------------------  ----  -------------------   --------
W. Gerald Newmin       60   President, CEO, 
                            Chairman  Secretary
                            & Director            12-01-95
William R. Hoelscher   60   Vice President  
                            & Director            10-25-94

Mr. W. Gerald Newmin was retained as a consultant to the 
Board of Directors of the Company in June 1995. As an 
accommodation to the Board, Mr. Newmin was elected Acting 
Secretary of the Corporation on July 13, 1995, and had 
signature authority on checks in the absence of an officer 
or director. On December 1, 1995, Mr. Newmin was elected 
Chairman, Chief Executive Officer, and President of the 
Company. Mr. Newmin is a principal of Newmin & Associates,
specializing in mergers and acquisitions and the operational 
management of troubled companies. Mr. Newmin currently 
serves on the Board of Directors and is an investor in four 
companies, one of which, SYS, is a publicly traded (OTC) 
on the Electronic Bulletin Board. 

Mr. Newmin is currently Chairman of the Board of the 
International Forum of Corporate Directors, a non-profit 
organization which promotes corporate governance, and which 
is composed of over 120 Board members from companies in San 
Diego and all over California. From 1991 to present. 
Mr. Newmin has been a consultant and a director of Greene 
International West, Inc., an industrial manufacturing 
company located in Oceanside, California. From 1993 to 
present, Mr. Newmin has been an investor and director of 
Occu-Med, Inc., a managed healthcare company located in 
Denver, Colorado. Since 1994, Mr. Newmin has been an 
investor and director of SYS, a defense systems company in 
San Diego, California. From 1984 to 1987, Mr. Newmin was 
President of Health-America Corporation, at the time the 
nation's largest publicly held HMO management company. From 
1977 to 1984, Newmin was President of International Silver 
Company, a diversified multi-national manufacturing company 
that he restructured. From 1973 to 1977, Mr. Newmin was Vice 
President and Western Regional Director for American 
Medicorp, Inc. In this capacity, he was responsible for the 
management of 23 acute care hospitals located throughout the 
Western United States. From 1962 to 1973, Whittaker 
Corporation employed Mr. Newmin, who was instrumental in 
Whittaker's entry into both the United States and 
International healthcare markets. At Whittaker, Mr. Newmin 
held various senior executive positions, including those of 
Chief Executive Officer of Whittaker's Production Steel 
Company, Whittaker Textiles Corporation, Bertram Yacht 
Corporation, Narmco Materials Corporation, and Anson 
Automotive Corporation. Mr. Newmin holds a Bachelor's degree 
in Accounting from Michigan State University.

Mr. William R. Hoelscher was elected a Director on 
October 25, 1994. From August 1984 to the present, 
Mr. Hoelscher has been the owner of Hoelscher Engineering 
("HEC"). HEC provides technical support to US Elevator, 
other elevator companies, and consulting services to legal 
counsel in connection with elevator litigation matters. Mr. 
Hoelscher also is part-time consultant to Cubic Corp. and 
provides elevator design training seminars for Cubic's US 
Elevator division. 

From July 1991 to the present, Mr. Hoelscher has been 
President of ETC Corp., a company involved in developing 
ideas and inventions. From August 1984 to July 1991, 
Mr. Hoelscher was Vice President, Secretary, and Treasurer  

<PAGE 19>

of Tec-Matic Corp. - a company involved in building computer
interface equipment for hydraulic milling machinery; and 
Mr. Hoelscher was also President of Photovoltaic Energy 
Development, Inc. - a company involved in the development 
of power inverters and other accessories for use in the 
conversion of solar and other natural energy. 

During this period Mr. Hoelscher was also President of Hypec 
Corp. - a company involved in the design and development of 
a thermal to electrical energy conversion unit. In July 1984 
Mr. Hoelscher retired as Director of Research and 
Development at US Elevator Corp. Mr. Hoelscher holds a B.Sc. 
Degree in Physics from San Diego State University (1959).

