10KSB/A

U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-KSB/A

(X)	Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended November 30, 2002.
Commission File Number 1-10221
EXTEN INDUSTRIES, INC. (Name of small business issuer in its charter)
DELAWARE (State or other jurisdiction of incorporation or organization)		52-1412493 (IRS Employer Identification No.)
55 Access Rd, Suite 700 Warwick, RI 02886 (401)384-1000 (Address and telephone number of principal executive offices)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Common Stock, $0.01 par value per share		Name of each exchange on which registered OTC Bulletin Board
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes XNo ___
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 [X]
State issuer's revenues for its most recent fiscal year: $ 804,538.
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 sold, or the average bid and asked price of such common equity as of a specified date within the past 60 days (based upon 61,956,753 shares held by non-affiliates and the closing price of $.08 per share for the common stock on the over-the counter market as of March 4, 2003): $4,956,540
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 101,024,904 shares of common stock as of February 11, 2003.
DOCUMENTS INCORPORATED BY REFERENCE None.
Transitional Small Business Disclosure Format (check one): Yes ____ No __X_

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EXTEN INDUSTRIES, INC.
FORM 10-K

INDEX

PART I		PAGE
Item 1.	DESCRIPTION OF BUSINESS	3
Item 2.	DESCRIPTION OF PROPERTY	6
Item 3.	LEGAL PROCEEDINGS	6
Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	6
PART II
Item 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	7
Item 6.	MANAGEMENT'S DISCUSSION AND ANALYSIS	8
Item 7.	FINANCIAL STATEMENTS	11
Item 8.	CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	11
PART III
Item 9.	DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT	12
Item 10.	EXECUTIVE COMPENSATION	13
Item 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	14
Item 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	16
Item 13	CONTROLS AND PROCEDURES	16
Item 14.	EXHIBITS AND REPORTS ON FORM 8-K	17
SIGNATURES		17
PART IV
CONSOLIDATED FINANCIAL STATEMENTS		F1 - F24

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PART I
Item 1. DESCRIPTION OF BUSINESS

About Exten Industries, Inc.

Exten Industries, Inc. was incorporated in Delaware on April 28, 1970 under the name of "Exten Ventures, Inc". Today, we have two independently operating subsidiaries. Our wholly-owned subsidiary, MultiCell Technologies Inc. ("MultiCell"), is now generating revenues. In February 2003, MultiCell signed a 15-year license agreement with Pfizer for non-exclusive research use of our two proprietary human liver cell lines. Also in February 2003, MultiCell began shipping assay plates containing immortalized hepatic cells to pharmaceutical and xenobiotic companies. Our majority-owned subsidiary, Xenogenics Corp. ("Xenogenics"), is a developmental stage enterprise that has not yet completed production of a marketable product. Its key product, the Sybiol® synthetic bio-liver device, remains in development and will not be ready to be marketed, assuming regulatory approval, befor e the end of the year 2006, at the earliest. We have operated, and continue to operate, at a deficit, which on a cumulative basis through November 30, 2002, equals $15,242,929 in a competitive industry. Our principal offices are at 55 Access Rd Warwick, RI 02886, (401) 384-1000.

About Our Business

Exten Industries, Inc. is a holding company that is focusing on the development of cells, medical products and associated research and development activities. Our primary focus, prior to the acquisition of MultiCell, had been the development of a synthetic bio-liver device. Technologies, such as this device, which are regulated by the Food and Drug Administration can take approximately three to five years to develop and commercialize, due to the regulatory approval process pursuant to which we will conduct required clinical studies. The necessary clinical studies , which will involve animal as well as three phases of human study, and the speed of completion is dependant on a number of factors including clinical evidence of safety and efficacy and the availability of qualified patients. To our knowledge, no mass-produced liver device of the type that we are developing is currently available. Our strat egic plan has been to acquire other technologies in order to generate sufficient cash flow to support our general operations, while the referenced liver technology proceeds through the final research and development stages and government regulatory approval processes. We intend to pursue business opportunities with companies that ideally have products that are health care related and have already received government regulatory approval.

MultiCell Technologies, Inc., formerly MultiCell Associates, Inc., our wholly-owned subsidiary, was acquired in September 2001, for $2.2 million in cash and stock. MultiCell develops, sells and licenses hepatic or liver cells, cell lines, and associated products to be used in drug development, diagnostic and therapeutic applications. MultiCell has developed immortalized human cell lines with cells that are designed to function as hepatocytes (liver cells) in Synthetic Bio-Liver Devices ("Sybiol") and other liver-related processes. Immortalized cells have been genetically manipulated to perform an unnatural replication function. This allows for the continuous growth, and therefore supply, of human liver cells. There is a great need for human liver cells for critical research in the pharmaceutical industry. Sales of immortalized human cell lines for non-human uses, for which regulatory approva l is not required, began in late 2002. These cells are our only commercial product. They are currently cultured at the MultiCell facility but as volume grows, we will look for a partner to culture the cells in greater quantities.

Xenogenics Corporation, our majority-owned (56.4%) subsidiary, is a developmental stage enterprise that owns all of the rights to the Sybiol synthetic bio-liver device for which a patent is pending in 15 countries, including the United States. The underlying concept of the device is that the artificial liver can act as a substitute liver for a patient whose own liver is healing from injury or disease. In addition, the device is intended for use as an artificial liver "bridge" for transplant patients awaiting a donor organ. This is accomplished by exposing the plasma portion of the blood to functioning liver cells. The cells perform the functions of the damaged liver of the patient. Theoretically, the artificial device can replace the essential functions of the normal liver. The key to our device or other devices attempting to gain approval, is the functionality of the cells. The Sybiol de vice is presumed to create a more natural environment that will contribute positively to cell functionality. The design is unique compared to other devices in that it includes a chamber with inserts allowing cells to attach and presumably emulating the normal environment. Today this is theoretical and has not been subjected to clinical study. The device may also be used to assist and improve the quality of life for patients with chronic liver disease or episodic liver trauma. We are currently working on a new design for this device and a compatible engineered cell line to work with it. Xenogenics has a Research and Development Agreement and a Supplier Agreement with MultiCell pursuant to which MultiCell will supply engineered pig or porcine and human liver cell lines and optimize the interface between these cell lines and the Sybiol synthetic bio-liver device. MultiCell scientists have redesigned the chamber that will hold the hepatocytes believing that this change will allow for a healthier more functio nal cell. An engineered cell line is expected to eliminate variability in patient treatment and limit the viral risks associated with primary porcine hepatocytes.

We estimate that we will need approximately $500,000 to validate the Sybiol synthetic bio-liver device through large animal testing. Assuming we can establish through testing that the Sybiol device can perform liver functions, we plan to joint venture the future development of this product with a major dialysis or pharmaceutical company. After establishing such a partnership, our goal will be to seek and obtain regulatory approval and introduce the Sybiol device for general distribution in 2006.

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About Our Revenues

We have begun to generate revenues. On November 1, 2001, MultiCell entered into a collaborative research agreement with Pfizer, Inc. pursuant to which Pfizer paid $724,500 to validate the efficacy of MultiCell's immortalized hepatic cells in four different experimental models. Pursuant to the agreement, Pfizer agreed to pay an aggregate of $724,500 to validate the efficacy of MultiCell's immortalized hepatic cells in four different experimental models. Pfizer made an initial payment to MultiCell of $477,500, and then paid the balance in equal quarterly payments of $61,750. Under the agreement, MultiCell was obligated to deliver data and information to Pfizer. This research agreement has been completed and all monies have been paid This research agreement has been completed and all monies have been paid.. The efficacy of these cell lines was demonstrated and presented by Pfizer at the Internatio nal Society for the Study of Xenobiotics ("ISSX") in October 2002.

In early 2003, Pfizer signed a 15-year license agreement for further nonexclusive research use of two cell lines. In 2003, orders from and shipments to other pharmaceutical companies have begun.

Patents and Proprietary Technology

Any proprietary protection that our Company can obtain and maintain will be important to our business. A patent application is presently pending on the process utilized by the Sybiol synthetic bio-liver device under the Patent Cooperative Treaty Protection in 15 countries. The Sybiol trademark is registered in the United States Patent and Trademark Office, number 2,048,080.

MultiCell has an exclusive, long-term license agreement with Rhode Island Hospital for use of the following patents owned by the Hospital related to liver cell lines and Liver Assist Devices (LADs)

US Patent #6,017,760, Isolation and Culture of Porcine Hepatocytes, expires October 9, 2015;

US Patent #6,107,043, Immortalized Hepatocytes, expires February 8, 2019;

US Patent #5,043,260, Perfusion Device for Hepatocytes, expires August 27, 2008; and

US Patent #4,795,459, Implantable Prosthetic Device (Endothelial) expires January 3, 2006.

This agreement remains in effect as long as MultiCell pays the annual license maintenance fees as follows:

Date	Amount
July 1, 2003	$50,000
July 1, 2004	$75,000

Each of the license maintenance fees specified above, may, at the option of MultiCell, be reduced to $10,000 if during the calendar year prior to the date of any such payment, MultiCell satisfies the contractual provisions, which involves a certain level of diligence by the company to develop commercial products, referred to as "due diligence" specified for such calendar year. MultiCell has satisfied the due diligence requirements for the calendar year preceding the July 1, 2003 payment date.

Need for Government Approval

Some of our products will be subject to regulation in the United States by the Food and Drug Administration ("FDA") and by comparable regulatory authorities in foreign jurisdictions. The Sybiol synthetic bio-liver device will be classified as a "biologic" regulated under the Public Health Service Act and the Food, Drug and Cosmetic Act. The use of HepLiu cells for this application will also be regulated by the FDA. Development of a therapeutic product for human use is a multi-step process. First, animal and in vitro testing must establish the potential safety and efficacy of the experimental product for a given disease. Once the product is 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, which may in some circumstances involve su bstantial delays, is necessary before commencing clinical investigations.

Clinical investigations typically involve three phases. Phase I is conducted to evaluate the safety of the experimental product in humans, and if possible to obtain 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 and closely monitored studies in a relatively small number of patients. The optimal routes and schedules of administration are determined in these studies.

As Phase II trials are successfully completed, Phase III studies will commence. 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. While it is not possible to estimate the amount of time that will be required to complete Phase I, II and III studies, this process often lasts 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.

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In addition to the regulatory framework for product approvals, we are 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.

We have not yet begun the regulatory approval process for our Sybiol Bio-synthetic liver device with the Food and Drug Administration (the "FDA").  We halted testing of the original device in early 2001pending our development of a new design for the liver device to improve oxygen availability.  Improved oxygen availability increases the viability of the hepatocytes that is critical to an efficacious liver-assist device.  The redesign was completed in late 2001.  In March 2001, our company and Compact Membranes Inc. received a grant from the National Institutes of Health to help fund specific research on the redesign of the device in conjunction with MultiCell.  Compact Membranes, Inc. has been involved in the development of a breathable membrane that improves oxygen transfer.  They had previously contacted us about using their membrane in our system. The work with Compact Membrane never materiali zed as the proposed membrane for the study never became available. We intend, as soon as adequate funding is available, to begin the approval process again the end of 2004 upon completion of the redesign and validation of the device and finding of a partner to take the project forward. Before human studies may begin, the cells provided for the system by MultiCell will be subjected to the same scrutiny as the Sybiol device. MultiCell will need to demonstrate sufficient process controls to meet strict standards for a complex medical system. This means the cell production facility will need to meet the same Good Manufacturing Practice ("GMP") standards as those pertaining to a pharmaceutical company, for example.

Research and Development

In fiscal 2002, our Company's research and development costs were $548,840. Research and development costs during fiscal 2001 were $297,424. We intend to continue our research and development during fiscal 2003. Our Xenogenics subsidiary will focus its development efforts on the Sybiol synthetic bio-liver device. Our goal is to develop compelling data utilizing the device with large animals. This data will generate interest from potential partners who will fund future development costs.

Our MultiCell subsidiary will have three major research projects. The first will be continued efforts towards improving the functionality of our immortalized hepatocytes and expanding our intellectual property base. Improvements in function will open even more markets and expand the usage in the current markets for our cells. Secondly, we will move forward on our therapeutic protein development program, taking a laboratory process and validating its commercial application. Finally, we will begin a research program focused on adult liver stem cells, for which Dr. Faris, Chief Scientific Officer, holds a patent.

Competition

We are engaged in businesses characterized by extensive research efforts, rapid technological change, and intense competition. A number of companies are pursuing artificial liver devices. However there appears to be only one real non -academic competitor in the immortalized hepatocyte business.Competitors in various stages of development of liver-related products or technologies include:

Amphioxis is focused on the sale of immortalized hepatocytes. The cells they are promoting are based on a cell line developed from a hepatoma (cancerous Liver tumor) therefore the efficacy and functionality of the cells are suspect.

Circe Biomedical (previously a wholly owned W.R. Grace subsidiary). Circe had a device using porcine primary cells in Phase III clinical studies. These studies have been halted as results proved statistically insignificant. The future of the company is not known at this time.

HemoTherapies, Inc. (formerly Hemocleanse), has a charcoal filtration device that has been granted FDA approval for liver dialysis. The company has recently declared bankruptcy and has not yet emerged with a reorganization plan.

VitaGen (formerly Hepatix) is currently running Phase I/II clinical trials with its ELAD device, which uses cloned human liver cells. The yet to be proven functionality of these cells, along with their potential tumor producing tendencies, is expected to obstruct the commercialization of their device.

In Europe, Braun Inc. has demonstrated interest in supporting the development of a complicated and sophisticated hollow fiber device, which has already been used to treat two patients.

To our knowledge, there is no approved affordable mass produced live-cell bio-artificial liver device currently available on the global market. Our device is intended to closely replicate human liver functions and not just to function as a blood-cleaning device. We believe that the differences in design between existing products and the Sybiol device will result in the Sybiol device achieving commercial success that will ultimately benefit our stockholders.

Employees

As of November 30, 2002, Exten had two full-time employees and one part-time employee; Xenogenics had one full-time employee and MultiCell had ten full-time employees and one part-time employee.

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Item 2. DESCRIPTION OF PROPERTY

Exten

Warwick, Rhode Island. Exten leases approximately 2,700 square feet of space in an office building located at 55 Access Rd., Warwick, RI 02886. The lease for the facility in Warwick requires aggregate monthly payments of $4,863 and continues through July 31, 2004. We believe the facilities are adequate for the near future.

Arizona. As of November 30, 2002, we owned 202 undeveloped lots in the Grand Canyon Development in Valle, Arizona, approximately 70 miles south of the Grand Canyon which were acquired by prior management as a tangible asset. We currently have no policy of acquisition of land for capital gain or income. We are currently in arrears on back taxes and interest in the amount of $47,200. Presently, we plan to deed 194 lots to the State of Arizona, following which we will have no obligation or liability with respect to such lots. Since we have paid taxes within the last five years on 8 of the lots, Arizona law prohibits us from deeding these lots back to the state and we therefore intend to sell them as soon as possible. Our obligation with respect to such lots is approximately $400.

MultiCell Technologies and Xenogenics

Our two subsidiaries share the corporate Warwick, Rhode Island facility that houses administration, research, development and manufacturing of human cells and cell lines. MultiCell had a lease agreement with Rhode Island Hospital for use of laboratory facilities which expired and was not renewed and activities that had been performed at this location were moved to the Warwick facility. We are not currently considering potential new sites for our operations and don't plan to move until 2004.

Item 3. LEGAL PROCEEDINGS

In March 2002, the Company was served with a lawsuit filed by George Colin in the Superior Court of California, in the county of Orange. The lawsuit on February 26, 2002 alleges that the Company had defaulted in its interest payments to Mr. Colin due pursuant to a $50,000 convertible loan entered into in October 2001. since the company, due to a clerical error, paid his interest 15 days late. The Company has settled the lawsuit by voiding the original warrant agreement and issuing a new warrant agreement. Upon conversion of his note, Mr. Colin has the right, for a three-year period, to purchase 2,000,000 shares of Exten common stock at $.10 and 500,000 shares of Exten common stock at $.12. All other terms of the original agreement remain in effect.

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

None.

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PART II

Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is traded on the OTC Bulletin Board under the symbol EXTI.OB. Our stock is considered penny stock and is, therefore, subject to the Securities Enforcement Remedies and Penny Stock Reform Act of 1990. Penny stock is defined as any equity security not traded on a national stock exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. Additional disclosure is required in connection with any trades involving a stock defined as a penny stock (subject to certain exceptions), including the delivery, prior to any such transaction, of a disclosure schedule explaining the penny stock market and the associated risks. Broker-dealers who recommend such low-priced securities to persons other than established customers and accredited investors satisfy special sales practice requirements, including a requirement that they make an individualized written suitability det ermination for the purchase and receive the purchaser's written consent prior to the transaction.

The table below gives the range of high and low bid prices of our common stock for the fiscal years ended November 30, 2002 and November 30, 2001 based on information provided by the OTC Bulletin Board. Such over-the-counter market quotations reflect inter-dealer prices, without mark-up, mark-down or commissions and may not necessarily represent actual transactions or a liquid trading market.

Fiscal Year Ended November 30, 2002
	High	Low
First quarter	$.14	$.08
Second quarter	$.11	$.08
Third quarter	$.08	$.04
Fourth quarter	$.08	$.04

Fiscal Year Ended November 30, 2001
	High	Low
First quarter	$.18	$.09
Second quarter	$.16	$.08
Third quarter	$.17	$.07
Fourth quarter	$.23	$.08

No cash dividends have been paid on Exten Common Stock for the 2001 and 2002 fiscal years and no change of this policy is under consideration by the Board of Directors.

The payment of cash dividends in the future will be determined by the Board of Directors in light of conditions then existing, including our Company's earnings, financial requirements, opportunities for reinvesting earnings, business conditions, and other factors. There are otherwise no restrictions on the payment of dividends. The number of shareholders of record of our Company's Common Stock on February 25, 2003 was approximately 1,208.