As per item 405 of SEC Regulation SB it should be noted that
during the fiscal year ended November 30, 1997, the Company
has no record of the timely filing of Statements of Changes
in Beneficial Ownership of Securities forms (Form 3 and 
Form 4) on one or more occasions by the following: none 

Item 10.  EXECUTIVE COMPENSATION

During fiscal 1997, the Company paid the following 
compensation to the Company's Officers and Directors:

       Cash Compensation:                   Amount
       -----------------                    ------   
       Fiscal 1997

       W. Gerald Newmin                       $0
       William R. Hoelscher                   $0
                                             ----- 
       Total (all Directors and 
       Officers, as a group,
       two persons)                           $0   
                                             ===== 

Non-Cash Compensation:

1. Stock Compensation

        Officer          Date of Issue     Number of Shares 
   ----------------      -------------    ------------------     
   W. Gerald Newmin        08-17-97            680,000

   William R. Hoelscher    08-17-97             36,000

2. Other Non-Cash Compensation 

In lieu of other compensation, the Company issued a $162,500 
secured promissory note (the "Note") to the Company's 
President, W. Gerald Newmin for services rendered during 
the fiscal year ending November 30, 1996 and as a prepayment 
(of $12,500) for the month of December 1996. The Note 
carries an interest rate of 7%, matures on demand or before 
November 30, 1997. The Company's patent applications, 
licenses, technologies, agreements, inventory, machines, 
office furniture, and all other Company assets secure the 
Note.

On June 1, 1997, a new note in the amount of $168,545, 
including principal and accrued interest, was issued by 
the Company's Xenogenics subsidiary to replace the above 
note. The new note carries an interest rate at the Wall 
Street Journal prime rate, matures on June 1, 1999 and is 
convertible into 168,545 shares of Xenogenics common stock. 
Xenogenic's patent applications, licenses, technologies, 
agreements, inventory, machines, office furniture, and all 
other Company assets secure the Note.

<PAGE 20>

Stock Option Compensation

In addition to the cash and stock compensation reported 
above, the Company's Board of Directors voted to issue 
options to purchase shares of the Company's Common Stock 
(par value $0.01) to the following Officers and Directors of 
the Company in lieu of cash compensation during fiscal 1996:

                         No. Of Shares  Exercise  Expiration
Name of Officer/Director  Under Option   Price      Date 
------------------------  ------------- --------  ----------
Electrical & Technical 
 Consulting, Inc. (1)      800,000       $0.10     11-13-00

Electrical & Technical
 Consulting, Inc. (1)      800,000       $0.06     08-16-98
____________________________________________________________
Footnote:

(1) Electrical & Technical Consulting, Inc. is a company 
partially owned by William R. Hoelscher, a Director of the 
Company. 

The Company also granted stock options to the following 
individuals who were named to the Company's informal 
scientific advisory board:

                         No. Of Shares  Exercise  Expiration
Name of Officer/Director  Under Option    Price       Date 
------------------------  -------------  --------  ---------
John Brems, M.D.            100,000      $0.10     01-25-01
Amy Friedman, M.D.           60,000      $0.10     01-25-01
Kurt Gehlsen, Ph.D.          60,000      $0.10     01-25-01


Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
MANAGEMENT

As of March 30, 1998, the Company's Directors, Officers and 
over 5% shareholders held beneficially the following shares 
of Common Stock or of beneficial interest.  Numbers of 
shares have been adjusted for 1:7 reverse split effective 
August 31, 1990 and the reverse split of 1:2 August 10, 1991 
and a reverse split of 1:10 on November 30, 1992.
 
<TABLE>

        Name                  Title           Common Shares  % Class 
---------------------   -------------------   -------------  -------
<S>                      <C>                  <C>            <C>
W. Gerald Newmin (2)     President, CEO, 
                         Chairman & Secretary   4,661,547     11.45%
William R. Hoelscher (3) Director & Treasurer   2,325,000      5.71%
                                              -------------  -------
All Officers and Directors
 as a Group (2 persons)                         6,986,547     17.16%
                                              =============  =======
</TABLE>

<PAGE 21>

Footnotes:

(1) Based on 40,718,762 shares of the Company's Common Stock 
outstanding as of March 30, 1998, and stock option shares 
currently executable by officers, directors, and affiliates 
within 60 days of March 30, 1998, without including the 
effect of any other stock options.

(2) Includes 4,081,704 shares held by the Company's legal 
counsel subject to release for services rendered by the 
Compensation Committee of the Company's board of directors.

(3) Includes 172,000 shares and 1,600,000 shares underlying 
1,600,000 options granted Electrical & Technical Consulting,
a company partially owned by William R. Hoelscher, a 
Director of the Company.

Stock Options Outstanding:

<TABLE>
                                         Amount of     Exercise   Expiration
Name                    Position        Stock Option     Price       Date
-------------------     -------------   ------------   --------   ----------
<S>                     <C>             <C>            <C>        <C>
Malcolm D. Campbell     Past CFO & 
                        Secretary         300,000        $0.50     08-26-98

Edward F. Myers         Past President
                        & Director        300,000        $1.00     11-30-98

Electrical & Technical 
Consulting, Inc.(1)                       800,000        $0.10     11-13-00

Electrical & Technical 
Consulting, Inc.(1)                       800,000        $0.06     08-16-98 

</TABLE>

Footnotes:

(1) Does not include options granted to other holders, 
totaling an additional 1,840,000 shares at exercise prices 
ranging from $0.10 to $0.50 per share. Electrical & 
Technical Consulting, Inc. is a company partially owned by 
William R. Hoelscher, a Director of the Company.

All of the options expire on the date shown, and there is no 
provision in the grant for any extension of the exercise 
period beyond the expiration date shown above. 

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On November 30, 1996, the Company's Board of Directors 
approved the issuance of a $162,500 secured promissory note 
(the "Note") to the Company's President, W. Gerald Newmin, 
in lieu of any other compensation for services rendered 
during the fiscal year ending November 30, 1996 and as a 
prepayment (of $12,500) for the month of December 1996. The 
Note carries an interest rate of 7%, matures on demand or 
before November 30, 1997. The Note is secured by the 
Company's patent applications, licenses, technologies, 
agreements, inventory, machines, office furniture, and all 
other Company assets.

No current Officer or Director of the Company has been 
indebted to the Company or any of its subsidiaries in an 
amount in excess of $60,000. 

In connection with the formation and private placement of 
the company's wholly owned subsidiary, Xenogenics Corp., 
the following transpired: Xenogenics assumed a promissory 
note in the amount of $162,500, plus accrued interest of 
$6,045 owing to an officer of the company in connection 
with the transfer of the SybiolR patents, trademarks, 
licenses and assets from Exten. This note matured 
November 30, 1997 and was payable interest only at 7% per 
annum until maturity and was convertible into common stock

<PAGE 22>

of Xenogenics at $1.00 per share over its term. In addition, 
the holder was granted an option to purchase an additional 
162,500 shares of common stock at $1.00 per share over a 
three-year period. The note was secured by a security 
interest in the Sybiol patents, trademarks, technology 
and assets.  This note was replaced by a new note dated 
June 1, 1997 which contains similar terms and conditions, 
and matures on June 1, 1999.

An unrelated party loaned Xenogenics $145,000 under a two 
year promissory note in June 1997, that is payable interest 
only and is convertible into common stock under a formula 
ranging from $2.00 to $3.00 per share. In addition, the 
unrelated party was granted an option to purchase 145,000 
shares of common stock of Xenogenics at $1.00 per share over 
a three-year period. The note is also secured by a security 
interest. Subsequent to year end, the same unrelated party 
loaned Xenogenics an additional $25,000, for which an 
additional note with the same terms and conditions was 
issued to said party.

Additionally, two directors of Xenogenics were granted stock 
options in June, 1997, to purchase 50,000 shares of 
Xenogenics common stock at $1.00 per share over a five-year 
period.

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

Reports On Form 8-K Item Reported

1.) On December 6, 1995, the Company filed Form 8-K to 
report the election of W. Gerald Newmin as the Company's 
Chief Executive Officer and Chairman of the Company's Board 
of Directors.

2.) On December 13, 1995, the Company filed Form 8-K to 
report the expansion of its Board of Directors from three 
to five members.

3.) On February 9, 1997, the Company filed Form 8-K to 
report the appointment of J.H. Cohn LLP, as the Company's 
public accountant to replace Harlan & Boettger, CPAs.

4.) On July 15, 1997, the Company filed Form 8-K to report 
the Company's acquisition of all the assets of its 
subsidiary, Xenogenex, Inc.

5.) On March 21, 1998, the Company filed Form 8-K to report 
the Company's agreement with Loyola University to provide 
research activities with its subsidiary, Xenogenex, Inc.

Exhibits

None

<PAGE 23>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders
Exten Industries, Inc.

We have audited the accompanying consolidated balance sheet 
of Exten Industries, Inc. and Subsidiaries as of 
November 30, 1997, and the related consolidated statements 
of operations, stockholders' deficiency and cash flows for 
the years ended November 30, 1997 and 1996. These financial 
statements are the responsibility of the Company's 
management. Our responsibility is to express an opinion 
on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements 
referred to above present fairly, in all material respects, 
the financial position of Exten Industries, Inc. and 
Subsidiaries as of November 30, 1997, and their results 
of operations and cash flows for the years ended 
November 30, 1997 and 1996, 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 discussed in Note 2 to the consolidated
financial statements, the Company has sustained recurring 
losses, negative cash flows and decreases in working capital
and is in default under the terms of certain loan 
agreements. These conditions raise substantial doubt about 
the Company's ability to continue as a going concern. 
Management's plans in regard to these matters are also 
described in Note 2 to the consolidated financial 
statements. The consolidated financial statements do not 
include any adjustments relating to the recoverability and 
classification of reported asset amounts or the amounts and 
classification of liabilities that might result from the 
outcome of this uncertainty.