Recent Sales of Unregistered Securities

1.	During FY 2002 we issued an aggregate of 5,170,000 options to employees, officers, directors and consultants. The options expire on various dates through 2010 and have exercise prices of $.08 per share.
2.	During FY 2002, we issued 33 convertible notes in the aggregate principal amount of $547,500.  The notes are convertible into shares of our common stock at the following conversion rates:
	(1)	$.10, if converted during the first twelve (12) months after the date of the Agreement;
	(2)	$.15, if converted after the twelfth (12th) and through the twenty-fourth (24th) month of the Agreement; and
	(3)	$.20, if converted after the twenty-fourth (24th) month and prior to the maturity date.

The securities were issued pursuant to the exemption set forth in Section 4.(2) of the Securities Act on the basis that they were issued under circumstances not involving a public offering.

The notes are secured by the assets and intellectual property of MultiCell

The above transactions were issued in reliance upon the exemption provided under Section 4(2) of the Securities Act of 1933, as amended, on the basis that the securities were issued under circumstances not involving a public offering.

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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

This Annual Report on Form 10-KSB contains forward-looking statements that involve risks and uncertainties. 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 complete and fund its research and development. The Company's actual results may differ significantly from the results discussed in the forward-looking statements.

Overview

We were incorporated in Delaware on April 28, 1970 under the name of Exten Ventures, Inc. Although we have been in existence for over thirty years, we have not yet completed production of any marketable products. Until recently, our primary focus has been the development of a synthetic bio-liver device, known as the Sybiol, through our majority-owned subsidiary, Xenogenics Corporation. Because this technology must be tested for safety and efficacy in humans in clinical trials which are reviewed by the Food and Drug Administration, we believe it will take approximately three to five years to develop, test and commercialize the liver device. With our recent acquisition of MultiCellTechnologies and its development of liver-related cell lines, we are now focusing on the opportunities afforded us with the engineered liver cell lines that a re currently available for drug discovery and toxicology testing. Since there are nonhuman uses for these cells, and there are no regulatory issues preventing immediate sales, licensing and direct sales have begun.

MultiCell will continue to improve and expand the number of cell lines to meet the testing and research needs of the pharmaceutical industry.

Human liver cells are the most bio-chemically complex cells in the body. One of their important functions relates to the production of proteins that are used by the body to perform vital functions such as blood clotting. MultiCell has developed culture conditions wherein cells are creating a number of these proteins. A major research effort will be to expand the quantity of proteins in an attempt to create a commercially viable product.

Scientists believe there will be a great opportunity to use stem cells as a source of highly functional hepatocytes. One use for these cells would be for transplant as a treatment for certain diseases. These cells would also have value to the pharmaceutical industry in toxicology testing. MultiCell is focusing on adult liver stem cells. There are no controversy or supply issues with these cells as there is with fetal or embryonic stem cells. This is a long-term project.

Xenogenics Corporation, our majority-owned subsidiary, is a developmental stage enterprise that owns all of the rights to the Sybiol synthetic bio-liver device for which a patent is pending in 15 countries, including the United States. Xenogenics is currently owned as follows:

Exten Industries, Inc.	56.4%
Kestrel Equity Partners, Ltd.	21.7%
Jack Schaps	12.5%
W. Gerald Newmin	8.0%
Others	1.4%

The underlying concept of the liver device is that an artificial liver can act as a substitute liver for a patient whose own liver is healing from injury or disease. In addition, the device is intended for use as a "bridge" for transplant patients awaiting a donor organ. The device may also be used to assist and improve the quality of life for patients with chronic liver disease or episodic liver trauma. Xenogenics has a Research and Development Agreement and a Supplier Agreement with MultiCell under which MultiCell will supply engineered human liver cell lines and optimize the interface between these cell lines and the Sybiol device. An engineered human cell line is expected to eliminate variability in patient treatment and limit the viral risks associated with primary porcine hepatocytes.

Some of our products will be subject to regulation in the United States by the FDA and by comparable regulatory authorities in foreign jurisdictions. Future products including Therapeutic Plasma Proteins, stem cell transplantation and the Sybiol device will be regulated under the Public Health Service Act and the Food, Drug and Cosmetic Act. The use of engineered liver cells generated by MultiCell for this application will also be regulated by the FDA. Development of a therapeutic product for human use is a multi-step process. After acceptance of a plan by the FDA, animal and human testing must be completed. Human clinical investigations typically involve three phases. Phase I is conducted to evaluate the safety of the experimental product in humans. If acceptable product safety is demonstrated, the Phase II and III studies are initiated. These 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. As Phase II trials are successfully completed, Phase III studies will commence with 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. While it is not possible to estimate the amount of time that will be required to complete Phase I, II and III studies, this process often lasts several years.

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We have not yet begun human clinical trials for the Sybiol device. We intend to begin such trials by the end of 2004 upon completion of the redesign and validation of the device. We estimate that we will need approximately $500,000 to validate the efficacy of the device. Once the device has demonstrated functionality, the Company intends to seek joint venture arrangements with major renal dialysis companies to complete the development and commercialization of this product.

Presently, our focus is on the generation of short-term revenue to stabilize our cash position. Most pharmaceutical companies in the world have a need for highly functional human liver cells. The engineered liver cells developed by MultiCell appear to meet many of these needs. These cells present an immediate sales revenue opportunity. We are currently in discussion with numerous pharmaceutical companies about research agreements or direct purchase of our cells.

With respect to MultiCell's efforts on behalf of Xenogenics, before human studies may begin, the cells provided for the Sybiol system by MultiCell will be subjected to the same scrutiny as the Sybiol device. MultiCell will need to demonstrate sufficient process controls to meet strict standards for a complex medical system. This means the cell production facility will need to meet the same standards as those pertaining to a pharmaceutical company . Our plan is to partner with a major pharmaceutical company to bring our therapeutic proteins to market. The expertise of such a partner would be invaluable in completing such a program.

We have operated and will continue to operate by minimizing expenses as we move towards a cash positive position. The largest expenses relate to personnel and to meeting the legal and reporting requirements of being a public company. By utilizing consultants whenever possible, and asking employees to manage multiple responsibilities, operating costs are kept low. Additionally, a number of employees receive company stock in lieu of cash as part of their compensation to help in the effort to minimize monthly cash flow. We have successfully lowered our costs while we are in this development mode.

Once we have achieved a positive cash position, we intend to gradually add scientific and support personnel. We want to add specialists for our key research areas. These strategic additions will help us expand our product offerings leading us to additional revenues and profits. Of course as revenues increase, administrative personnel will be necessary to meet the added workload. Other expenses, such as sales and customer service, will increase commensurate with increased revenues.

The Application of Critical Accounting Policies

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

Research and Development - Company sponsored research and development costs related to future products and redesign of present products are expensed as incurred.

Patents - Costs incurred to obtain patents, principally legal fees, are capitalized. The Company amortizes these costs on a straight-line basis over fifteen years.

Long-Lived Assets - Long-lived assets, such as property and equipment and trademark, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses 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 for assets to be held and used are then measured based on the excess, if any, of the carrying amounts of the assets over their fair values. Long-lived assets to be disposed of in a manner that meets certain criteria are stated at the lower of their carrying amounts or fair values less costs to sell and are no longer depreciated.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") approved the issuance of Statement on Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 requires that goodwill no longer be amortized to earnings but instead be reviewed at least annually for impairment. SFAS 142 was effective for the Company's fiscal year ended December 31, 2002.

In July 2001, the FASB issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"), that requires recording the fair value of the liability for closure and removal costs associated with the legal obligations upon retirement or removal of any tangible long-lived assets. SFAS 143 is required to be effective January 1, 2003.

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In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123" ("SFAS 148"). SFAS 148 amends FASB Statement No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of FASB Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 is effective for the fiscal years beginning after December 15, 2002.

The adoption of these new pronouncements did not have or is not expected to have a material effect on the Company's consolidated financial position or results of operations.

Results of Operations.

The following discussion is included to describe our consolidated financial position and results of operations. The consolidated financial statements and notes thereto contain detailed information that should be referred to in conjunction with this discussion.

Year Ended November 30, 2002, Compared to Year Ended November 30, 2001

Revenues. Total revenues increased to $804,538 for the fiscal year ended November 30, 2002 compared to $113,327 for the fiscal year ended November 30, 2001. These revenues came primarily from a collaborative research agreement between our MultiCell subsidiary and Pfizer Inc. which was entered into and completed during the fiscal year ended November 30, 2002. The research contract with Pfizer was to evaluate the efficacy of our liver cells for drug testing. We are negotiating a license agreement with Pfizer allowing them to continue to use the cell lines for research. In addition, MultiCell began to receive revenues from licensing fees and product sales that management expects will be part of a continuous revenue stream. Accordingly, due to the level of and the recurring nature of the revenue, the Company is no longer considered a development stage company for accounting purposes.

Operating Expenses. Total operating expenses increased to $2,241,310 for the fiscal year ended November 30, 2002 from $1,756,057 for the fiscal year ended November 30, 2001. The increase is primarily due to the inclusion of expenses from MultiCell that are not included in the prior year numbers that are being compared. The Company did not add personel to work on the research project for Pfizer. Responsibilities were simply shifted from one project to another. Such expenses include general and administrative expenses, research and development costs and depreciation and amortization.

The increase of $99,498 in general and administrative expenses for the fiscal year ended November 30, 2002 over the prior year is primarily attributable to salaries, benefits and operational expenses at MultiCell and Exten. The increase of $251,416 in research and development over the prior year expenses is attributable primarily to continued work on our engineered liver cell lines. In addition, the $134,339 increase in depreciation and amortization over the prior year is due to the additional amortization expense related to the amortization of the license agreement recorded in connection with the acquisition of MultiCell.

Other income/expense. Interest expense for the fiscal year ended November 30, 2002, was $124,464, which represents an increase of $30,876 over the prior fiscal year. This increase is attributable to interest expense incurred on the funds borrowed for the acquisition and operation of MultiCell, as well as other new notes payable which were not outstanding during the prior year. Interest income for the fiscal year ended November 30, 2002, was $74,731, as compared to $79,262 for the prior year. This decrease is attributable to interest earned on notes receivable from loans made in prior years and during the current fiscal year. The amortization of the discount on notes payable for the fiscal year ended November 30, 2002, was $132,142, as compared to $25,163 for the prior year. The increase is due to increase of financing obtained during year 2002 and the impact of a full year's amortization of the deb t discount related to 2001 financings. Minority interest in loss of subsidiary for the fiscal year ended November 30, 2002 was $12,334, as compared to $169,686 for the prior year. This decrease is due to the subsidiary's decrease in activity and resultant loss this year.

Net loss. Net loss for the fiscal year ended November 30, 2002, was $1,576,663, as compared to a net loss of $1,609,383 for the prior year, representing a decrease in net loss of $32,720. This decrease is attributable to the higher revenues attained during the year, as discussed in greater detail above, which was partially offset by greater expenses associated with the combined organizations.

Liquidity and Capital Resources

In the past, our cash needs have been managed primarily through the issuance of debt or equity securities. Although the parties (some of whom are related parties) have shown a commitment to our Company, and may therefore be willing to provide additional financing should be need it, we do not have formal commitments from any of these parties nor can we provide any assurance that these sources may continue to loan or invest monies, there is no certainty that such funds will be available in the future. The Company ismaintaining a conservative fiscal policy until the Company signs new pharmaceutical agreements that are being aggressively pursued. The Company has had discussions with numerouscompanies interested in acquiring our engineered cells for research. Sales have begun and we believe that other discussions will be brought to a conclusion in the near future. The agreements may produce cash to use for operations and research.

The Company is also discussing agreements with various potential distribution partners. Such an agreement will involve a cash investment by the partner to MultiCell to obtain the rights to our cells. There are a number of companies that currently market products similar to the cell products that we have to our potential customers. These companies have the sales and distribution forces in place and could add our product maximizing the strengths of both companies. Our goal is to find partners that can help us in all segments of the markets. These could include, for example, pharmaceutical companies, contract toxicology labs, and industrial labs. The cash investments would be followed by sales and royalty revenues to maintain positive cash flow for the Company.

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The Company anticipates that the revenue generated by MultiCell, along with the potential cash investments by potential distribution partners will be sufficient for the Company to operate through fiscal 2003. To the extent that additional funds may be required, the Company hopes to be able to secure the needed funds through the sale of additional equity securities or debt, as noted above. In addition, where possible, the Company may continue to satisfy obligations through the issuance of additional common stock.

Research Agreements

In October 2002, MultiCell Technologies was awarded a Phase I Small Business Innovation Research (SBIR) grant from the National Institutes of Health (NIH) to study the production of therapeutic plasma proteins by immortalized, non-tumorigenic human hepatocytes. The aim of the SBIR award is to compare the function of MultiCell's hepatocyte-derived products to recombinant and plasma-derived therapeutic plasma proteins. The grant is for $133,000 and will be paid over the grant period of one year as the work is performed. At November 30, 2002, work had not yet commenced.

Notes Payable

As of November 30, 2002, the Company, or its subsidiary, Xenogenics, are in default on notes payable with a principal balance of $129,000. Through March 31, 2003, such lenders have not demanded payment and the Company continues to accrue interest on all notes payable.

During Fiscal Year 2002, the Company entered into 33 convertible promissory notes for a total of $547,500 with interest accruing at 10% per annum. The principal and interest are payable in 2005, three years after the inception of the notes. The lenders may convert the principal and any unpaid interest due into the Company's common stock. The conversion price varies from $.10 to $.20 per share. Additionally, the Company issued 5,170,000 common stock warrants convertible at $.10 per share. The Company initially increased additional paid-in capital by $127,236 based on the fair value of the warrants and reduced the carrying value of the convertible promissory notes payable by the same amount for the debt discount attributable to the fair value of the warrants. In addition, after the initial allocation of the loan proceeds to the relative fair value of the warrants and the notes in 2002, the fair value of the Company's common stock exceeded the effective conversion price of certain notes on their respective dates of issuance. Such excess, which represents beneficial conversion rights, totaled $39,837, which the Company recorded by increasing both the debt discount and additional paid-in capital by that amount. The debt discount attributable to the warrants and the beneficial conversion rights is being amortized to interest expense over the term of the convertible notes.

On April 1, 2002, the Company negotiated a Promissory Note with its legal counsel, Jeffers, Shaff & Falk, LLP, now named Falk, Shaff & Ziebell, LLP, for legal services rendered through March 31, 2002. The note is for $33,392 at 10% per annum and was due and payable June 30, 2002. The Company did not pay the note and renegotiated the terms the terms on February 1, 2003. The new note voids the previous note and its terms and starts a new note of $50,000 involving monthly payments beginning March 2003 until the note is paid in full.

Item 7. FINANCIAL STATEMENTS

The full text of the Company's audited consolidated financial statements for the fiscal years ended November 30, 2002 and 2001 begins on page F-1 of this Report

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

Effective January 14, 2003, our board of directors approved the engagement of J. H. Cohn LLP, as our independent public accountants to audit our consolidated financial statements for the fiscal year ended November 30, 2002 and 2003. Swenson Advisors, LLP. was the independent certifying accountant previously engaged to audit our consolidated financial statements for the fiscal year ended November 30, 2001. On January 15, 2003, we notified Swenson Advisors, LLP. of their dismissal. The audit report provided by Swenson Advisors, LLP. does not contain an adverse opinion or disclaimer of opinion nor modification as to audit scope or accounting principles; however, the audit report for such period does contain a paragraph describing factors that raise doubt as to the Company's ability to continue as a going concern. There have been no disagreements between us and Swenson Advisors, LLP. on any matter of accounting principles or practices, financial statement disclosures or auditing scope or procedures. There were no "reportable events" (as such term is defined in Item 304 of Regulation S-B) that occurred during the two years prior to dismissal and subsequent interim period.

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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 as of November 30, 2002 were:

Name	Age	Position	Date elected
---------------------------	------------	-------------------------------------------------------	---------------------
W. Gerald Newmin	65	Chairman, CEO, Secretary and Director	May 17, 2000
Jerry G. Simek	59	Director	May 17, 2000
Ed Sigmund	44	Director	May 17, 2000
Gregory Szabo	49	President and Director	June 6, 2001
Ann Randolph	56	Director	June 21, 2002

W. Gerald "Jerry" Newmin began as a consultant to the Board of Directors of Exten in June 1995. On December 1, 1995, he was elected Chairman of the Board of Directors, Chief Executive Officer, and President of Exten. He currently serves as our Chairman, Chief Executive Officer and Secretary. Mr. Newmin is the Secretary and a director of Xenogenics and a director of MultiCell Technologies. Mr. Newmin serves on the Board of SYS Technologies, Inc. and is Chairman and Chief Executive Officer of SYS, a defense systems company in San Diego, California, which is publicly traded on the OTC Bulletin Board. Mr. Newmin is past Chairman of the Board of the Corporate Directors Forum, a non-profit organization of over 200 California Board members, which promotes excellence in corporate governance. He serves as an advisor to the Corporate Governance Institute at San Diego State University also serves on the Board of Directors of San Diego Defcomm, a not-for-profit consortium of defense companies based in San Diego. From 1987 to 1995, Mr. Newmin owned a management consulting firm that provided consulting expertise to both public and private companies. From 1984 to 1987, Mr. Newmin was President of HealthAmerica Corporation, then the nation's largest publicly held HMO management company. From 1977 to 1984, he 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., and managed 23 acute care hospitals in the Western United States. From 1962 to 1973, at Whittaker Corporation, Mr. Newmin held senior executive positions, including Chief Executive Officer of Production Steel Company, Whittaker Textiles Corporation, Bertram Yacht Corp., Narmco Materials Corp., and Anson Automotive Corp., and was instrumental in Whittaker's entry into the U nited States and international health care markets. Mr. Newmin has a Bachelor's degree in Accounting from Michigan State University.