/S/J. H. COHN LLP

San Diego, California
February 9, 1998

<PAGE F-1>
              EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEET
                         NOVEMBER 30, 1997


ASSETS
Current assets - cash (including
 restricted cash of $17,601)                       $ 22,915
Real estate held for sale                            47,200
Patent costs                                         37,226
                                                    ------- 
Total                                              $107,341
                                                    =======

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
Accounts payable                                   $ 61,776
Accrued expenses                                    275,817
Refunds payable to stock subscribers                 17,601
Notes payable in default                            160,072
                                                    -------
Total current liabilities                           515,266
                                                    -------
Estimated liability under settlement agreement       30,000
Notes payable                                       313,545
                                                    ------- 
Total liabilities                                   858,811
                                                    ------- 
Commitments and contingencies                          - 

Stockholders' deficiency:
Common stock, par value $.01 per share;
50,000,000 shares authorized;
37,136,642 shares issued and outstanding            371,366
Additional paid-in capital                        9,106,023
Receivable from sales of stock                     (140,040)
Accumulated deficit                             (10,088,819)
                                                   --------
Total stockholders' deficiency                     (751,470)
                                                    ------- 
Total                                              $107,341
                                                    =======

See Notes to Consolidated Financial Statements.
 
<PAGE F-2>
            EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS
           YEARS ENDED NOVEMBER 30, 1997 AND 1996


                                         1997        1996
                                        -------     -------
Operating expenses:
Consulting fees                       $ 115,232   $ 386,292
General and administrative              226,154     390,561
Depreciation and amortization            35,214      16,326
                                        -------     -------
Totals                                  376,600     793,179
                                        -------     ------- 
Loss from operations                   (376,600)   (793,179)
                                        -------     -------
Other expenses:
Interest expense                        (31,234)       (273)
Loss on disposition of assets              -       (110,288)
Recision of technology license             -        (60,000)
Write-off of investment in and
receivables from equity investee           -       (133,670)
                                        -------     -------
Totals                                  (31,234)   (304,231)
                                        -------     -------
Loss before extraordinary item         (407,834) (1,097,410)

Extraordinary item - gain on
extinguishment of debt                  303,000     147,188
                                        -------     -------
Net loss                              $(104,834)  $(950,222)
                                        =======     =======
Net loss per common share:
Loss before extraordinary item        $    (.01)  $    (.04)
Extraordinary item                          .01         .01
                                        -------     -------
Net loss                              $     -     $    (.03)
                                        =======     =======
Weighted average number of common
shares outstanding                   31,846,403  26,846,661
                                     ==========  ==========

See Notes to Consolidated Financial Statements.

<PAGE F-3>
               EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
               YEARS ENDED NOVEMBER 30, 1997 AND 1996

<TABLE>  
                                  Common Stock       Additional  Receivable    Accum-       Stock-           
                              ---------------------    Paid-in   from Sales    ulated      holders'
                                Shares      Amount     Capital    of Stock     Deficit    Deficiency
                              ----------  ---------  ----------  ----------  -----------  ----------
<S>                          <C>         <C>        <C>         <C>         <C>          <C> 
Balance, December 1, 1995    23,462,205  $ 234,622  $9,134,899  $(812,500)  $(9,033,763) $  476,742)

Return of common stock upon
 cancellation of note
 receivable                   (1,000,000)   (10,000)   (802,500)   812,500          -           -

Issuance of stock              2,000,000     20,000     162,435       -             -        182,435

Issuance of stock for
 services                      3,718,640     37,186     220,109       -             -        257,295

Issuance of stock for 
 investment in subsidiary        581,587      5,816      45,050       -             -         50,866

Issuance of stock for 
 settlement of note 
 payable                       1,000,000     10,000      40,000       -             -         50,000

Net loss                            -          -           -          -         (950,222)   (950,222)
                              ----------  ---------  ----------  ----------  -----------  ----------

Balance, November 30, 1996    29,762,432    297,624   8,799,993       -       (9,983,985)   (886,368)

Issuance of stock                120,000      1,200       4,800       -             -          6,000

Issuance of stock for 
 services                      4,003,988     40,040     163,692       -             -        203,732

Issuance of stock under 
 agreement for settlement 
 of accounts payable             750,000      7,500      22,500       -             -         30,000

Issuance of stock for 
 receivable from 
 stockholder                   2,500,222     25,002     115,038   (140,040)         -           -  