Ed Sigmond was elected to the Board of Directors of Exten in 1999. He has been in sales, marketing and operations management for the past 20 years. Mr. Sigmond has served as president of Kestrel Holdings, Inc. since its inception in 1997. His duties include all executive functions from financial oversight to marketing and management of business services. Kestrel Holdings, Inc. is the general partner of Kestrel Equity Partners, Ltd., which was formed to fund Exten and Xenogenics. Mr. Sigmond served as president of Kestrel Development, a Texas based real estate development company, from 1993 to 1998 when it was dissolved. From 1992 to 1996, Mr. Sigmond was President of American Machine and Bearing of Dallas, Texas. Prior positions included Assistant to President of Alpha Aviation, Dallas, Texas, 1990-1992; Founder and President of Specialty Food Products, Arlington, Texas, 1987-1990; and Vi ce President/Regional Manager of Geodata Corporation, Houston, Texas 1981-1987. He has varied negotiation, sales, marketing, managerial and operational skills with existing and startup operations. He studied Marketing and Chemistry at Duquesne University.

Jerry Simek was elected to the Board of Directors of Exten on March 20, 1998. From June 16, 1998 to April 19, 2001, he served as Exten's President, Chief Operating Officer and Treasurer. Mr. Simek has been President of JGS Management Group since 1984, specializing in strategic planning, financial management, business/corporate development and international business. He has successfully directed and implemented company reorganizations, refinancing programs and company turnarounds, as well as market development, acquisition and divestiture programs. Mr. Simek was past President of a San Diego public medical electronics manufacturing company and facilitated its turnaround and funding. Mr. Simek has over thirty years of management experience with major multinational companies in the medical, energy, electronics and aerospace industries. He has worked for such medical companies as Baxter and Johns on & Johnson. He has facilitated raising capital in public, private and start-up ventures; has identified and established joint venture transatlantic manufacturing, trading company and joint licensing programs, and has established and implemented multimillion dollar project management and manufacturing expansion programs. Mr. Simek has been a Director and/or Management Advisor for other public and private companies in the United States and the United Kingdom. He has a B.S. from Illinois Institute of Technology and an MBA from Pepperdine University.

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Gregory F. Szabowas appointed Exten's President and Treasurer on April 19, 2001, and was appointed MultiCell Technologies' Chief Executive Officer and Secretary on September 15, 2001. From June 2000 to the present, he has served as President of Xenogenics Corporation, our majority-owned subsidiary. He has 20 years of experience in the medical device industry, including FDA product submission and insurance reimbursement experience plus sales, marketing and management responsibilities. From January 2000 to June 2000, Mr. Szabo worked as an independent management consultant for several companies, including Exten. Prior to joining Exten and Xenogenics, Mr. Szabo was President and Chief Executive Officer of Titan Scan where he managed the medical sterilization and food pasteurization business from June 1998 until January 2000. From January 1 997 until June 1998, he was President and Chief Executive Officer of Goulter Medical Inc. He has also held senior management positions at Comfort Clinic, Bio Clinic, Zimmer, and Becton Dickinson. He holds a Masters in Management from Drucker Graduate School, Claremont University, Claremont, CA and a Bachelors degree from the University of Toledo.

Ann Randolph, a respected San Diego executive and consultant to the life sciences industry, was elected to the Board of Directors of Exten on June 21, 2002. Ms. Randolph, as the first managing director (1995-1999) and charter board member of BIOCOM (1993-1999), the regional trade association for life sciences, was a public advocate for the 400 San Diego companies BIOCOM represented. While at BIOCOM, she developed a buying consortium for member companies and built BIOCOM into one of the largest regional biosciences trade associations in the world. Previously, she was principal of a medical strategic planning, business development and marketing firm (1985-1995) after leaving a similar position at Scripps Clinic and Research Foundation in La Jolla, California. Randolph has served on the San Diego Regional Economic Prosperity Committee, the San Diego Regional Economic Development Corporation's i ndustrial land use committee, the Greater San Diego Chamber of Commerce public policy committee, the Airport Master Planning Public Working Committee, and was a founding member of the High Tech Steering Committee. Randolph earned Bachelor and Master of Arts degrees in English from the University of Louisville, Kentucky. She also serves on the Corporate Directors Forum board and was named Director of the Year by the board in 2001.

Item 10. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information concerning the compensation received for the fiscal years ended November 30, 2002, 2001, and 2000 for services rendered to the Company in all capacities by the Company's Chief Executive Officer and any officer with salary over $100,000 per year.

			Annual Compensation			Long Term Compensation Awards
			-------------------------------------------------			---------------------------------------------
Name and principal position		Year	Salary ($)	Bonus ($)	Other annual compensation ($)(1)	Restricted stock award(s) ($)	Securities Options/SARs (#)
-----------------------------		--------	------------	-------	-------------------	---------------	--------------------------
W. Gerald Newmin, Chairman of the Board, Chief Executive Officer, Secretary and Director		2002 2001 2000	-0- - -0- - -0-	-0- - -0- - -0-	$53,500 $67,841 $48,424	-0- - -0- - -0-	-0- 500,000 825,000
Gregory F. Szabo President, Treasurer, Director		2002 2001 2000	$66,169 $145,000 $60,000	-0- - -0- - -0-	$35,176 $30,000 $15,000	-0- - -0- - -0-	2,000,000 400,000 250,000
(1)	Represents the fair market value of shares of our common stock paid in lieu of cash based on the closing market price of our common stock on the date of approval by our board of directors. A total of 458,656, 311,147 and 1,614,133 shares were issued to Mr. Newmin in fiscal 2002, 2001, and 2000, respectively, and a total of 474,951, 248,918 and 62,664 shares were issued to Mr. Szabo in fiscal 2002, 2001, and 2000, respectively.

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Stock Option Grants in Fiscal Year 2002

     The following table sets forth information concerning stock options granted in the fiscal year ended November 30, 2002 to the Named Executive Officers.

Name	Number of Securities Underlying Options/SARs Granted (#)	Percent of Total Options/SARs Granted to Employees in Fiscal Year	Exercise or Base Price ($/Sh)	Expiration Date
W. Gerald Newmin	0	0%	$0.0	N/A
Gregory F. Szabo	2,000,000	37.7%	$0.8	06/21/2006

Stock Option Exercises and Fiscal Year-end Values

     The following table presents information for the Named Executive Officers with respect to stock options exercised during fiscal year 2002 and unexercised options held as of the end of the fiscal year.

Aggregated Option Exercises In Fiscal Year 2002 And Fiscal Year End Option Values

Name	Shares Acquired On Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options at Fiscal Year End 11/30/02 Exercisable/Unexercisable	Value of Unexercised In-the-Money Options at Fiscal Year End ($) Exercisable/Unexercisable
W. Gerald Newmin	None	0	701,389/1,075,000	0/0
Gregory F. Szabo	None	0	1,299,000/1,084,267	0/0

Compensation of Directors

Our bylaws authorize our board of directors to fix the compensation of directors for services related to their membership in board committees and allow the reimbursement of expenses of directors for their attendance at each meeting of our board of directors. On February 15, 2000, the board of directors resolved that each board member would receive the equivalent of $2,000 in our common stock for each board meeting in which such director participates. The number of shares issued for each meeting is based upon the closing price of our common stock on the date of the board meeting in questions. In addition to the per meeting stock grants, during fiscal year 2000, Messrs. Szabo, Sigmond and Simek were each granted options to purchase 250,000 shares of common stock, exercisable at $.21 per share; these options vest over three years and expire on May 17, 2004. During fiscal 2001, Mr. Sigmond and Mr. Simek were each granted stock options for 250,000 shares, exercisable at $.115 per share; these options vest over a period of three years and expire on July 11, 2005. During fiscal year 2002, no options were granted to board members during the fiscal year ended November 30, 2002. Prior option grants were in addition to the meeting compensation.

Jerry Simek, a director of our company is the president and sole shareholder of JGS Management Group, Inc., which has a Contractor/Management Consulting and Finders Fee Agreement with our company pursuant to which Mr. Simek provides services to our company. Mr. Simek's duties include, but are not limited to evaluation of potential acquisition candidates, corporate due diligence, and special projects. The agreement provides that Mr. Simek will be paid at the rate of $50.00 per hour, which will be converted into our common stock at the end of each month using the common stock price on the last day of the month. Mr. Simek received 26,190 shares in consideration for 55 hours of service and directors' fees of $21,000 in fiscal year 2002, and 372,318 shares in consideration for 568 hours of service and director fees of $16,000 in fiscal year 2001, under the terms of that agreement.

Gregory Szabo was granted options for 2,000,000 shares of common stock at $.08 per share. These options vest over a six month period from June 7, 2002 and January 2, 2003 and will expire on June 6, 2006.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 6, 2003, certain information as to shares of our common stock owned by (i) each person known to beneficially own more than 5% of the outstanding common stock, (ii) each of our directors, and named executive officers, and (iii) all of our executive officers and directors as a group. Unless otherwise indicated, the address of each named beneficial owner is the same as that of our principal executive offices located at 55 Access Road, Suite 700, Warwick, RI, 02886.

Name and Address of Beneficial Owner (1)	Number of Shares Beneficially Owned (2)	Percentage of Class Beneficially Owned
-------------------------------	-------------------------------	------------------------
W. Gerald Newmin (3)	31,116,683	24.5%
Jerry G. Simek (4)	2,855,617	2.7%
Gregory F. Szabo (5)	4,724,728	4.5%
Ed Sigmond (6)	8,957,896	8.8%
Kestrel Equity Partners Ltd.(7)	8,000,000	7.9%
Clifton L. Cooke, Jr. (8)	5,719,432	5.4%
The Estate of Hugo O. Jauregui (9)	8,725,000	7.9%
Ann Randolph (10)	278,571	0.3%
All executive officers and directors as a group (four persons)	44,518,719	36.1%

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(1)	Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the Commission, shares of common stock that each named person and group has the right to acquire within 60 days pursuant to options, warrants, or other rights, are deemed outstanding for purposes of computing shares beneficially owned by and the percentage ownership of each such person and group. However, such shares are not deemed outstanding for purposes of computing the shares beneficially owned by or percentage ownership of any other person or group.
(2)	Unless otherwise noted, all shares listed are owned of record and the record owner has sole voting and investment power, subject to community property laws where applicable.
(3)	Includes 3,414,776 shares of our common stock owned by Mr. Newmin's spouse, over which Mr. Newmin disclaims beneficial ownership. Includes 638,889 shares issuable under options which are exercisable on or within 60 days of December 31, 2002 and 13,920,000 shares in the form of convertible notes and warrants.
(4)	Includes 309,444 shares issuable under options which are exercisable on or within 60 days of December 31, 2002.
(5)	Includes 2,052,730 shares issuable under options which are exercisable on or within 60 days of December 31, 2002.
(6)	Includes 309,444 shares issuable under options which are exercisable on or within 60 days of December 31, 2002. Includes 8,000,000shares of our common stock owned by Kestrel Equity Partners Ltd., for which Mr. Sigmond serves as Managing Partner.
(7)	Kestral Equity Partners, Ltd. is a limited partnership investment fund; Ed Sigmond, one of our directors, is its Managing Partner. Its address is 2808 Cole Ave., Dallas, Texas 75204.
(8)	Includes 5,000,000 shares of the Cooke Family Trust for which Clifton Cooke is a Trustee.
(9)	The trustees of the Estate are Candice L. Dyer, M.D. and Timothy Van Johnson.
(10)	Includes 34,722 shares issuable under options which are exercisable on or within 60 days of December 31, 2002

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Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

JGS Management Group, Inc. (JGS), of which Jerry G. Simek, a Director of Exten, is the President and sole shareholder, provides services to Exten pursuant to a Contractor/Management Consulting to assist the Company in specific projects such as acquisition analysis and due diligence and a Finders Fee Agreement with Exten. The agreement provides that JGS will be compensated for every hour of consulting work performed and pursuant to an established formula for the introduction of investors who actually invest in Exten or lend Exten money. During fiscal year 2002, we issued a total of 30,295 shares of our common stock to Mr. Simek pursuant to this agreement in consideration of 55 hours of service, which service consisted primarily of financial analysis. The remainder of the shares were issued for his Director role. The shares were issued to Mr. Simek's trust at the request of JGS Management. None of the shares issued to Mr. Simek were issued to him as finders fee compensation.

From August 2001 through November 2002, we borrowed an aggregate of $1,632,500 in order to finance the acquisition of MultiCell and for working capital. Of this amount, we borrowed $655,000 from Mr. Newmin, our chairman and Chief Executive Officer, and $50,000 from Mr. Szabo, our President. The notes bear interest at the rate of 10% per annum, with all principal and accrued interest due and payable in August 2004 and various dates in 2005.

Mr. Newmin and Mr. Szabo each may convert his loan into shares of our common stock prior to the due date of the loan at the following conversion rates (i) $.10, if converted during the first twelve (12) months after the date of this Agreement; (ii) $.15, if converted after the twelfth (12^th) and through the twenty-fourth (24^th) month of this Agreement; and (iii) $.20, if converted after the twenty-fourth (24^th) month and prior to the maturity date. In addition, Messrs. Newmin and Szabo received warrants to purchase 6,550,000 and 500,000 shares of our common stock, respectively, at an exercise price of $.10 per share.

Item 13. CONTROLS AND PROCEDURES

As of September 30, 2002, an evaluation was performed under the supervision and with the participation of the Company's management, including the CEO and Treasurer, the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO and Treasurer, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2002. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to September 30, 2002.

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Item 14. EXHIBITS LIST AND REPORTS ON FORM 8-K

(a)Exhibits

Exhibit No.	Description	Page
----------------	----------------------------------------------------------------------------------	-----------
10.3	NIH Grant.	22
10.4	Loan and Security Agreement dated August, 2001 among Exten Industries, Inc. and the lenders named therein.	23
10.5	Form of Warrant issued to each of the lenders a party to the Loan and Security Agreement.	24
10.6	Loan Agreement dated October 13, 2001 between Exten Industries, Inc. and George Colin.	25
10.7	Collaborative Research Agreement dated as of November 1, 2001, between Pfizer, Inc. and MultiCell Technologies, Inc.	26
23.1	Consent of Independent Public Accountants-J.H. Cohn, LLP	F24
23.2	Consent of Independent Public Accountants- Swenson Advisors, LLP	F24
31.1	Certifications of the Chief Executive Officer and the Treasurer under Section 302 of the Sarbannes-Oxley Act of 2002	18
31.2	Certifications of the Chief Executive Officer and the Treasurer under Section 302 of the Sarbannes-Oxley Act of 2002	19
32.1	Certifications of the Chief Executive Officer under Section 906 of the Sarbannes-Oxley Act of 2002	20
32.2	Certifications of the Treasurer under Section 906 of the Sarbannes-Oxley Act of 2002	21

(b)Reports on Form 8-K

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15D 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,

EXTEN INDUSTRIES, INC.
(Registrant)

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

Dated: November 17, 2003

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 W. Gerald Newmin	Chairman ,CEO and Secretary	November 17, 2003
/s/Jerry G. Simek Jerry G. Simek	Director	November 17, 2003
/s/ Gregory F. Szabo Gregory F. Szabo	President, COO and Treasurer	November 17, 2003
/s/ Ed Sigmond Ed Sigmond	Director	November 17, 2003
/s/ Ann Randolph Ann Randolph	Director	November 17, 2003

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors and Stockholder
Exten Industries, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of EXTEN INDUSTRIES, INC. AND SUBSIDIARIES as of November 30, 2002, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended. 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 audit provides 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, 2002, and their results of operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

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 and it had a working capital deficiency and an accumulated deficit at November 30, 2002. In addition, the Company was in default on certain notes payable. 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. 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 form the outcome of this uncertainty.

J. H. Cohn LLP

San Diego, California

March 4, 2003

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REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders
Exten Industries, Inc.

We have audited the accompanying consolidated balance sheet of Exten Industries, Inc. (a Delaware corporation), and subsidiaries as of November 30, 2001, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the year ended November 30, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides 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 its subsidiaries as of November 30, 2001, and the results of their operations and their cash flows for the year ended November 30, 2001, in conformity with accounting principles generally accepted in the United States of America.

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 significant net losses, negative working capital, serious liquidity concerns and is in default on certain notes payable. These matters raise substantial doubt about the Company's ability to continue as a going concern. The Company may not be able to acquire adequate funding for its continued operations. The consolidated financial statements do not include any adjustments as to the recoverability and classification of assets and liabilities that might result should the Company be unable to continue as a going concern.

SWENSON ADVISORS, LLP
An Accountancy Firm

San Diego, California
February 25, 2002

- F 2 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
November 30, 2002 and 2001

ASSETS
		2002	2001
		-----------------	-------------------
Current assets:
	Cash and cash equivalents	$43,892	$367,864
	Accounts receivable, net	35,181	40,000
	Current portion of notes receivable	5,813	15,000
	Other current assets	26,026	83,528
		-----------------	-------------------
Total current assets		110,912	506,392
		-----------------	-------------------
Property and equipment, net		154,295	174,659
		-----------------	-------------------
Other assets:
	License agreement, net of accumulated amortization of $159,232 and $26,800.	2,273,371	2,406,593
	Notes receivable, net of current portion	237,949	200,000
	Other assets	111,835	88,540
		-----------------	-------------------
Total other assets		2,623,155	2,695,133
		-----------------	-------------------
Total assets		$2,888,362	$3,376,184
		=================	===================

See accompanying notes on consolidated financial statements.

- F 3 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
November 30, 2002 and 2001

LIABILITIES AND STOCKHOLDERS' EQUITY
		2002	2001
		-----------------	-------------------
Current liabilities:
	Accounts payable and accrued expenses	$702,259	$353,007
	Current portion of notes payable	34,892	79,500
	Deferred income	30,100	417,125
	Other current liabilities	34,467	11,552
		-----------------	-------------------
Total current liabilities		801,718	861,184
		-----------------	-------------------
Other liabilities:
	Notes payable, net	1,423,281	832,713
	Other liabilities	119,695	36,349
		-----------------	-------------------
Total other liabilities		1,542,976	869,062
		-----------------	-------------------
Total liabilities		2,344,694	1,730,246
		-----------------	-------------------
Minority interest		147,257	159,591
		-----------------	-------------------
Commitments and contingencies
Stockholders' equity:
	Common stock, $.01 par value: 200,000,000 shares authorized, 101,024,904 and 97,629,444 shares issued and outstanding at November 30, 2002 and 2001, respectively	1,010,249	976,294
	Additional paid-in capital	14,724,007	14,269,569
	Stock subscriptions receivable	(70,000)	(85,000)
	Deferred compensation costs	(24,916)	(8,250)
	Accumulated deficit	(15,242,929)	(13,666,266)
		-----------------	-------------------
Total stockholders' equity		396,411	1,486,347
		-----------------	-------------------
Total Liabilities and Stockholders' Equity		$2,888,362	$3,376,184
		=================	===================

See accompanying notes on consolidated financial statements.

- F 4 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Consolidated Statements of Operations
For Years ended November 30, 2002 and 2001

		2002	2001
		-----------------	-----------------
Revenue		$804,538	$113,327
		-----------------	-----------------
Operating expenses:
	General and administrative	1,525,126	1,425,628
	Research and development	548,840	297,424
	Depreciation and amortization	167,344	33,005
		-----------------	-----------------
Total operating expenses		2,241,310	1,756,057
		-----------------	-----------------
Operating loss		(1,436,772)	(1,642,730)
		-----------------	-----------------
Other income (expense):
	Interest expense	(124,464)	(93,588)
	Discount on notes payable	(132,142)	(25,163)
	Interest income	74,731	79,262
	Discount on note receivable	30,000	(95,000)
	Minority interest in loss of subsidiary	12,334	169,686
		-----------------	-----------------
Total other income (expense)		(139,541)	35,197
		-----------------	-----------------
Loss before income tax provision		(1,576,313)	(1,607,533)
Income tax provision		350	1,850
		-----------------	-----------------
Net loss		$(1,576,663)	$(1,609,383)
		=================	=================
Loss per share		$(0.02)	$(0.02)
Weighted average number of shares outstanding		99,458,556	81,208,211

See accompanying notes on consolidated financial statements.

- F 5 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
For Years ended November 30, 2002 and 2001

	Common Stock
	------------------------
	Shares	Amount	Additional Paid-in Capital	Stock Subscriptions Receivable	Deferred Compensation Costs	Accumulated Deficit	Total Stockholders' Equity (Deficit)
	------------	------------	------------	------------	------------	------------	------------
Balance, November 30, 2000	73,586,502	$ 735,865	$11,409,980	$(81,500)	$(16,500)	$(12,056,883)	$ (9,038)
Issuance of stock for services	4,035,546	40,355	405,141	-	8,250	-	453,746
Issuance of stock for note payable	5,000,000	50,000	450,000	-	-	-	500,000
Acquisition of MultiCell Associates	12,083,334	120,833	1,329,167	-	-	-	1,450,000
Issuance of stock for cash and other	2,824,062	28,241	65,759	11,500	-	-	105,500
Effect of issuance of stock by subsidiary in excess of book value	-	-	298,572	-	-	-	298,572
Exercise of stock options	100,000	1,000	9,000	-	-	-	10,000
Common stock warrants issued in connection with borrowings	-	-	301,950	-	-	-	301,950
Note receivable from stockholder	-	-	-	(15,000)	-	-	(15,000)
Net loss	-	-	-	-	-	(1,609,383)	(1,609,383)
	------------	------------	------------	------------	------------	------------	------------
Balance, November 30, 2001	97,629,444	976,294	14,269,569	(85,000)	(8,250)	(13,666,266)	1,486,347
Issuance of stock for services	3,395,460	33,955	287,364	-	(16,666)	-	304,653
Partial extinguishment of receivable	-	-	-	15,000	-	-	15,000
Common stock warrants issued in connection with borrowings	-	-	167,074	-	-	-	167,074
Net loss	-	-	-	-	-	(1,576,663)	(1,576,663)
	------------	------------	------------	------------	------------	------------	------------
Balance, November 30, 2002	101,024,904	$1,010,249	$14,724,007	$(70,000)	$(24,916)	$(15,242,929)	$396,411
	============	============	============	============	============	============	============

See accompanying notes on consolidated financial statements.

- F 6 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For Years ended November 30, 2002 and 2001

			2002	2001
			--------------	------------
Cash flows from operating activities:
	Net loss		$(1,576,663)	$(1,609,383)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization	167,344	33,005
		Discount on note receivable	(30,000)	95,000
		Discount on notes payable	132,142	25,163
		Valuation allowance on note receivable		305,000
		Common stock issued for services	304,653	445,496
		Minority interest in loss of subsidiary	(12,334)	(169,686)
		Vesting of deferred compensation costs		8,250
	Changes in operating assets and liabilities:
		Accounts receivable	4,819	(40,000)
		Other current assets	57,502	(48,258)
		Other assets	(23,295)	5,215
		Accounts payable and accrued expenses	382,644	(35,871)
		Deferred income	(387,025)	417,125
		Other liabilities	106,261	36,349
			--------------	------------
Net cash used in operating activities			(873,952)	(532,595)
			--------------	------------

See accompanying notes on consolidated financial statements.

- F 7 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For Years ended November 30, 2002 and 2001

			2002		2001
				--------------		------------
Cash flows from investing activities:
		Advances for notes receivable			(482,500)
		Purchase of equipment	(13,758)		(95,644)
		Principal payments on notes receivable	1,238		-
		Purchase of license agreement			(750,000)
				--------------		------------
Net cash used in investing activities:				(12,520)		(1,328,144)
				--------------			------------
Cash flows from financing activities:
	Proceeds from notes payable			547,500			1,164,000
	Payments of notes payable						-
	Proceeds from sale of stock						94,000
	Proceeds from exercised options			-			10,000
	Proceeds from subscribed stock			15,000			11,500
	Proceeds from sale of stock by subsidiary						410,000
				--------------			------------
Net cash provided by financing activities				562,500			1,689,500
				--------------			------------
Net decrease in cash and cash equivalents				(323,972)			(171,239)
Cash and cash equivalents, beginning of year				367,864			539,103
				--------------			------------
Cash and cash equivalents, end of year				$43,892			$367,864
				==============			============
Supplemental disclosures:
	Interest paid			$18,203			$45,219
	Income taxes			$350			$1,600
Non-cash transactions:
	Issuance of stock warrants in connection with borrowings			$167,074			$301,950
	Issuance of stock for debt			$-			$500,000
	Issuance of stock for purchase of license agreement						$1,450,000
	Settlement of accounts payable and accrued expenses for stock			$33,392			$-

See accompanying notes on consolidated financial statements.

- F 8 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 1 - Summary of Organization and Significant Accounting Policies

Organization - Exten Industries, Inc. is a holding company for its two subsidiaries, Xenogenics Corporation and MultiCell Associates, Inc. (together the "Company"). Xenogenics was incorporated in February 1997 to focus on the research and development of Sybiol technology. At the time of Xenogenic's incorporation, the Company reentered the development stage. In September 2001, the Company purchased MultiCell Technologies, Inc. ("MultiCell"), which was previously named MultiCell Associates, Inc. (see Note 6). MultiCell is in the business of the development and commercialization of hepatic cells, cell lines and associated products to be used in diagnostic and therapeutic applications. Management considers the Company's activities to be in one segment related to liver-cell bio-technology.

On November 1, 2001, MultiCell entered into a collaborative research agreement with Pfizer, Inc. ("Pfizer") pursuant to which Pfizer began the process of validating the efficacy of MultiCell's immortalized hepatic cells in four different experimental models (see Note 10). During the fiscal year ended November 30, 2002, Pfizer demonstrated the efficacy of these cell lines to the scientific community in October 2002 and MultiCell began to receive revenues from licensing fees and product sales that management expects will be part of a continuous revenue stream. Accordingly, the Company is no longer a development stage company for accounting purposes.

Basis of Consolidation - The consolidated financial statements include the accounts of Exten and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents - The Company considers all unrestricted highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Fair Value of Financial Instruments - The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair market value because of the short maturity of those instruments. Notes payable approximate fair value.

Credit Risk - It is the Company's practice to place its cash equivalents in high quality money market securities with one major banking institution. Periodically, the Company maintains cash balances at this institution that exceed the Federal Deposit Insurance Corporation insurance limit of $100,000 per bank. The Company considers its credit risk associated with cash and cash equivalents to be minimal. The Company does not require collateral from its customers. The Company closely monitors the extension of credit to its customers while maintaining an allowance for potential credit losses. On a periodic basis, management evaluates its accounts receivable and, if warranted, establishes an allowance based on current credit considerations. However, accounts receivable at November 30, 2002 and 2001 consist primarily of amounts due under contractual agreements. All accounts receivable related to contractual agreements are collectible; accordingly, the Company recorded no allowanc e for doubtful accounts.

Revenue Recognition - To date, the Company's revenues have been generated primarily from contractual research activities and the sale of cells. Management believes such sources of revenue will be part of the Company's ongoing operations. The Company applies the guidance provided by Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," ("SAB 101"). Under the provision of SAB 101, the Company recognizes revenue from commercial and government research agreements as services are performed, provided a contractual arrangement exists, the contract price is fixed or determinable and the collection of the contracted amounts is probable. In situations where the Company receives payment in advance of the performance of services, such amounts are deferred and recognized as revenue as the related services are performed.

- F 9 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

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

Property and Equipment - Property and equipment is valued at cost. Improvements to leased properties are amortized over their estimated useful lives or lease period, whichever is shorter. Leased property meeting certain criteria is capitalized and the present value of the related lease payments is recorded as a liability. Depreciation for equipment and furniture is provided using the straight-line method over the estimated useful lives of the assets, generally three to five years. Amortization of capitalized leased assets is computed over the term of the lease. Leasehold improvements are depreciated using the straight-line method over the remaining life of the lease.

License Agreements - Costs incurred to obtain license agreements, principally legal fees, are capitalized. The Company amortizes these costs on a straight-line basis over the term of the respective license agreement. Amortization totaled $132,432 and $26,800 for the years ended November 30, 2002 and 2001, respectively.

Impairment of long-lived assets - The impairment of long-lived assets that do not have definite lives, such as property and equipment and trademarks, is 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 did not record any charges for the impairment of long-lived assets in 2002 or 2001.

Stock-Based Compensation - Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation", provides for the use of a fair value based method of accounting for stock-based compensation. However, SFAS 123 allows an entity to continue to measure compensation cost related to stock and stock options issued to employees using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees". Entities electing to continue to use the intrinsic value method must make pro forma disclosures of net income or loss and earnings or loss per share as if a fair value method of accounting had been applied. The Company has elected to continue to account for its stock-based compensation to employees under APB 25.

Research and Development Costs - Research and development costs are expensed as incurred.

Income Taxes - Deferred income taxes are provided for the estimated tax effects of temporary differences between income for tax and financial reporting. A valuation allowance is provided against deferred tax assets, where realization is uncertain. The income tax provision is the tax payable for the period plus or minus the change during the period in deferred tax assets and liabilities.

Loss Per Share - The Company computed basic and diluted loss per share amounts for 2002 and 2001 pursuant to Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share". The Company has incurred losses applicable to common stock during the years ended 2002 and 2001. The assumed effects of the exercise of outstanding stock options, warrants, and conversion of notes were anti-dilutive and, accordingly, diluted per share amounts have not been presented in the accompanying consolidated statements of operations. Accordingly, diluted loss per share equals basic loss per share. The total number of potential common shares excluded from the calculation of diluted loss per share for the years ended November 30, 2002 and 2001 was 25,001,556 and 14,676,556, respectively.

- F 10 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

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

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

Risks and Uncertainties - The Company is dependent on continued financing from investors and obtaining new research grants to sustain the development and other activities necessary to commercialize new products. Management is seeking additional financing in order to fund its future activities. There is no assurance, however, that such financing will be available, if and when needed, or if available, such financing will be completed on commercially favorable terms, nor that such development and other activities in connection with its planned products will be successful.

Environmental Remediation - Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated. Generally, the timing of these accruals coincides with the Company's commitment to a formal plan of action. As of November 30, 2002, no amounts have been accrued for environmental liabilities.

Reclassifications - Certain prior year balances have been reclassified to conform to the current year presentation.

- F 11 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 2 - Going Concern

These consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of November 30, 2002, the Company has operating and liquidity concerns, has incurred an accumulated deficit of $15, 242,929 as a result of recurring losses, has current liabilities that exceed current assets by $794,806 and is in default on certain notes payable (see Note 9). These factors, among others, create an uncertainty about the Company's ability to continue as a going concern. There can be no assurance that the Company will be able to successfully acquire the necessary capital to continue its on-going research efforts and bring it to the commercial market. Management's plans to acquire future funding include sales of its proprietary media, immortalized cells and primary cells to the pharmaceutical industry. Additionally, the Company continues to pursue research projects, government grants and capital investment. The accompanying consolidated financial state ments do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue its operations as a going concern.

Note 3 - Notes Receivable

As of November 30, 2000, in connection with a letter of intent to purchase the outstanding common stock of Lexicor Medical Technology ("Lexicor"), the Company advanced a total of $600,000 for a note receivable from Lexicor and 83,333 common stock warrants. The Company allocated $17,500 to the warrants resulting in a discount on the note. The warrants entitle the Company to purchase up to 83,333 shares of Lexicor's common stock. The note has a stated interest rate of 10% per annum. Principal and interest was due and payable on May 31, 2001; however, according to its terms the note was automatically extended with principal and interest due January 2, 2005. As of November 30, 2002, the Company discounted this long-term note receivable and provided a valuation allowance thereby reducing the carrying amount of the note to $230,000. In the event of default, Lexicor must issue common shares to the Company equal to 51% of the issued and outstanding shares of Lexicor. Unpaid principa l and accrued interest on this note receivable may be converted at any time until maturity into Lexicor common stock at a per share price of $6.00. All interest payments are current through November 30, 2002

As of April 17, 2001, in connection with a letter of intent to purchase Armstrong Industries, Inc., ("Armstrong") the Company advanced $15,000 to Armstrong for a note receivable that was due May 1, 2002. On June 27, 2001, the Company informed Armstrong that it no longer had any intention of acquiring them. Interest is due from June 1, 2001 on the unpaid principal at the rate of 12% per annum. Armstrong was unable to repay the note in full. The Company agreed to a monthly payment schedule to repay the debt. Beginning June 15, 2002, Armstrong agreed to pay $558.67 per month for 33 months. The payments are current through November 30, 2002.

- F 12 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 3 - Notes Receivable, continued

Notes receivable at November 30, 2002 and 2001 are as follows:

	2002	2001
	--------------	--------------
Notes receivable	$ 613,762	$ 615,000
Less: discounts to net present value	(65,000)	(95,000)
Less: valuation allowance	(305,000)	(305,000)
	--------------	--------------
Net notes receivable	243,762	215,000
Less: current portion	(5,813)	(15,000)
	--------------	--------------
	$ 237,949	$ 200,000
	========	========

Note 4- Property and Equipment

Property and equipment is valued at cost, less accumulated depreciation and amortization is as follows:

	2002	2001
	--------------	--------------
Lab equipment	$192,590	$189,118
Furniture and fixtures	30,585	29,330
Equipment	5,490	4,459
Leasehold improvements	48,995	40,995
	--------------	--------------
	277,660	263,902
Less: Accumulated depreciation and amortization	123,365	89,243
	--------------	--------------
Property and equipment, net	$154,295	$ 174,659
	========	========

Depreciation and amortization expense totaled $34,122 in 2002 and $6,205 in 2001.

- F 13 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 5 - Real Estate Held for Sale

The Company owns a parcel of undeveloped land near the Grand Canyon. The land was originally purchased in February 1992 for $1,654,000. During the fiscal year ended November 30, 1995, the Company tested the land for impairment and expensed all but the remaining fair market value of $47,200. The Company is currently in arrears on property taxes and interest in the amount of $47,200. A tax sale for property taxes is pending and as management has been unable to obtain an appraisal of the fair market value of the land, no decision has been made as to whether to pay the taxes in arrears. Real estate held for sale is included in other assets and unpaid property taxes are included in accrued expenses.

Note 6 - Acquisition of MultiCell Associates, Inc.

On September 13, 2001, the Company acquired all of the capital stock of MultiCell for $2,200,000, of which $750,000 was paid in cash and the remaining $1,450,000 was paid by the issuance of 12,083,334 shares of Exten common stock valued at $.12 per share, totaling $1,450,000. The stock was valued at the per share market trading price at the close of the market on the date the Board of Directors authorized the acquisition price. MultiCell is in the business of the development and future commercialization of hepatic cells, cell lines and associated products to be used in diagnostic and therapeutic applications. The Company accounted for the acquisition in accordance with SFAS No. 141 "Business Combinations".

The following table summarizes the estimated fair values of the assets and liabilities assumed at September 13, 2001:

Current assets	$ 168,436
Property and equipment	176,186
License agreement	2,433,393
Other assets	5,940
	--------------
Total assets acquired	2,783,955
	--------------
Current liabilities	(446,629)
Long-term debt	(125,000)
Other liabilities	(12,326)
	--------------
Total liabilities assumed	(583,955)
	--------------
Net assets acquired	$ 2,200,000
	=========

The Company has an exclusive license agreement with Rhode Island Hospital for use of patents owned by the hospital related to liver cell lines and liver assist devices. The Company pays an annual fee of $10,000. The license agreement also requires royalty payments upon completion of certain milestones. The Company has not met these milestones as of November 30, 2002. The license agreement is being amortized over an estimated useful life of approximately 18 years. Amortization expense totaled $133,222 in 2002 and $26,800 in 2001.