Net loss                            -          -           -          -         (104,834)   (104,834)
                              ----------  ---------  ----------  ----------  -----------  ----------
Balance, November 30, 1997    37,136,642   $371,366  $9,106,023  $(140,040) $(10,088,819) $ (751,470)
                              ==========  =========  ==========  ==========  ===========  ========== 

</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE F-4>

               EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS
              YEARS ENDED NOVEMBER 30, 1997 AND 1996

                                           1997      1996
                                          ------    ------
Operating activities:
Net loss                               $(104,834) $(950,222)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Common stock issued for services         203,732    257,295
Note payable issued for compensation      15,133    150,000
Write-off of employee advances              -        92,538
Depreciation and amortization             35,214     16,326
Loss on disposition and 
impairment of assets                        -       110,288
Recision of technology license              -        60,000
Write-off of investment in and
receivable from equity investee             -       133,670
Gain on extinguishment of debt          (303,000)  (147,188)
Changes in operating assets and
liabilities:
Other current assets                      25,000    139,400
Accounts payable                         (29,240)    (6,859)
Accrued expenses                          98,956    (31,646)
                                         -------    -------
Net cash used in operating activities    (59,039)  (176,398)
                                         -------    -------
Investing activities:
Patent costs                             (37,226)      -
Advances to employee                        -       (13,578)
                                         -------    -------
Net cash used in investing activities    (37,226)   (13,578)
                                         -------    -------
Financing activities:
Proceeds from notes and loans payable    145,000      1,650
Payments of notes and loans payable      (50,000)    (1,763)
Proceeds from stock subscriptions         17,601       -
Net proceeds from sale of stock 
and exercise of stock options              6,000    182,435
                                         -------    -------
Net cash provided by financing 
activities                               118,601    182,322
                                         -------    -------
Net increase (decrease) in cash           22,336     (7,654)
Cash at beginning of year                    579      8,233
                                         -------     ------
Cash at end of year                     $ 22,915   $    579
                                          ======     ======
Supplementary disclosure of
cash flow data:
               Interest paid            $ 14,496   $    273
                                          ======     ======

<PAGE F-5>

EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING 
POLICIES:

Business:
Exten Industries, Inc. ("Exten") is a holding company that 
is in the business of developing, through one of its 
wholly-owned subsidiaries, Xenogenics Corporation 
("Xenogenics"), a synthetic bio-liver technology ("SYBIOL").
In 1993 ,the Company acquired all of the rights to the 
SYBIOL technology developed under its contract with Cedars-
Sinai Medical Center. The rights to the technology were 
transferred to Xenogenics when it was formed in 1997. A 
patent application is currently pending on the process 
utilized by the SYBIOL device and the Company has applied 
for trademark protection for the SYBIOL trade name.

Basis of consolidation:
The consolidated financial statements include the accounts 
of Exten and its subsidiaries (together the "Company"). All 
significant intercompany balances and transactions have been 
eliminated in consolidation.

Use of estimates:
The preparation of financial statements in conformity with 
generally accepted accounting principles requires management 
to make estimates and assumptions that affect certain 
reported amounts and disclosures. Accordingly, actual 
results may differ from those estimates.

Impairment of long-lived assets:
In accordance with Statement of Financial Accounting 
Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," 
("SFAS 121"), impairment losses on real estate and other 
long-lived assets are recognized when events or changes in 
circumstances indicate that the undiscounted cash flows 
estimated to be generated by such assets are less than their 
carrying value and, accordingly, all or a portion of such 
carrying value may not be recoverable. Impairment losses are 
then measured by comparing the fair value of assets to their 
carrying amounts. 

The Company's real estate held for sale was determined to be 
impaired prior to 1996 and, accordingly, it is stated at 
fair value, in accordance with SFAS 121, based upon 
management's estimate of the amount that will be recovered 
from the ultimate sale of the real estate. 

Income taxes:
The Company accounts for income taxes pursuant to the asset 
and liability method which requires deferred income tax 
assets and liabilities to be computed annually for temporary 
differences between the financial statement and tax bases of 
assets and liabilities that will result in taxable or 
deductible amounts in future periods based on enacted laws 
and rates applicable to the periods in which the temporary 
differences are expected to affect taxable income. Valuation 
allowances are established when necessary to reduce deferred 
tax assets to the amount expected to be realized. The income 

<PAGE F-6>

EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1 - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING 
POLICIES (concluded):

Income taxes (concluded):
tax provision or credit is the tax payable or refundable 
for the period plus or minus the change during the period 
in deferred tax assets and liabilities.

Net loss per common share:
Net loss per share is calculated using the weighted average 
number of outstanding common shares. Common stock 
equivalents, consisting of stock options outstanding, have 
not been considered because the impact of the assumed 
exercise of such options is antidilutive.