The License Agreement acquired during the purchase includes the ownership of four patents of which the primary patent for immortalized hepatocytes is being utilized. As required by Statement of Financial Accounting Standard No. 141, the Company determined that the excess of purchase price over the fair value of the tangible assets acquired is attributable to the licensing agreement. The Company recorded the value of license agreement at $2,200,000, the purchase price, plus the assumption of additional accounts payable and other accrued liabilities of $233,343 for a total price of $2,433,343. The License Agreement is being amortized over the estimated useful life of this patent of approximately 18 years.

- F 14 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

The unaudited condensed pro forma consolidated statement of operations of the Company for the year ended November 30, 2001, assuming the acquisition of MultiCell occurred as of December 1, 2000 follows:

	2001
	--------------
Revenue	$340,421
	--------------
Research and development	633,306
General and administrative	1,650,978
Depreciation and amortization	160,416
	--------------
Total expenses	2,444,700
	--------------
Operating loss	(2,104,279)
Other income	80,782
	--------------
Loss before income tax provision	(2,023,497)
Income tax provision	1,850
	--------------
Net loss	$(2,025,347)
	=========
Loss per share	$(.03)
	=========

- F 15 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 7 - Income Taxes

The Company provides for income taxes using an asset and liability based approach. Deferred income tax assets and liabilities are recorded to reflect the tax consequences of temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the 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 Company had net deferred tax assets of approximately $3,220,000 and $2,877,000 at November 30, 2002 and 2001 relating primarily to the net operating loss carry-forwards generated by its operations. For financial statement purposes, the deferred tax assets have been almost fully offset by valuation allowances due to the uncertainties related to the extent and t iming of the assets. The valuation allowance has increased by approximately $629,000 and $639,000 for 2002 and 2001, respectively. The Company did record current state income tax provisions of $350 and $1,850 for 2002 and 2001, respectively.

A reconciliation of the expected income tax benefit at the U.S. Federal income tax rate to the provisions for state income taxes for the years ended November 30, 2002 and 2001 are set forth below:

	2002	2001
	--------------	--------------
Income tax benefit	$(536,065)	$(546,561)
State income benefit, net of federal tax	(92,235)	(93,879)
Valuation allowance	628,650	638,550
Other, net	-	3,740
	--------------	--------------
Income tax expense	$350	$1,850
	========	========

The Company's net operating loss carry-forwards expire as follows:

Year Loss Generated	Balance of Loss Carry-forwards	Year of Expiration
---------------------------------------	-------------------------	-------------------------
November 30, 1999 and prior	$5,264,158	2008 through 2019
November 30, 2000	1,025,963	2020
November 30, 2001	1,604,660	2021
November 30, 2002	1,516,313	2022
	-------------------------
	$9,411,094
	===============

- F 16 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 8 - Lease commitments

Lease - The Company and its two subsidiaries lease a Warwick, Rhode Island facility that houses administration, research, development and manufacturing of human cells and cell lines.The lease for the facility in Warwick requires aggregate monthly payments of $4,064 and continues through July 31, 2004.In addition, the Company leases certain office equipment under operating leases that expire at various dates through 2006.The following table summarizes the future rental commitments under all operating leases for years subsequent to November 30, 2002.

Year ending November30	Amount
-----------------------------------	---------------
2003	$ 52,790
2004	34,420
2005	1,908
2006	1,749
	---------------
Total	$ 90,867
	===============

Rent expense was $128,329 and $11,218 for the fiscal years ended November 30, 2002 and 2001, respectively

- F 17 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 9 - Notes payable:

Notes payable at November 30, 2002 and 2001 consisted of the following:

		2002		2001
		----------------------		----------------------
Xenogenics convertible promissory note payable with interest at 10%, due on April 17, 2001, in default at November 30, 2002		$	10,000	$	10,000
Xenogenics convertible promissory note payable to a related party with interest at 8%, due on November 10, 2000, in default at November 30, 2002			15,000		15,000
MultiCell promissory note payable to Rhode Island Cellular Medicine, Inc. with interest at 5.25%, due on or before February 9, 2004			125,000		125,000
Convertible promissory notes payable to related parties with interest at 10%, due on varying dates in 2004 and 2005			1,258,000		935,000
Convertible promissory note payable with interest at 12%, due on October 15, 2002			50,000		50,000
Convertible promissory notes payable with interest at 10%, due in 2005			224,500		-
Convertible promissory note payable to a related party with interest at 10%, due June 29, 2005			54,000		54,000
Promissory note payable with interest at 10% in monthly installments of $4,000 for principal and interest until paid off			33,392		-
		----------------------		----------------------
	Totals		1,769,892		1,189,000
Less:
	Unamortized discounts attributable to warrants and beneficial conversion features on certain promissory notes payable		(311,719)		(276,787)
Current portion of notes payable			(34,892)		(79,500)
		----------------------		----------------------
Notes payable - long-term portion		$	1,423,281	$	832,713
		===============		===============

- F 18 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 9 - Notes payable: continued

The Company continues to accrue interest on all notes in default.

The Xenogenics convertible notes payable are convertible into common stock of Xenogenics at $1.875 per share (see Note 12).

The 10% convertible promissory notes payable with a principal balance of $1,258,000 as of November 30, 2002, are convertible into common stock of the Company at conversion prices that vary from $.10 to $.20 per share. In addition, during the fiscal years ended November 30, 2002 and 2001, the Company issued a total of 5,170,000 and 9,350,000 warrants to purchase common stock exercisable at $.10 per share to the lenders on the respective dates of the issuances of the notes.The Company initially increased additional paid-in capital by $127,236 and $280,500 in 2002 and 2001, respectively, based on the fair value of the warrants and reduced the carrying value of the convertible promissory notes payable by the same amount for the debt discount attributable to the fair value of the warrants.In addition, after the initial allocation of the loan proceeds to the relative fair value s of the warrants and the notes in 2002, the fair value of the Company's common stock exceeded the effective conversion price of certain notes on their respective dates of issuance.Such excess, which represents beneficial conversion rights, totaled $39,837 which the Company recorded by increasing both debt discount and additional paid-in capital by that amount. The debt discount attributable to the warrants and the beneficial conversion rights is being amortized to interest expense over the term of the convertible notes.

The 12% convertible note payable was issued in October 2001 and is convertible into common stock of the Company at a conversion price of $.07 per share.In addition, the Company issued 715,000 common stock warrants exercisable at $.10 per share to the lender at the date of the issuance of the note.The Company initially increased additional paid-in capital by $21,450 based on the fair value of the warrants and reduced the carrying value of the note by the same amount for the debt discount attributable to the fair value of the warrants. Such discount was fully amortized during the period from the issuance of the note to its original maturity date in October 2002.

During 2002, the note went into default and the lender and the Company reached an agreement whereby (i) the 715,000 warrants granted in 2001 were cancelled, (ii) the lender will be allowed to convert the note into 724,000 shares of common stock of the Company and (iii) upon conversion of the note, the lender will receive warrants to purchase 2,000,000 shares of common stock of the Company exercisable at $.10 per share through 2005 and 500,000 shares of common stock of the Company exercisable at $.12 per share through 2005. The lender has agreed to convert the note at such time as the Company is able to complete the registration of the shares under the Securities Act of 1933. If and when the note is converted the new warrants will become issuable and the Company will record a charge for the fair value of those warrants.

The 10% convertible promissory note payable with a principal balance of $54,000 as of November 30, 2002, is due and payable on June 29, 2005. The note may be converted at $.10 per share during year one, $.15 per share during year two, and $.20 per share during year three. Upon conversion, the lender is entitled to warrants to purchase 540,000 shares at $.10 per share.

The Company is obliged to register for resale all of the shares associated with conversion of notes for common stock and the warrant rights that come with a conversion of a note.

- F 19 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 9 - Notes payable: continued

During the fiscal year ended November 30, 2002, the Company converted $33,392 of accounts payable into the 10% promissorynote payable in monthly installments.

During the fiscal year ended November 30, 2001, the Company converted a 10% promissory note with a principal balance of $500,000 into 5,000,000 shares of common stock.

Interest expense of $111,058 and $21,822 and amortization of debt discount of $124,170 and $22,081 were attributable to notes payable to related parties in the fiscal years ended November 30, 2002 and 2001, respectively.

The maturities of notes payable in years subsequent to November 30, 2002 are as follows:

Year Ending November 30	Amount
---------------------------------------	----------------
2003	$138,892
2004	1,194,000
2005	437,000
	----------------
Total	$1,769,892
	==========

Note 10 - Research Contracts

On November 1, 2001, MultiCell entered into a research contract with Pfizer to test MultiCell's library of hepatocyte cell lines.The contract was for $724,500, which the Company received over the contract period that ended October 31, 2002.The Company recognized revenue of $664,125 and $60,375 during the fiscal years ended November 30, 2002 and 2001, respectively.

Note 11 - Stock Compensation Plans

Effective February 15, 2000, the Company adopted a 2000 Stock Incentive Plan and a 2000 Employee Benefit Plan which authorizes the granting of stock and options to employees, outside directors, consultants, and vendors. Under the Plans, awards are made in the form of restricted shares or options, which may constitute incentive stock options or nonstatutory stock options.Only employees of the Company are eligible for the grant of incentive stock options.

The total number of options and restricted shares that can be awarded under the 2000 Stock Incentive Plan is 5,000,000. As of the first day of each calendar year commencing January 1, 2001, this total will automatically increase by 2% of the total number of common shares then outstanding or 500,000, whichever is less. At November 30, 2002, the Company had 9,640,000 options for common stock issued and outstanding.The option price, number of shares, grant date, and vesting period are determined at the discretion of the Company's Board of Directors. The exercise price of each ISO granted under the plan must equal 100% of the market price of the Company's stock on the date of grant. The exercise price of each NSO grant under the plan cannot be less than 85% of the market price of the Company's stock on the date of grant.An option's maximum term is 10 years. Under the 2000 Emp loyee Benefit Plan, one or more Performance Awards may be granted to any eligible person providing services to or for the Company. The value of such awards may be linked to the market value, book value or other measure of the value of the common stock or other specific performance criteria determined appropriate by the Board of Directors or the Compensation Committee (Committee). The Board or the Committee may approve stock payments to eligible persons who elect to receive such payments in the manner determined by the Board or the Committee.The total number of shares that can be awarded under the 2000 Employee Benefit Plans is 35,000,000. Federal, state or local taxes that are subject to the withholding tax at the source will be withheld by the Company as required by applicable law. The Company is entitled to the required deduction from other compensation for these taxes or in the alternative may require the participant to advance such sums or if th e participant elects the Company may withhold, or require the return of, shares having the fair market value equal to the sums required to be withheld.This election is subject to the Board's approval.

- F 20 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 11 - Stock Compensation Plans, continued

Prior to 2000, the Company had issued options with terms of up to 10 years and exercise prices of $.10 per share (the fair market value at the respective dates of grant) to various employees, officers and directors of the Company in return for various services rendered to the Company.

Changes during the years ended November 30, 2002 and 2001 in stock options outstanding for the Company were as follows:

	2002		2001
	----------------------------		----------------------------
	Shares	Weighted average exercise price	Shares	Weighted average exercise price
	-----------	-----------	-----------	-----------
Options outstanding at beginning of year	4,400,000	$0.15	2,665,000	$0.17
Granted	5,300,000	$0.08	2,205,000	$0.12
Forfeited	(145,000)	$0.15	(370,000)	$0.17
Exercised		-	(100,000)	$0.10
	-----------		-----------
Options outstanding at end of year	9,555,000	$0.12	4,400,000	$0.15
	===========	===========	===========	===========
Options exercisable at end of year	6,518,889		1,011,666
	===========		===========

The following table summarizes information about stock options outstanding at November 30, 2002, all of which are at fixed prices:

Range of Exercise Prices	Number Outstanding At 11/30/02	Weighted Average Remaining Contractual Life	Weighted Average Exercise,Price	Number Exercisable At 11/30/02
---------------------------	---------------------------	---------------------------	---------------------------	---------------------------
$.10 - $.50	2,075,000	1.32	$.24	1,779,167
$.115 - $.12	2,180,000	2.46	$.12	878,611
$.08	5,300,000	3.00	$.08	3,861,111
	---------------------------			---------------------------
	9,555,000			6,518,889
	===============			===============

- F 21 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 11 - Stock Compensation Plans, continued

SFAS 123 provides for the use of a fair value based method of accounting for stock-based compensation. However, SFAS 123 allows an entity to continue to measure compensation cost related to stock and stock options issued to employees using the intrinsic value method of accounting prescribed by APB 25. Entities electing to continue to use the intrinsic value method must make pro forma disclosures of net income or loss and earnings or loss per share as if a fair value method of accounting had been applied.

The Company and its subsidiary (see Note 12) have elected to continue to account for their stock-options issued to employees under APB 25. Since the exercise price of all of the options granted by the Company and its subsidiary to their employees has been equal to or greater than fair value, the Company has not recognized any earned or unearned compensation cost in its consolidated financial statements in connection with those options. The Company's historical net loss and basic net loss per share, and pro forma net loss and basic net loss per share, for the years ended November 30, 2002 and 2001 assuming compensation cost had been determined based on the fair value of all options at the respective dates of grant determined using a pricing model consistent with the provisions of SFAS 123 are set forth below.

	2002	2001
Net loss as reported	$(1,576,663)	$(1,609,383)
Pro forma net loss under SFAS 123	$(2,509,413)	$(2,058,333)
Basic loss per share as reported	$(.02)	$(.02)
Pro forma net loss per share under SFAS 123	$(.02)	$(.02)

The fair value of each option granted by the Company was estimated on the date of grant using the Black-Scholes option pricing model, as permitted by SFAS 123, with the following weighted-average assumptions used for the years ended November 30, 2002 and 2001:risk free interest rate of 2.9%, dividend yield of 0%, volatility factor of 1.67 and expected lives of 2.63 for the fiscal year ended.

- F 22 -
- ---------------------------------------------------------------------------------------------------------------------

Exten Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended November 30, 2002 and 2001

Note 12 - Xenogenics Subsidiary and Minority Interest

During 2001, Xenogenics, the Company's subsidiary, issued 226,000 additional shares of common stock in exchange for $410,000 in cash.The proceeds exceeded the Company's proportionate interest in Xenogenics by $298,572, which the Company recorded as an increase in additional paid-in capital, and the balance of $111,428 was recorded as an increase in minority interest.As of November 30, 2002 and 2001,the Company owned 56.41% ofthe 2,659,004 shares of Xenogenics common stock outstanding.

During 1997 and 1999, , Xenogenics granted options to acquire 494,063 shares of its common stock at $1.00 per share to various employees, officers and directors of Xenogenics in connection with the issuance of notes and in return for services rendered.Xenogenics had options to acquire 211,556 shares at $1.00 per share outstanding as of November 30, 2002 and 2001. The options had a weighted average contractual life of 2.5 years as of November 30, 2002.

- F 23 -
- ---------------------------------------------------------------------------------------------------------------------

EX-23

Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the incorporation by reference in the registration statement of Exten Industries, Inc. on Form S-8 (No. 333-40752) of our report, which contains an explanatory paragraph relating to the Company's ability to continue as a going concern, dated March 4, 2003 on the consolidated financial statements of Exten Industries, Inc. and subsidiaries as of November 30, 2002 and for the year then ended, which report is included in this Annual Report on Form 10-KSB/A.

J. H. COHN LLP

San Diego, California
November 17, 2003

EX-23

CONSENT OF INDEPENDENT ACCONTANTS

We hereby consent to the application of our report dated February 25, 2002, included in this Form 10-KSB/A of Exten Industries, Inc., relating to their consolidated financial statements for the year ended November 30, 2001, and previously filed Form S-8 No. 333-40752.

Swenson Advisors, LLP

San Diego, California
November 12, 2003

- F 24 -
- ---------------------------------------------------------------------------------------------------------------------

EX-10

                                                                   EXHIBIT


BIOGRAPHICAL SKETCHES AND BIBLIOGRAPHY

DR. NINA LAMBA (Principal  Investigator)  graduated in 1991 with a B.Sc. (Hons.)
degree in Applied  Chemistry  from Aston  University,  Birmingham,  U.K. She was
awarded  a  doctorate  in   Bioengineering   in  1994  from  the  University  of
Strathclyde,   U.K.  Her  doctoral   thesis   "Blood-biomaterial   interactions:
Application of a parallel plate flow cell to study blood responses in vitro" was
conducted  under  the  supervision  of  Professor  J.  M.  Courtney.   Following
graduation,  she joined the Department of Chemical Engineering at the University
of Delaware as a post-doctoral  research fellow and Research Associate,  working
with Dr. Stuart L. Cooper. Her research  activities included studies of cellular
adhesion  to  polyurethanes,   the  interrelationships   between  infection  and
inflammation associated with biomaterials and aspects of tissue engineering. She
joined Compact  Membrane  Systems,  Inc. last year as Director of the Biomedical
Research  Division.  She has made  significant  contributions  to the biomedical
literature,  and selected publications are listed below. She is also a member of
the Society for  Biomaterials,  the  American  Society for  Artificial  Internal
Organs, and of the Royal Society of Chemistry.
N.M.K.  Lamba,  K.A.  Woodhouse,  S.L.  Cooper.   "Polyurethanes  in  Biomedical
Applications," CRC Press, 1998, pp. 277.
N.M.K. Lamba, J.D.S. Gaylor, J.M. Courtney,  G.D.O. Lowe. "Complement activation
by cellulose:  Investigation of the effects of time, area, flow rate, shear rate
and temperature on C3a generation in vitro, using a parallel plate flow cell."J.
Mater. Sci ., Mater. Med. (1998) 9(7): 409-414.
N.M.K.   Lamba,  J.A.   Baumgartner,   S.L.  Cooper.   "Cell-Synthetic   Surface
Interactions" In: Frontiers in Tissue Engineering. Eds. C.W. Patrick Jr., et al.
Elsevier Science Publishers. 1998, p. 121-137.
N.M.K.  Lamba,  S.L.  Cooper.  "Covalent  grafting of RGD  peptides to synthetic
surfaces." In: Tissue Engineering of Prosthetic  Vascular Grafts.  Eds. P. Zilla
and H.P. Greisler. R.G. Landes Co. 1999, p. 553-559.
N.M.K. Lamba, J.D.S.  Gaylor, J.M. Courtney,  G.D.O. Lowe. "Effect of heparin on
the blood response to  blood-contacting  biomaterials  in vitro."  Biomaterials.
(2000) 21(1): 89-96.