In February 1997, the FASB issued Statement of Financial 
Accounting Standards No. 128, "Earnings per Share," 
("SFAS 128") which replaces the presentation of primary 
earnings per share required under previously promulgated 
accounting standards with a presentation of basic and 
diluted earnings per share on the face of the statement of 
operations for all entities with complex capital structures 
and provides guidance on other computational changes. SFAS 
128 is effective for financial statements for both interim 
and annual periods ending after December 15, 1997. 
Management believes that the adoption of SFAS 128 will not 
have a material impact on the Company's reported net loss 
per share.

Other recent accounting pronouncements:
In June 1997, the FASB issued Statements of Financial 
Accounting Standards No. 130, "Reporting Comprehensive 
Income," ("SFAS 130") and No. 131, "Disclosures about 
Segments of an Enterprise and Related Information," 
("SFAS 131") which could require the Company to make 
additional disclosures in its financial statements no later 
than for the fiscal year ending November 30, 1999. SFAS 130 
defines comprehensive income, which includes items in 
addition to those reported in the statement of operations 
and requires disclosures about its components. SFAS 131 
requires disclosures for each segment of a business and 
the determination of segments based on its internal 
management structure. Management believes that the adoption
of SFAS 130 and SFAS 131 will not have a material impact on
the Company's disclosures.

Reclassification:
Certain balances in the 1996 consolidated financial 
statements have been reclassified to conform to the 1997 
presentation.

<PAGE F-7> 

EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - GOING CONCERN MATTERS:
In 1997 and 1996, the Company incurred net losses of 
$104,834 and $950,222, respectively. Management does not 
expect the Company to generate significant revenues in the 
near future. At November 30, 1997, the Company's accumulated 
deficit and stockholders' deficiency were $10,088,819 and 
$751,470 respectively, and its current liabilities exceeded 
its current assets by $492,351. Additionally, even though 
the Company has been able to satisfy obligations for certain 
operating expenses by issuing shares of the Company's 
common stock, operating activities still resulted in 
negative cash flows aggregating $59,039 and $176,398 in 1997 
and 1996, respectively. Furthermore, judgments and claims 
against the Company relating to loan guarantees, and amounts 
owed current and former suppliers continue to accumulate and 
it was in default under the terms of certain loan agreements 
(see Note 5). These factors, among others, raise substantial 
doubt about the Company's ability to continue as a going 
concern.

In order to continue as a going concern, develop and 
commercialize its technology and, ultimately, achieve a 
profitable level of operations, the Company will need, among 
other things, additional capital resources. Management's 
plans to obtain such resources for the Company include 
(1) raising additional capital through sales of common 
stock, the proceeds of which would be used to perfect the 
Company's patent position in its SYBIOL technology and 
satisfy immediate operating needs; (2) continuing to use 
common stock to pay for consulting and professional 
services; (3) negotiating reductions in existing 
liabilities; and (4) selling non-productive assets. In 
addition, management is continually seeking other potential 
joint venture partners or merger candidates that would 
provide financial, technical and/or marketing resources to 
enable the Company to realize the potential value of its 
technology. However, management cannot provide any 
assurances that the Company will be successful in 
accomplishing any of its plans.

The ability of the Company to continue as a going concern is 
dependent upon its ability to successfully accomplish the 
plans described in the preceding paragraph and eventually 
secure other sources of financing and attain profitable 
operations. The accompanying consolidated financial 
statements do not include any adjustments that might be 
necessary should the Company be unable to continue as a 
going concern.

<PAGE F-8>

EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Extinguishments of debt :
During 1997 and 1996, the Company extinguished debts that 
had carrying values in excess of the fair value of the 
consideration transferred to the creditors and realized 
gains as shown below, which were classified, in accordance 
with generally accepted accounting principles, as 
extraordinary items in the accompanying consolidated 
statements of operations:
                                 
                                      1997           1996
                                    --------       --------
Settlement of judgment (A)          $283,000           -
Settlement of account payable (B)     20,000           - 
Settlement of note payable (C)          -          $147,888
                                    --------       --------
               Totals                $303,00       $147,888

(A) In 1997, a judgment payable by the Company to a bank of 
$333,000, which arose from a prior settlement of a note 
payable, was settled and released through a cash payment 
of $50,000.

(B) On October 21, 1997, the Company entered into an 
agreement with a creditor to settle an account payable with 
a balance of approximately $100,000 for total initial 
consideration of $50,000, comprised of a cash payment of 
$20,000, and the issuance of 750,000 shares of the Company's 
common stock with a market value of $30,000 or $.04 per 
share (see Note 8). If the market value of the Company's 
common stock at December 10, 1998 is less than $.10 per 
share, the creditor will be entitled to file, without 
notification or objection from the Company, a stipulated 
judgment for a cash payment (the "Contingent Payment") 
equal to the lesser of (i) the excess of $75,000 over the 
market value of 750,000 shares as of that date, or 
(ii) $45,000. Accordingly, at November 30, 1997, the Company 
accrued a liability of $30,000 for the Contingent Payment 
equal to the excess of $75,000 over the market value of the 
750,000 shares which was $45,000; it also recognized the 
extraordinary gain of $20,000 based on the excess of the 
balance of the account payable over the total of the initial 
consideration paid and the value of the Contingent Payment 
at year end.

(C)In 1996, liabilities payable to a former president with a 
total carrying value of $397,188, comprised of a $388,000 
note payable and accrued interest of $9,188, were settled 
by the Company for total consideration of $250,000, 
comprised of a cash payment of $50,000, the issuance of a 
new note with a principal balance of $150,000 (see Note 5) 
and the issuance of 1,000,000 shares of the Company's common 
stock with a market value of $50,000 or $.05 per share (see 
Note 8).

<PAGE F-9>

EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - REAL ESTATE HELD FOR SALE:
Real estate as of November 30, 1997 consists of a parcel of 
undeveloped land near the Grand Canyon.

The land was originally purchased in February 1992 for 
$1,654,000 and written down to its estimated fair market 
value of $47,200 in 1995.

NOTE 5 - NOTES PAYABLE IN DEFAULT:
Notes payable in default at November 30, 1997 consist of the 
following:

Agreement payable to a former
president of the Company, with
interest at 10%                                     $150,000

Note payable to attorneys for
professional services                                 10,072
                                                     -------
Total                                               $160,072
                                                     ======= 

NOTE 6 - NOTES PAYABLE:
Notes payable at November 30, 1997 consist of the following:

Note payable to officer, with interest
at 8.5%, due in full on May 31, 1999               $168,545

Notes payable to an unrelated party, 
with interest at the prime rate 
(8.5% at November 30, 1997), due in
full on March 7, 1999                               145,000
                                                    -------
Total                                              $313,545
                                                    ======= 

NOTE 7 - INCOME TAXES:
As of November 30, 1997, the Company had net operating loss 
carryforwards and other temporary differences arising 
primarily from the write-down of real estate totaling more 
than $10,000,000. The net operating loss carryforwards, 
before any limitations, expire on various dates through 
2011. Due to the uncertainties related to, among other 
things, the extent and timing of its future taxable income, 
the Company has offset the deferred tax assets attributable 
to the potential benefits from the net operating loss 
carryforwards and the other temporary differences by an 
equivalent valuation allowance at November 30, 1997 as shown 
below:

Deferred tax assets                              $3,900,000
Valuation allowance                              (3,900,000)
                                                 ----------
Net deferred tax asset                           $     -
                                                 ==========

<PAGE F-10>

EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - STOCKHOLDERS' DEFICIENCY:

Stock issuance's:

During 1996, the Company issued shares of common stock, 
which were valued at their fair market value at the date 
of issuance, in the following noncash transactions:

     3,718,640 shares, valued at $257,295, were issued for 
     employee compensation, consulting services, directors' 
     fees and legal services. Approximately 400,000 of the 
     shares issued were for future services to be provided 
     under contractual agreements and, accordingly, the 
     value of those shares was included in prepaid expense 
     as of November 30, 1996.

     581,587 shares, valued at $50,866, were issued to the 
     minority stockholders of the Company's subsidiary 
     (see Note 9).

     1,000,000 shares, valued at $50,000, were issued in 
     partial settlement of a note payable (see Note 3).

During 1997, the Company issued shares of common stock, 
which were valued at their fair market value at the date of 
issuance, in the following transactions:

     4,003,988 shares, valued at $203,732, were issued for 
     consulting services, directors' fees and as 
     reimbursement of expenses paid by an officer.

     750,000 shares, valued at $30,000, were issued in 
     connection with an agreement for the settlement of  
     accounts payable (see Note 3).

     2,500,222 shares issued in exchange for an agreement 
     to pay $140,010 in 1998 to an officer.

Stock subscription:
During 1997, the Company initiated a private placement of 
the common stock of Xenogenics, its subsidiary, for a 
minimum of 60,000 shares and a maximum of 360,000 shares at 
$2.50 per share. At November 30, 1997, Xenogenics was 
authorized to issue up to 5,000,000 shares of common stock 
and it had 1,500,000 shares outstanding. At November 30, 
1997, the Company had received $17,500 for subscriptions to 
purchase 7,000 shares. Since the minimum number of shares 
had not been sold, the amount received was being held in 
escrow and was included as restricted cash and a liability 
in the accompanying 1997 consolidated balance sheet.