DR. STUART NEMSER - Dr. Nemser  received his BS. in 1966, MS. in 1968, and Ph.D.
in 1972 all from MIT in Chemical  Engineering.  Between 1972 and 1974, he worked
for Millipore Corporation (Bedford, Mass.) and developed their line of Thin Film
Composites (TFCs), ultrafiltration membranes via interfacial membranes formation
("Pellicon"  line)  as  well  as  developing  their  supported   microfiltration
membranes for pleated  cartridges.  Dr. Nemser worked for DuPont from 1974 until
his retirement in May 1993 to found Compact Membrane Systems, Inc. During his 19
years at DuPont, Dr. Nemser held numerous  research,  business and manufacturing
positions,  including  Technical  Superintendent of DuPont's  "Permasep" reverse
osmosis membrane business. As New Business Development Manager for E. I. DuPont,
Dr. Nemser identified and patented the family of PDD homopolymers and copolymers
for various separations.

In his  current  position  as  President  of  CMS,  Dr.  Nemser  is  focused  on
commercializing  the family of PDD polymers in the patented  membrane areas. Dr.
Nemser has been involved in a number of NIH funded projects,  including IVOX and
ECMO,  membrane  oxygenators  for  bioreactors,  ozonation of drinking water and
dental unit water lines,  and portable O2 enriching  systems for lung disorders.
These programs have provided Dr. Nemser with  excellent  experience in enhancing
oxygenation  delivery to fluids through their novel  bubbleless  oxygen delivery
nonporous membranes. Key publications include: S.M. Nemser, "Controlled Porosity
Reverse Osmosis Membranes," MIT Doctoral Thesis, June 2, 1972 S.M. Nemser and I.
C. Roman,  "Perfluorodioxole Membranes," U.S. Patent 5,051,114, (Sept, 24, 1991)
S.M.  Nemser,  "Air-intake  Systems for Mobile Engines," U.S. Patent 5, 147,417,
Sept. 45, 1992 S.M. Nemser,  "Air-intake systems for Residential Furnaces:, U.S.
Patent 5, 053, 059, Oct. 1, 1991




DR. HUGO O.  JAUREGUI - Dr.  Jauregui  received  his MD from the  University  of
Buenos Aires School of Medicine and his Ph.D. in Pathology from Duke University.
Dr. Jauregui has two decades  experience in the development of cell-based  liver
assist devices.  In 1979, his laboratory was the first to explore the culture of
rat hepatocytes in perfused hollow fiber bioreactors.  Numerous studies aimed to
identify  hepatocyte culture  requirements and optimize culture in these devices
ensued.  These perfusion  bioreactors were later modified (in collaboration with
Dr.  Barry  Solomon of Amicon) to create  liver  assist  device  prototypes  for
testing in experimental  models of hepatic  encephalopathy.  Dr. Jaregui's group
characterized  the  galactosamine  (gal)  intoxicated  rabbit model which nearly
mimics  hepatic   encephalopathy  in  humans.  Studies  to  scale-up  rat-rabbit
hepatocyte isolation procedures led to ex vivo porcine hepatocyte procurement by
collagenase digestion.

         Further activities of Dr. Jauregui's group were directed toward storage
and  transport  requirements  of porcine  hepatocyte  preparations.  Proprietary
methodology  was developed for the frozen storage of porcine  hepatocytes  which
allows  recovery of ~80% viable cells which  maintain ~75% of their initial P450
metabolic  function.  Additional  activities  explored  methods of culture which
would allow scale-up of porcine  hepatocyte  populations  from  monolayer.  Data
generated from these porcine  hepatocyte studies helped guide the development of
the  methodologies  currently  used in the Circe  Biomedical  ELAD system today.
Currently,  Dr.  Jauregui is the  President  of  MultiCell  Associates,  Inc., a
company  dedicated to the  development and  commercialization  of cells and cell
lines for medical use,  with a focus on  developing  immortalized  human hepatic
cell lines which have retained their primary  functionality.  Some  publications
and patents include:

Jauregui HO, C Mullon,  P Press, D Trenkler,  S Naik, H Santangini,  T Muller, B
         Solomon.  1995.  In Vivo  evaluation  of a hollow  fiber  liver  assist
         device. Hepatology 21:460-469.
Jauregui HO, N Roy Chowdury, J Roy Chowdhury. 1996. Use of mammalian liver cells
         for artificial liver support. Cell Trans 5,3:353-367.
Jauregui HO, S Naik, H Santangini,  D Trenkler,  C J-P Mullon.  1997. The use of
         microcarrier-roller  bottle  culture  for  large  scale  production  of
         porcine hepatocytes. Tissue Eng 3(1):17-25.
Jauregui HO. 1997.  The  technology  of biological  extracorporeal  liver assist
         devices: From infancy to adolescence. Artif Org. 4721(11).
Naik S, H  Santangini, D Trenkler, C J-P Mullon,  B Solomon,  HO Jauregui. 1997.
         Functional  recovery   of   porcine  hepatocytes  after  hypothermic or
         cryogenic   preservation  for  liver  support   systems.   Cell  Trans,
         6(5):447-454.
Liu J, P Jing, S Naik,  H  Santangini,  D  Trenkler,  N  Thompson,  A  Rifai, JR
         Chowdhury,  HO  Jauregui.  1998.  Characterization  and  evaluation  of
         detoxification  functions of a Nontumorigenic  Immortalized  Hepatocyte
         Cell Line (HepLiu). Submitted to Cell Trans.
Patents: Patent   #5,043,260.   Perfusion   Device  with   Hepatocytes,   Patent
         #4,795,459.  Implantable  Prosthetic Device  (Endothelial),  Dual Fiber
         Bioreactor.   (Patent  allowed),   Isolation  and  Culture  of  Porcine
         Hepatocytes ( USSN  08/5411,462  filing date  12/22/95),  Cryopreserved
         Hepatocytes and Process for Doing Same. (Patent Pending),  Immortalized
         Hepatocytes. (USSN 08/611, 171 (allowed).


A.  SPECIFIC AIMS

         The long range  objective  of the  proposed R & D project is to enhance
the function of the  bioartificial  liver (BAL) device by improving the external
bubbleless oxygenation system used for hepatocyte culture. More specifically, we
plan to fabricate and evaluate a new bubbleless external hollow fiber oxygenator
for use in the  Sybiol(R)  Bio-Liver  Device  developed by Exten  Industries.



                                       2



A unique,  non-porous,  highly gas permeable amorphous  perfluorocarbon  polymer
(CMS-7)  will be applied as a very thin  membrane on  microporous  polypropylene
hollow  fibers.  CMS-7 will  provide  excellent  oxygen  transport  with minimal
deposition  and  fouling.  The  non-porous  perfluoropolymer  layer will provide
minimal  resistance  to O2/CO2 flow while  stabilizing  the  system's  long term
performance.  Non-wetting  porous hollow fiber  membranes (HF) have good initial
O2/CO2 transport,  but deteriorate over time due to fluid  infiltration into the
pores and breakthrough of the perfusate into the gas side of the oxygenator (wet
out).  By coating  porous HF with a thin  continuous  layer of our high flux and
non-porous  perfluoropolymer  film, the initial flux will be comparable to other
porous HF (in fact,  coating of porous HF  actually  increases  oxygen  flux-see
Tables 1, 2; Fig.  3),  with  minimal  degradation  over time.  With  increased,
long-term access to oxygen,  hepatocyte viability and detoxification function is
expected to improve. Prolonged hepatocyte function will provide better treatment
for patients with acute or chronic hepatic failure. Specific aims include:

1.   Fabricate CMS oxygenators using  polypropylene  hollow fiber modules coated
     with the CMS-7 polymer.
2.   Compare a number of modules  with and without the CMS membrane by analyzing
     mass transfer of oxygen into water and hepatocyte media, varying conditions
     to optimize performance.
3.   In vitro,  analyze oxygen mass transfer with recirculating media containing
     hepatocytes.  Compare CMS  oxygenators  to those  without the CMS  membrane
     (controls), and monitor cell viability relative to oxygen mass transfer.
4.   Integrate the  oxygenator  and  recirculating  cell culture with the hollow
     fiber  module  used as a  blood/cell  culture  interface  to  monitor  cell
     viability  and  detoxification  function  in vitro,  comparing  controls to
     coated modules.
5.   Plan Phase II, which will include  comparison  of primary and  immortalized
     hepatocytes,  and in vivo animal trials. Food and Drug Administration (FDA)
     approval will be secured for clinical trials for device safety.


B.  SIGNIFICANCE

         One in ten Americans  has some form of liver  disease.  Currently,  the
treatment of choice for patients  with acute  hepatic  failure (AHF) and chronic
hepatic  failure  is liver  transplant.  AHF is brought  on by  Hepatitis  or an
overdose of drugs such as  acetaminophen,  and can lead to  encephalopathy  (HE)
(mortality of 50-80%)(1).  However,  in the United States,  there are only about
3000 donor livers available annually,  while  approximately  30,000 patients die
from liver failure (2). The American Liver Foundation  states that liver failure
is the fourth  leading  cause of death in the United  States  (40,000  deaths in
1996). According to Algenix, Inc. of Minneapolis, a company currently developing
a BAL, the market  potential  for the BAL  industry  exceeds $700 million in the
United  States,  and may reach  $1.4  billion  worldwide  (23).  Transplantation
procedures  are  expensive,  and  carry  risks  increased  by AHF.  If a patient
suffering from AHF could receive temporary liver support, the native liver would
have time to regenerate. Patients with advanced liver disease have been known to
recover once regeneration  begins, often with no residual disease after recovery
(3). In fact, using BAL while awaiting organ  transplant  yields better survival
rates,  less frequent graft failure,  and earlier hospital  discharge than those
patients whose health  deteriorates prior to  transplantation  due to poor liver
function (3).

         A  bioartificial  liver  assist  device  (BAL) can serve as a  "bridge"
during reversible AHF, allowing the native liver to regenerate,  and can prevent
multisystem failure as a result of the accumulation of metabolic byproducts. For
patients with chronic liver diseases,  BAL could also be used for periodic liver
"dialysis," or  detoxification.  The ideal BAL would mimic normal liver function
as  closely  as  possible  for as  long  as  possible  while  requiring  minimal
investment.  Many of the BALs being  developed  today have  focused on providing
support   for  a  short   period  of  time  (six   hours)  as  a  bridge   until
transplantation,  but for the native liver to  regenerate,  the BAL must operate
for a longer  duration  (at least ten days) (21).  In  addition,  pharmaceutical
companies can use BALs for drug  metabolism  evaluations  that would be safe and
inexpensive.  Our  oxygenation  technology is  non-fouling  and resists wet out,
indicating that it would be advantageous  for long term BAL operation.  Adequate
oxygenation  is essential in BAL devices to obtain  maximum cell  viability  and
function.  CMS membrane  technology  will improve  oxygenation of the hepatocyte
cell culture,  allowing better control of oxygen flux while resisting "wet out",
to provide maximum hepatocyte functionality.



                                       3


1.  Variations of BAL
    -----------------

         BALs  vary in the  choice of  perfusate,  the  choice of cell,  and the
arrangement of hepatocytes within the bioreactor.  Either the patient's blood or
plasma is perfused through a bioreactor  containing the hepatocytes.  Clinically
tested BALs have employed  transformed cell lines (e.g. C3A, a cell line derived
from human  hepablastoma) or freshly isolated porcine  hepatocytes.  Since human
hepatocytes are of limited  availability,  rabbit, rat, and pig hepatocytes have
been successfully used in experimental BALs. Porcine hepatocytes can be procured
in  adequate  numbers,  screened  for  contamination  by other cell  types,  and
cryopreserved  so a  continuous  supply is  assured  (4).  Immortalized  porcine
hepatocytes  have also been  developed  (26) and may be used in Phase II of this
project.  Different  polymer  materials  and/or  configurations  of the man-made
components used in BALs have undergone the most advances.  Hepatocytes have been
used in  suspension or  immobilized  on a  nonspecific  material,  and have been
cultured among three dimensional  nonwoven polyester fabric, with HF oxygenation
(5-7,  9).  Some of the most  promising  and  prevalent  design  technology  has
involved hollow fiber  membranes (HF).  Hepatocytes are cultured in a variety of
arrangements,  including in suspension  (40) within a gel bed inside the HF (8),
outside the HF in suspension,  in cell aggregates, or bound to microcarriers (7,
8), in adhesion outside of HF (3, 8), or among mats of woven capillary membranes
(7, 8). For this Phase I project,  CMS has chosen to work with Exten  Industries
to develop an in-series HF  oxygenator  for use with their  Sybiol(R)  synthetic
bio-liver device, discussed below.


2.   The Sybiol(R) Bio-Liver Device
     ------------------------------

         The  Sybiol(R)  synthetic  bio-liver  device is now being  developed by
Exten  Industries  Corporation.  The  Sybiol(R)  bioartificial-liver  circulates
patients' blood through a replaceable cartridge (hollow fiber module),  where it
is interfaced  with  constantly  recirculating  viable  hepatocytes.  Toxins and
enzymes diffuse across the membrane,  and are  metabolized by the  recirculating
hepatocytes.  The expectation behind all types of bioartificial liver devices is
that by providing liver support with the appropriate  metabolic,  detoxification
and  biosynthetic  functions,  the  native,  ailing  liver  could  be  given  an
opportunity to recover from shock,  disease,  poisoning,  or drug overdoses.  In
cases of acute hepatic failure, it is envisaged that bioartificial liver support
could allow  regeneration  to the degree that no  transplant  would be required,
reducing  the  demand  for  the  already   limited  supply  of  donated  organs.
Furthermore, such a device could also help liver transplant patients prepare for
surgery and provide post-transplant support.

         The Sybiol(R) technology circulates blood extracorporeally, as depicted
in the diagram below (Figure 1). This device may have significant  advantages in
methodology and mechanical  design that allow tangible benefits in treatment and
cost over  competitive  technologies  currently in development.  Although it has
been shown that  hepatocyte  adhesion  improves liver function in vitro (5,6,7),
attachment to  microcarriers  or membranes does not necessarily  determine liver
function.  Reseachers  working on the Sybiol(R) liver device  demonstrated  that
hepatoctyes  remained  viable in suspension  without prior  immobilization  onto
microcarriers  (42). A major advantage of recirculating  hepatocytes rather than
isolating them in the  extracapillary  space,  is that there is a less stringent
limitation  on the  number  of cells  that can be  included  in the  circuit.  A
recirculating   loop  also  offers  the  ability  to  replenish  the  supply  of
hepatocytes as needed,  and allows closer  monitoring and control over variables
such as  temperature,  pH, etc.  Hepatocytes  in BALs that have been  clinically
tested lose function in 6-8 hours. By increasing the number of other hepatocytes
and adding the ability to replenish the  hepatocyte  supply with new cells,  the
Sybiol(R) synthetic bio-liver device should prolong performance. A recirculating
system also has  potential to be used as liver  "dialysis"  treatment for either
chronic liver disease  stemming  from  alcoholism or hepatitis,  and/or to treat
ingestion or overdose of toxic substances.  Other advantages include lower cost,
fast change-over between patients, and a much longer treatment cycle. The design
of this technology also minimizes the possibility of immune reactions.



                                       4


         An additional role for this recirculating bioartificial liver is in the
evaluation of drug  metabolism.  Therapeutic  drugs introduced into the body are
metabolized  by the  liver,  and may have a  variety  of  beneficial  as well as
detrimental  effects.  It is, therefore,  mandatory that developers of new drugs
thoroughly  evaluate  this  process.  A design  such as this will  allow for the
sampling  of not only the media  used to  suspend  the  cells,  but for the easy
sampling  of  hepatocytes  in order to  evaluate  any  phenotypic  changes.  The
availability of a laboratory device able to accurately  simulate the behavior of
the human liver will provide a significant alternative to animal testing for the
pharmaceutical  industry.  A CMS  oxygenator  will reduce  fouling and "wet out"
compared to a HF oxygenator  without the membrane,  thus  prolonging  oxygenator
performance.  A long term  oxygenator  will be necessary if the  Sybiol(R) is to
deliver liver treatment for a sufficient amount of time. Eliminating the need to
change the oxygenator also reduces the likelihood of introducing  pathogens into
the heptocyte suspension.

         Currently,  oxygenation  of the  hepatocytes is achieved by running the
suspension  through a 28ft  length of  silicone  rubber  tubing,  which is wound
around a mandrel. O2 and CO2 diffuse passively through the tubing wall, and this
is the  source  of O2  for  the  cells.  Replacing  this  coil  with a  membrane
oxygenator  will  allow  increases  in the rates of oxygen  and  carbon  dioxide
transfer  and better  control  over  oxygen  transfer  through  the  increase in
membrane permeability and the use of enriched gas feedstreams. Mixing within the
hepatocyte  suspension  and mass  transfer of the  dissolved  gases will also be
improved. The oxygen flux of silicone rubber is 500 GPUs (GPU=cm3/cm2-sec-cmHG x
10-6) a selectivity  (O2 GPUs/N2 GPUs) of 2, while the CMS-7  membrane  provides
9900 GPUs of oxygen flux and a selectivity of 2. Thus, use of the CMS-7 membrane
dramatically increases oxygen flux.

Figure 1.  The Sybiol(R)Synthetic Bio-Liver Device


          ---------------------------------------------------
          |                                                 |
          |                                                 |
          |                     GRAPHIC                     |
          |                                                 |
          |        Diagram of the Sybiol (R) Synthetic      |
          |                  Bio-Liver Device               |
          |                                                 |
          |                                                 |
          ---------------------------------------------------



                                       5



3.  Hepatocyte Function for Bioartificial Liver Support
    ---------------------------------------------------

         To date,  the precise  pathogenic  mechanism of hepatic  encephalopathy
(HE) remains  unknown.  Observations  in both animal models and patients with HE
indicate that the syndrome is  precipitated  by the  accumulation of toxins that
are normally  metabolized by the liver.  High levels of these  products  promote
neurotransmission failure. Various neuroactive substances, such as ammonia, (29)
as well as  endogenous  or exogenous  compounds  with  benzodiazepine  agonistic
properties  (28)  have been  implicated  as  potential  neurotoxins  or  agents,
increasing the tone of the inhibitory  gamma-aminobutyric acid neuro transmitter
system.

         Drug metabolism is typically divided into two phases: Phase 1 oxidation
or  reduction  reactions  catalyzed  primarily  by  P450  enzymes,  and  Phase 2
reactions which are conjugative  reactions that increase aqueous solubility.  In
some  cases,  a drug may be  sequentially  metabolized  by  Phase 1 and  Phase 2
reactions, as is the case with certain metabolites of diazepam. Other drugs such
as acetaminophen are primarily  metabolized by Phase 2 reactions (sulphation and
glucuronidation).

         The  primary  requirement  of cells in a liver  support  system  is the
preservation of the in vivo metabolic functions that prevent and/or decrease the
progress of HE in patients with acute liver failure. Benzodiazepines, as well as
other drugs or toxins,  are metabolized in the liver by a family of enzymes that
catalyze their oxidative  degradation  (Phase 1 metabolism) (31). This oxidation
facilitates  further  detoxification  steps (Phase 2  reactions)  by which these
byproducts are conjugated. The oxidative enzymes, known collectively as the P450
system,  usually decay very rapidly in normal  cultured  hepatocytes  (32). Most
importantly,  enhancement  of  diazepam  (a  benzodiazepine)  and  acetaminophen
metabolism may support the utility of these BAL for liver support. Acetaminophen
metabolism is higher in porcine hepatocytes than in human (Jauregui -unpublished
data). In fact,  acetaminophen toxicity is the etiology of acute hepatic failure
most likely to be fully reversible by the provision of porcine  hepatocyte based
BAL  support,  obviating  the need for  transplantation  (presented  at American
Association for the Study of Liver Disease Meeting, Nov. 1997).

         The  study  proposed  here  will  explore  the  potential  of an oxygen
enhanced  bioreactor culture system to support the metabolic function of porcine
hepatocytes in vitro. We will address both Phase 1 and 2 reactions using 3 drugs
for which the  reaction  products  are well  known  and  characterized,  namely,
diazepam,  7-ethoxycoumarin and actaminophen. The ability of porcine hepatocytes
attached to microcarriers to convert ammonia to urea will also be assessed.


4.  Oxygen Demands of Hepatocytes
    -----------------------------

         The liver is one of the organs most dependent on oxygen. In fact, under
basal metabolic  conditions,  20-33% of the total oxygen utilized by the body is
consumed by the liver (22). For this reason,  hepatocytes and cell lines derived
from  hepatocytes  (hepatoma)  have high oxygen demands (10, 11). In vitro,  the
optimal conditions for cultivation and functioning of hepatocyte cell culture is
10-50% oxygen tension (10). Typically,  mammalian cells consume oxygen at a rate
of 0.05-0.5 (mu)mol/106 cells/hr (17). The reported oxygen uptake rate (OUR) for
hepatocytes is approximately 1.0 (mu)mol/106 cells/hr, a high rate for mammalian
cells (18). Oxygen must be continuously supplied because it is depleted quickly,
even at relatively low cell densities.  Oxygen is often the biolimiting nutrient
in BALs, not just because of its high  consumption  rate,  but also because,  in
typical cultures, it is found in relatively low concentrations. For example, the
solubility of oxygen at 1 atm and 37(Degree)C is 0.2mM, while glucose is as high
as 25mN (41).

         Oxygen requirements of hepatocytes vary depending on the culture phase,
extracellular environment, cell density, cell type, and metabolic challenge. Low
concentrations  of  oxygen  in  the  early  phase  of  hepatocyte  cell  culture
establishment hinders cell attachment, spreading, and adaptation (8). Increasing
the  gas  phase  oxygen  levels  increases  attachment  and  spreading;  without
sufficient oxygen,  hepatocytes cannot assume the appropriate physical state for
optimal albumin  secretion (1, 8). The oxygen uptake rate (OUR) varies depending
on the extracellular requirements;  when hepatocytes were sandwiched between two
collagen layers for long term testing, the OUR was 13.6 +/- 3 pmol/sec/(mu)g DNA
in 2-16 hours (22).  In BALs that  contain  hepatocytes  within the hollow fiber
module, high cell densities can cause a steep concentration gradient to form, so
that cells far from  sources  of  oxygen,  nutrients,  and  metabolites  may not
receive sufficient amounts,  causing, at best, loss of function,  at worst, cell
starvation  and  necrosis.  Only the very  first  layer of cells can be  assured
sufficient  oxygen (8, 11). In fact,  when HF membranes  are used for blood flow
with cells cultured outside, oxygen is completely depleted at distances equal to
one to two cell layers from the membrane outer wall (11).



                                       6



         Hepatocytes must have sufficient  oxygen available to attach and spread
and to perform metabolic functions, including specific liver functions that will
benefit the patient.  In the Sybiol(R)  synthetic  bio-liver  device,  cells are
attached to microcarriers that recirculate through the hepatocyte loop. With the
CMS oxygenator integrated into the hepatocyte loop, cells will regularly receive
oxygen as the media and cells pass through the oxygenator. Since oxygen diffuses
through the CMS membrane to dissolve in the liquid  (media),  all  microcarriers
should receive the same level of oxygenation. Thus, oxygenation will not be site
dependent  and steep  concentration  gradients can be avoided.  The  oxygenation
technology we are proposing will allow control of the oxygen provided  without a
loss of operation over time due to wetting out of the oxygenator or fouling with
biological  matter, and in fact increases the oxygen flux. Another advantage our
oxygenator  provides is that this is a  bubbleless  source of oxygen.  Sparging,
which  involves  bubbling  O2  directly  into the media,  often  results in foam
formation,  and can  damage  cells  (for  details  on the  nature  of the  CMS-7
membrane, see below). The CMS oxygenation technology provides a "gentler" source
of oxygen to cells removed from their natural environment.


5.  Existing Oxygenation Techniques
    -------------------------------

         The BALs that  perfuse  blood  sometimes  rely on red  blood  cells for
oxygenation,  although it has been suggested that additional  oxygenation  would
improve  hepatocyte  function (12). In plasma-based  models, red blood cells are
usually excluded to reduce hemolysis,  so an alternative  oxygenation  method is
necessary.  Many BALs incorporate either an indirect  (in-series) or an integral
(in-parallel)  oxygenation system to maintain cell function and viability.  With
an  indirect  system,  an  oxygenator  aerates  either the plasma or medium with
oxygen (sometimes pure) at pressures of 474-552 mmHg.

         High oxygen pressure, however, is problematic. Oxygen tension modulates
enzyme  activities,  indicating  that  high O2  pressure  could  interfere  with
hepatocyte  function.  Since  sparging can cause bubbles and foam formation that
can damage the delicate  hepatocyte  cells, the preferred choice for oxygenation
is a hollow fiber design,  whether used as a separate,  in-series  unit (often a
blood oxygenator) or integrated with a HF bioreactor. The materials employed for
oxygenation in hepatocyte culture are typically hydrophobic  polypropylene HF or
silicone  rubber (9, 14).  These provide high oxygen flux with reduced  bubbling
and foam formation compared with spargers.

         However,  there  are  adverse  consequences  of  oxygenation  with  HF,
including  bubble  formation  in the cell mass due to  changes  in the  pressure
differences  between the capillary  spaces,  and  concentration  of media due to
evaporation  of  water at the  air/media  interface.  In  addition,  the  oxygen
transfer is so high in the present  oxygenation  scheme that  scavengers of free
radical  oxygenated  species  need  to  be  added  to  the  media.  Coating  the
polypropylene  fibers with CMS-7 would solve  problems of bubble  formation  and
media  concentration  while  still  permitting  sufficient  oxygenation  and  pH
control.

         Furthermore,  with CMS-7 treated fibers, as described in this proposal,
hepatocyte and cell debris adhesion will be reduced, thereby minimizing fouling.
This fouling  problem is similar to the situation  with blood  oxygenators,  the
majority  of  which  are  based  on  non-wetting  microporous  polypropylene  HF
membranes.  Blood flows on one side of the membrane,  O2 on the other. Since the
HF membranes are initially non-wetting,  O2 and CO2 diffuse through the pores in
the membrane. While these membranes function quite well initially, in many cases
after 3-6 hours the holes in these  porous HF become  infiltrated  with  plasma.
Pore blockage causes gas flux to drop  significantly,  plus plasma  breakthrough
into the gas phase occurs  (15).  We propose the use of a  non-fouling  membrane
with higher  oxygen flux in order to improve  hepatocyte  access to a bubbleless
oxygen source,  and,  therefore,  hepatocyte  function and viability.  Our CMS-7
coated HF membrane  will provide a constant  source of higher  oxygen flux for a
longer time period than those HF membranes currently in use.



                                       7



6.  New Integral Oxygenation Technology
    -----------------------------------

         The cornerstone for developing an improved external  oxygenation system
using hollow fiber membranes (HF) in  bioartificial  liver assist devices (BALs)
is  a  family  of  new  perfluoropolymer  membranes:  perfluoro-2-2-dimethyl-1-3
dioxole (PDD) copolymerized with tetrafluoroethylene  (TFE)(see Figure 2). These
membranes  will  be  employed  in  the HF  oxygenator  to  enhance  performance.
Characteristics of these membranes include: 1) the ability to be made ultra-thin
(0.5-2.0u)  supported  on flat sheet  stock  and/or  porous  hollow  fibers,  2)
chemical  inertness  and  mechanical  non-porous  features  which will  prohibit
cultured  cells from  attaching to the  membrane,  and 3) high oxygen and carbon
dioxide  permeability.  HF treated with the PDD-TFE  (CMS-7)  polymer  provide a
bubbleless,  non-fouling,  biocompatible,  rugged  membrane that affords  higher
oxygen and carbon  dioxide  flux.

                              a) SUPERIOR GAS-LIQUID  TRANSFER- Through a number
        GRAPHIC               of programs,  we have  demonstrated that the CMS-7
                              membrane  provides  oxygen  transfer  into  liquid
                              equal or superior to the  performance  of uncoated
    Diagrams of the           modules   (control   modules   without   the   CMS
     Structure of             membrane).  One of these  projects  involved using
       PDD-TFE                the CMS membrane in  bioreactors to enhance the O2
                              delivery and CO2 removal from fermentation broths.
                              Table  1  summarizes  the   improvement   (4x)  of
                              volumetric  O2 mass  transfer  gained with the CMS
                              membrane.


 TABLE 1: Comparison of volumetric mass transfer coefficients for different contactors
 --------------------- ----------------------- ----------------------- ----------------
 OTR Studies (k(l) a)* Coated Module (s(-1))** Uncoated Module (s(-1)) Spargers (s(-1))
 --------------------- ----------------------- ----------------------- ----------------
                                                              
 Air                   0.54 x 10(-3)           0.29 x 10(-3)           0.72 x 10(-3)
 Oxygen                3.3 x 10(-3)            0.88 x 10(-3)           5.5 x 10(-3)
 --------------------- ----------------------- ----------------------- ----------------

*K(1) a estimated from the time (sec.) for a volume of liquid (10L) to reach 63%
air saturation measured with a dissolved oxygen probe. **Outside coated

         Sparging, another type of oxygenation, involves the physical dispersion
of gas into  liquid and,  therefore,  is more  energy  intensive.  With a coated
module,  we approach  the  performance  obtained by simple  sparging.  Sparging,
however,  is  detrimental  for a number of cell lines,  since the bubbles  cause
unusually  high shear  stresses on the  fragile  cell  walls,  resulting  in the
breakage of the cell wall and cell death.

         We  have  also   completed  a  project  on  oxygenation  of  water  for
aquaculture  (DOC  SBIR).  With PVDF  modules  coated with CMS-7 on the fiber ID
(inside  diameter),  O(2) flux rates for the  coated device  showed  significant
improvement  compared to the uncoated devices, see Table 2. Additional work with
Avecor  polypropylene  (PP)  modules  showed  that  the  CMS  membrane  provided
comparable oxygen mass transfer, see Table 3.



 Table 2:  Comparison of O2 flux rates for a PVDF coated with CMS-7 versus an uncoated module*
 --------------------------------------------------------------------------------------------
 Test Description                       O(2) flux in gm/cm(2)/min              %Increase
                                        Coated           Uncoated              in Flux
                                                                        
 Oxygenation with Pure O(2)
 (200 cm(2), 1000 um ID fiber)        0.28 x 10(-4)     0.18 x 10(-4)            56%
 Oxygenation with Air
 (200 cm(2), 1000 um ID fiber)        0.34 x 10(-4)     0.19 x 10(-4)            79%
 --------------------------------------------------------------------------------------------

 *Runs made under identical operating conditions.




                                       8




         Table 3:  Mass Transfer Testing of Polypropylene Modules with and without the CMS Membrane
 ----------------------------------------------------------------------------------------------------------
 Module       Membrane        Membrane         a             Pressure Drop        K(1) a (sec(-1)), average
 Number        Status         Thickness    O(2)/N(2)        1 LPM     5 LPM           1 LPM       5 LPM
 ----------------------------------------------------------------------------------------------------------
                                                                            
 99-1191         -                -            -             ~0      2.2 psi         2.0E-02     4.4E-02
 99-1191      w/CMS-7         3.0 micron       2             ~0      2.3 psi         1.7E-02     4.6E-02
 ----------------------------------------------------------------------------------------------------------
 99-1195         -                -            -             ~0      2.0 psi         1.5E-02     4.6E-02
 99-1195      w/CMS-7         2.3 micron      1.8            ~0      2.1 psi         1.4E-02     5.3E-02
 ----------------------------------------------------------------------------------------------------------

         Figure 3  schematically  explains  that this  increase in gas  transfer
relates to the position of the gas-liquid interface. In an uncoated module, this
interface  exists at, or at a small  distance  into,  the pore mouth.  Molecules
moving  from the gas to the liquid  phase must  diffuse  through  this  stagnant
liquid phase into the edge of the liquid phase  boundary  layer,  where they are
carried  away into the bulk of the  solution by  convection.  In the case of the
coated fiber,  this stagnant  liquid phase is replaced by the CMS polymer phase,
which has  considerably  less  diffusional  resistance  to gas  molecules.  As a
result, the observed mass transfer rate is greater.  The size of the diffusional
boundary layer is also reduced,  since the portion that would have been occupied
by the liquid phase is now occupied by the CMS polymer.


Figure 3: Gas Liquid Interface for CMS-7 Membrane on a Microporous Substrate



                                    GRAPHIC

                 Diagram of the Gas Liquid Interface for CMS-7
                      Membrane on a Microporous Substrate




b) COMPARISON TO OTHER COMMONLY USED HOLLOW FIBER MEMBRANES - In our studies, we
focus on oxygen  transfer  rather  than  carbon  dioxide  transfer.  Because our
membrane's  gas flux is so high,  the  transfer  of oxygen  into a cell  culture
medium becomes liquid-side limited.  Therefore,  if we optimize the transport of
oxygen into the liquid,  the faster  permeating carbon dioxide will be maximized
as well.  Our CMS-7 polymer has nearly 40 times the oxygen flux of commonly used
silicone  rubber.  We have also compared the oxygen  transfer rate of our coated
flat sheet membranes with microporous  Gore-Tex(TM) and with existing non-porous
silicone rubber materials under no-load  conditions.  The results are summarized
in Table 4, and show a 2-3x improvement with CMS-7.

         Table 4 presents  results of  experiments  with Sf-21 insect cells that
have a high O(2) demand.  The reported  oxygen uptake rate (OUR) for Sf-21 cells
is  0.24  (mu)mol/106  cells/hr  compared  to  approximately  1.0  (mu)mol/10(6)
cells/hr  for  hepatocytes.  We  observed a 3-4x  higher  cell  density per unit
membrane  area for the CMS-7  membrane  oxygenators  versus the silicone  rubber
membrane  oxygenator  when used  with  bioreactors.  We  expect  to see  similar
improvement with hepatocyte detoxification  functions.  Under non-bubble forming
conditions,  our non-porous  CMS-7 membrane  outperforms  Gore-Tex(TM)  with the
measured  O(2) delivery  rate twice as much as  Gore-Tex(TM)  and three times as
much as non-porous silicone rubber.

         We are able to successfully and  reproducibly  coat both the inside and
outside of several different polymeric hollow fiber supports with CMS-7, as seen
in Table 5. We have successfully demonstrated the feasibility of outside coating
both hydrophobic  (polypropylene) and hydrophilic (cellulose ester, polysulfone)
HF by putting a thin layer (0.6-0.9u) of good  selectivity  (O(2)/N(2) ~ 1.7) on
the  outside of HF.  There is no problem  with fiber  sticking  with our coating
procedures.