<PAGE F-11>

EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Stockholders' deficiency (continued):

Stock options:
The Company has granted options to purchase common stock to 
various individuals, officers and directors of the Company 
in return for various services rendered to the Company.

Since the Company has adopted the disclosure-only 
provisions of Statement of Financial Accounting Standards 
No. 123, "Accounting for Stock-Based Compensation" 
("SFAS 123") and the exercise price of all of the options 
granted in 1997 was equal to or greater than fair value, 
no earned or unearned compensation cost was recognized in 
the accompanying consolidated financial statements for stock
options granted by the Company or its subsidiary in 1997. 
However, even if compensation cost had been computed based 
on the fair value at the grant date for all awards in 1997 
consistent with the provisions of SFAS 123 and recognized 
in the financial statements, the Company's net loss in 1997,
and the related per share amounts, would not have been 
materially different from the amounts reported in the 
accompanying 1997 consolidated statement of operations.

Changes during the years ended November 30, 1997 and 1996 in 
common stock options outstanding for the Company were as 
follows:
                 

                                1997    Weighted     1996
                              or Price  Exercise   or Price  
                             Per Share   Price     Per Share 
                            ----------   ------   ----------
-     
Options outstanding at 
beginning of year            4,340,000   $.26      4,190,000
Options granted at $.10                              150,000
Options canceled            (1,920,000)  $.15           -
                             ---------             --------- 
Options outstanding at
end of year                  2,420,000   $.25      4,340,000
                             =========             =========

Option price range at 
end of year                 $.06-$1.00            $.06-$1.00

<PAGE F-12>

EXTEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - STOCKHOLDERS' DEFICIENCY (concluded):
Stock options (concluded):

The following table summarizes information about stock 
options outstanding at November 30, 1997, all of which are 
at fixed prices:

            Number of     Contractual        Number  
 Exercise    Options    Life of Options    of Options
 Price     Outstanding    Outstanding      Exercisable
 --------  -----------  ---------------    -----------

  $1.00      300,000       1.0 year          300,000
   $.06      800,000        .7 year          800,000
   $.10      800,000       3.0 years         800,000
   $.10      220,000       3.2 years          73,333
   $.50      300,000       5.7 years         300,000
             -------                         -------
           2,420,000                       2,273,333 
           =========                       =========

During the year ended November 30, 1997, Xenogenics granted 
options to acquire 387,500 shares at an exercise price of 
$1.00 per share. All of the options granted during the year 
were outstanding at November 30, 1997.

NOTE 9- BUYOUT OF MINORITY INTEREST:
In June 1996, the Company entered into an agreement with the 
minority stockholders of Xenogenex (an inactive subsidiary) 
to exchange their shares of Xenogenex, Inc. for shares of 
Exten Industries, Inc. As a result of this transaction, the 
Company issued 581,587 shares of common stock and recorded 
goodwill in the amount of $50,866 which was amortized over 
15 months.

NOTE 10- EQUITY IN LOSS OF PARTNERSHIP:
During 1996, management determined that the investment in a
joint venture to manufacture and sell the Company's 
technology was worthless. Accordingly, the investment in the 
joint venture, which was accounted for by the equity method, 
and a note receivable from the joint venture were written 
off by a charge to operations in the amount of $133,670.

NOTE 11- LEASE COMMITMENTS:
The Company leases its office space under an operating lease
that is renewable annually. Rent expense was $8,486 and 
$5,736 in 1997 and 1996, respectively.

<F-13>

SIGNATURES
 

Pursuant to the requirements of Section 13 of the Securities 
Exchange Act of 1934, the registrant has duly caused this 
report to be signed on its behalf by the undersigned, 
thereunto duly authorized, on the 4th day of April 1998.
 
 
 EXTEN INDUSTRIES, INC.
 (Registrant)


/s/ W. Gerald Newmin
W. Gerald Newmin
Chairman & CEO



Pursuant to the requirements of the Securities Exchange Act 
of 1934, this report has been signed below by the following 
persons on behalf of the registrant and in the capacities 
and on the dates indicated.


Signature                  Title                    Date

/s/ W. Gerald Newmin       President, CEO, 
W. Gerald Newmin           Chairman & Secretary   04/07/98

   
/s/ William R. Hoelscher   Director & Treasurer   04/07/98
William R. Hoelscher


<PAGE 24>