                                       9





 Table 4:  Oxygen transfer rate for flatsheet materials/zero bubble formation
 ----------------------------------------- ---------------------- --------------------- ---------------------
                                           CMS-7                  Gore-Tex(TM)          Silicone Rubber
                                           (Non-porous)           (Porous)              (Non-porous)
 ----------------------------------------- ---------------------- --------------------- ---------------------
                                                                               
 Membrane Thickness (um)                   1                      ? 100                 60
 Gas Pressure (psig)                       3                      < 1                   3
                      ml/L
 O(2) Delivery Rate  ------*10(2)
                      min                  18.1                   8.8                   5.5
 ----------------------------------------- ---------------------- --------------------- ---------------------
 Cell Densities of SF-21 obtained          2.1 x 10(4)                                  0.6 x 10(4)
 with Flat Membrane Sheets                 (Membrane area                               (Membrane area
 (cells/ml-cm(2) membrane area)            =130 cm(2))                                  =260 cm(2))
 ----------------------------------------- ---------------------- --------------------- ---------------------







   Table 5.  Outside -vs- Inside Coating of PDD-TFE on Various Polymeric Hollow Fiber Supports
 --------------- ------------- --------------------- -------------- ---------------- -----------
 Unit               Coating           Support         Area (cm(2))    Thickness(m)    O(2)/N(2)
 =============== ============= ===================== ============== ================ ===========
                                                                         
 MCE-50-E           Outside       Cellulose Ester           50            0.7           1.7
 MCE-50-D           Inside        Cellulose Ester           50            1.5           1.7

 TexasLOD-A         Outside         Polysulfone             22            1.9           1.5
 MPS-680-3          Inside          Polysulfone            680            0.2           1.7

 MPP-63-G19         Outside        Polypropylene            63            0.8           1.8
 MPP-250-21         Outside        Polypropylene           250            0.9           1.7
 MPP-250-G14        Outside        Polypropylene           250            0.9           1.9
 MPP-850-G23        Outside        Polypropylene           850            0.6           1.7
 MPP-1000-G1        Inside         Polypropylene          1000            1.0           1.8
 --------------- ------------- --------------------- -------------- ---------------- -----------







           Table 6: Coating of Polypropylene Hollow Fiber Substrates from Various Manufacturers
 ----------------------------------------------------------------------------------------------------------
                       Supplier/         Surface       Number    Selectivity(O(2)/N(2))    Thickness (mm)
    Module Type       Manufacturer      Area(m(2))     Coated     Average      Std Dev    Average  Std Dev
 ----------------------------------------------------------------------------------------------------------
                                                                                
 Terumo BLOX(a)          Terumo            1.8            2        1.51          0.01       0.4      0.3
 Liqui-Cel(b)           Celgard            2.0            5        1.60          0.4        0.6      0.1
 KrosFlow(1a)        Spectrum, Inc.        1.0            5        1.69          0.06       0.4      0.2
 KrosFlow(1b)        Spectrum, Inc.        4.25           2        1.7           0.05       0.6      0.1
 Avecor Affinity(2a)     Avecor            2.5            8        1.6           0.05       1.5      0.5
 Cellgas(1b)         Spectrum, Inc.        0.25           5        1.66          0.1        0.3      0.2
 IVOX(1b)              OTD, Inc.           0.25           8        1.59          0.08       0.9      0.2
 ----------------------------------------------------------------------------------------------------------

 1 Fibers manufactured by Mitsubishi         a Inside Coated
 2 Fibers manufactured by Celgard            b Outside Coated

         Table 5 discusses our ability to successfully  inside or outside coat a
wide range of PPs,  suggesting  that we have  developed a universal  process for
coating PP. This table  demonstrates the  reproducibility of our success and the
ability to scale it up to sizes  consistent  with large  scale  bioreactors.  By
contrast,  others have been  unsuccessful  when  coating the outside  surface of
microporous  PP supports.  Bob Schucker from Exxon reported at the November 1995
American Institute of Chemical Engineers annual meeting that they were unable to
coat  microporous  PP with their  polyurea/urethane  membranes.  Our  success in
coating CMS-7 onto microporous PP most likely relates to 1) the very low surface
energy of the  perfluoropolymer,  2) the  excellent  film forming  capability of
CMS-7,  and 3) our  superior  fabrication  process.  Success  in  coating  PP is
especially  valuable to this application since PP is inherently  hydrophobic,  a
quality that will  provide a "second  layer of  protection"  should there be any
defects in our coating. In addition, PP is tough and flexible, and it is already
familiar to those in the bioreactor industry.



                                       10



c)  RESISTANCE  TO  FOULING  AND  DEPOSITION  - The  drop  in mass  transfer  of
microporous  membrane-based  gas-liquid  contactors  can  be  attributed  to the
wetting  out of the  substrate  pores by the liquid  phase  (refer to Figure 3).
Coating the membrane  increases  the time over which a contactor can be operated
without  having to be dried to  recover  the mass  transfer  performance  of the
original device.  The device can now be operated with both phases at atmospheric
pressure.  In  addition,  one can now use these  devices to carry out  selective
absorption  of gases  into  liquids at high  pressures,  without  requiring  the
pressurization  of the gas phase to prevent the  intrusion  of the liquid  phase
into the pores of the microporous substrate.

         Compact  Membrane   Systems,   Inc.  has  supplied  modules  to  Cellex
Biosciences,  a company with the largest hollow fiber  bioreactor  market in the
world.  Cellex  manufactures a gas-exchange  cartridge  (GEX) to reoxygenate the
medium and remove CO2 for pH control.  When  Cellex  uses a silicone  sheet GEX,
this accounts for 25-50% of the total  manufacturing cost. Using a porous PP GEX
is one  quarter the cost,  but this tends to wet out through the pores.  Even in
the absence of surface active foulants,  the PP GEX wetted out after two days of
use. Cellex is using a PP GEX coated with the CMS polymer in a bioreactor with a
murine  hybridoma  (MH483)  producing an IgM antibody,  a passive  anti-malarial
immunization.  The run is over 30 days old, and has  produced  1.5g of antibody.
The pH control was good,  demonstrating  sufficient CO2 exchange through the CMS
GEX, and no loss in GEX efficiency was observed.  No condensation was noted, and
wet-out has not occurred.  The CMS membrane significantly improved the long term
performance of the GEX (20).

d)  RUGGEDNESS - CMS-7 also has  excellent  thermal  stability,  with a high Tg,
above 200(degrees)C, so autoclave temperatures of 120(degree)C have little or no
effect on it. Secondly,  membranes  tested before and after  autoclaving show no
significant change in gas flux performance in either direction. This indicates a
very rugged  material  that can operate in a  supported  as well as  unsupported
mode.  This ability to work in an unsupported  mode is significant in gas/liquid
applications,  as gas  transfer is higher if the liquid flows on the coated side
of the membrane, allowing the gas to pass through an unsupported membrane.

         Because of our membrane's organophobic and hydrophobic  properties,  we
tested its ability to operate in an oil/gas environment. We tested our nonporous
CMS-7 and an enhanced  microporous  PTFE  (e-PTFE)  sheet.  The gas flux of each
membrane was  measured and then they were  submerged in a vacuum pump oil for at
least two hours. The oil was then drained and the system was blown with air. The
change  in  performance  before  and  after oil  coating  for CMS-7 was  modest;
however,  the flux of the e-PTFE  dropped to zero when  exposed to oil.  We also
observed  breakthrough  of the vacuum pump oil with the e-PTFE.  This was due to
oil getting  into the pores of e-PTFE,  hindering  the flow of gas. By contrast,
oil could not pass through the non-porous,  organophobic, perfluoro CMS coating,
and never reached the  microporous  support.  The oil was easily washed from the
surface of the CMS-7 coated  membrane.  Similar  results were obtained  using an
air/oil aerosol.  These tests demonstrate the ruggedness and fouling  resistance
of CMS-7.

e) BIOCOMPATIBILITY  TESTING - We have also conducted  biocompatibility  testing
both in vitro and in vivo for the use of our membrane in extracorporeal membrane
oxygenators  (ECMO).  Platelet  adhesion  was studied in vitro using a perfusion
chamber to visualize  fluorescently  labeled  platelet  adhesion to CMS-7 coated
glass coverslips.  Whole blood from healthy,  non-medicated  donors was perfused
over the slides, and non-adherent  platelets were removed.  Platelet  deposition
onto CMS-7 coated  coverslips  was not  significantly  different  (p>0.05)  than
deposition  onto  uncoated  glass   coverslips   (controls).   To  evaluate  the
thrombogenicity  of the CMS-7  copolymer,  coated and uncoated  mini-oxygenators
were perfused with radiolabeled platelets. Platelet deposition onto CMS-7 coated
mini-oxygenators   was  less   than  that   measured   on   uncoated   (control)
mini-oxygenators. However, this difference was not significant (p>0.05).



                                       11


         In vivo biocompatibility of CMS-7 coating used in ECMO was tested using
calves.  In this experiment,  one coated and one uncoated  (control)  oxygenator
were tested in parallel for 24 hours. The surgical  procedure was well-tolerated
and the animals  recovered  rapidly.  All biochemical  indices of organ function
remained  stable.  Figures 4 and 5 summarize CO2 transfer results for the coated
and uncoated  membrane  oxygenators.  Similar  findings were obtained as regards
VO2.  However,  because  the  inlet  pCO2 for the data  shown  below is in close
conformity with AAMI standards for venous CO2 content during oxygenator testing,
VCO2 data are presented here for discussion. The trend regarding CO2 transfer in
uncoated,  HF  oxygenators  follows  the  usual,  well-documented  pattern  of a
dramatic loss in gas exchange capacity over a period of hours (15). On the other
hand, VCO2 in the CMS-7 coated membrane  oxygenator is virtually unchanged at 20
hours versus the very early perfusion time points.  Further, VCO2 for the coated
units at these same very early  times  matches  the CO2  transfer  rates for the
control.  This latter finding supports the in vitro data above regarding minimal
loss of mass  transfer  capability in HF covered with CMS-7.  Further,  the VCO2
data suggest that the  perfluoropolymer  may resist the fluid  infiltration  and
plasma  breakthrough  associated with currently  available hollow fiber membrane
oxygenators,  at least for the  duration of in vivo  perfusions  approaching  24
hours.

             Figure 4:                              Figure 5:


            [GRAPHIC]                               [GRAPHIC]

    Diagram of the Uncoated MO            Diagram of the Perfluoropolymer
  In Vivo Perfusion Time (Hours)                    Coated MO
                                          In Vivo Perfusion Time (Hours)


         We believe the improved oxygen flux delivered by a CMS-7 coated HF will
benefit hepatocytes used in BALs. Oxygenation will be bubbleless, and should not
damage cells.  The hepatocytes in BALs are especially  fragile because they have
been removed from their native  environment.  Any "protection" that can possibly
be provided to these cells will encourage  greater  viability and function.  The
coated  membrane is non-fouling  and resists liquid  penetrations,  so it should
outperform the commonly used  polypropylene  and silicone rubber,  where fouling
and wet out can be problematic.  Its ruggedness assures the ability to withstand
repeated sterilization for long term use. For these reasons, CMS-7 coated hollow
fiber membranes should improve the access of hepatocyte cells to oxygen, thereby
improving  their   viability  and  function,   and  the  modules  should  remain
operational  for longer  periods than  oxygenators  containing  uncoated  hollow
fibers.

7.  Technical Objectives
    --------------------

         The  overall  goals of this  program  are to  develop  and  test  CMS-7
membrane modules for O2 and CO2 transport for use as an in-series  oxygenator in
a BAL hepatocyte loop. We will demonstrate enhanced hepatocyte function compared
to use of oxygenators without the CMS-7 membrane. The key technical goals of the
Phase I program are:

1)   Design and fabricate CMS oxygenators using polypropylene CMS-7 membranes.



                                       12



2)   Demonstrate  that  the  CMS  oxygenator  permits  sufficient   microcarrier
     passage.
3)   Demonstrate   that  the  CMS  oxygenators  have  the  ability  to  transfer
     oxygen/carbon  dioxide into/from water and hepatocyte media at a rate equal
     or superior to that of oxyenators  without the CMS-7  membrane  (controls).
     Determine which type(s) and  configuration(s)  are most appropriate for use
     with the Sybiol(R) Bio-Liver Device.
4)   Demonstrate  that the CMS-7 coated  membrane has a broader  operating range
     (greater  resistance to bubble formation or wet out [liquid  penetrations])
     than uncoated polypropylene membranes.
5)   Demonstrate  short  term  performance  of the  CMS  oxyenator  assessed  by
     viability of a recirculating hepatocyte suspension.
6)   Demonstrate a significant  increase in primary porcine hepatocyte  function
     with the CMS  oxygenator  by using  the CMS  oxygenator  and the  Sybiol(R)
     Bio-Liver Device as compared to performance of control oxygenators.

     In Phase II, we will:

     a)   Conduct extensive  evaluations of hepatocyte function.  Long term (ten
          days)  performance will be a key goal. We look forward to working with
          MultiCell Associates, Inc. (MCA) and Exten Industries in this area.
     b)   Consider  using a human  hepatocyte  cell line developed by MCA and/or
          use of a medium with higher O2 carrying capacity for Phase II.
     c)   The Sybiol(R)  Bio-Liver  Device will be evaluated in vivo with use of
          the CMS  oxygenator  for  provision  of liver  support  function  in a
          well-documented large animal model.
     d)   Food and Drug  Administration  (FDA)  approval  will be secured  for a
          Phase I clinical trial for device safety.  This will set the stage for
          Phase III of the development, which will consist of Phase I and II FDA
          clinical  trial  assessment  of  the  device  for  safety,  dose,  and
          efficacy.


8.  Significance of Phase I Effort
    ------------------------------

         This Phase I effort is composed of three work  stages:  1)  Fabrication
and performance  evaluation of the CMS oxygenator,  2) Enhancement of hepatocyte
functional  viability when the CMS  oxygenator is used in  conjunction  with the
Sybiol(R)  Bio-Liver  Device,  and 3) Assessment of program results and planning
for Phase  II.  More  specifically,  Phase I will  demonstrate  our  ability  to
fabricate  CMS  oxygenators  by  applying  the CMS-7  membrane  to  commercially
available polypropylene hollow fiber modules. We will determine which type(s) of
modules and  membrane  configuration(s)  are most  appropriate  for use with the
Sybiol(R) Bio-Liver Device based on initial gas testing,  microcarrier  passage,
and  oxygen  flux  into  water  and cell  culture  media.  Furthermore,  we will
demonstrate  that  performance of these CMS  oxygenators is equal or superior to
comparable  oxygenators  without the CMS membrane (controls) in oxygen flux/mass
transfer.  Phase I will also  demonstrate  that  these HF with the CMS  membrane
provide a broader  operating range (greater  resistance to bubble  formation and
liquid  wet-out)  than uncoated HF PP. In addition,  HF with the CMS-7  membrane
will perform for a longer  duration  than fibers  without the  membrane  because
CMS-7 is non-fouling,  thus providing prolonged  function.  Thus, use of the CMS
oxygenator  will enhance  performance of hepatocytes in the Sybiol(R)  Bio-Liver
Device.  Prolonged BAL  performance  will provide the treatment the patient with
acute or chronic hepatic failure requires.


C.  RELEVANT EXPERIENCE

Dr. Nina Lamba (Principal Investigator) - Through her graduate and post-doctoral
studies,  Dr. Lamba developed an extensive knowledge of bioengineering,  and the
advancing field of tissue engineering. Recently appointed as the Director of the
Biomedical  Research  Division  of  Compact  Membrane  Systems,   Inc.,  she  is
overseeing  projects  to develop  oxygenation  devices  for  extracorporeal  and
intravenous  application  and an artificial  liver project based on a dual fiber
bioreactor.  These  programs are also funded  through the NIH SBIR program.  The
information  gathered  from  these  investigations  can be  directly  applied to
advance the development of membrane devices to oxygenate bioartificial organs.



                                       13


Dr. Stuart M. Nemser  (President - Compact Membrane Systems) - Dr. Nemser has 25
years   experience  in  the  development  and   commercialization   of  membrane
technologies.  Dr. Nemser identified and patented the family of PDD polymers for
separations.  Related to PDD-TFE  copolymer  development,  E.I. DuPont holds key
patents on the PDD monomer and  associated  polymers.  Dr.  Nemser has a strong,
close working relationship with the key DuPont groups and DuPont is committed to
exclusively  supplying Dr. Nemser with PDD-TFE  copolymers for evaluation in key
membrane separation  applications.  In his current position as President of CMS,
Dr. Nemser is focused on commercializing this family of PDD polymers.

Compact Membrane Systems,  Inc. - CMS is currently  involved in two key research
areas that relate directly to this program: 1) PDD-TFE copolymer development and
2) thin film membrane development. Markets where CMS is presently active include
membranes to facilitate oxygen transfer to blood and to an artificial liver, and
membranes  to  facilitate  ozone to water for  disinfection  of food  processing
plants and dental equipment.  We anticipate starting a BAL project on developing
a dual fiber bioreactor  (integral O2 verus the in-series  oxygenation  proposed
here)  shortly.   Compact  Membrane  Systems,   Inc.  has  also  made  excellent
commercialization  progress  since  receiving its first Phase II SBIR in the 4th
quarter of 1994.  Our  accomplishments  during the last five years  include  the
following:

(1)  Sales/royalties  have  doubled  each of the last four  years  and  exceeded
     $290,000 in 1999.
(2)  We have established a long term licensing and supplier  agreement with Pall
     Corporation  (sales of  $1,000,000,000).  This  agreement will be supplying
     between  $100,000 and $200,000  minimum annual royalty for their sales into
     the  semiconductor  market using our  chemically  resistant  bubbleless gas
     delivery system.  Equally important,  Pall Corporation has agreed to supply
     us with  membrane  systems.  This  now  provides  us  with a large  quality
     supplier to drive our technology into the semiconductor and other markets.
(3)  We have established a strong  relationship  with Praxair and their membrane
     subsidiary  Innovative  Membrane Systems,  Inc. (IMS).  Praxair is a global
     leader in  industrial  gases  ($5,000,000,000/yr)  and they provide us with
     excellent  market  access and  needed  module  manufacture.  CMS and IMS in
     collaboration  with a major industrial  diesel  manufacturer  have invested
     over $150,000 developing an improved CMS membrane.
(4)  We are commercially supplying  Celgard/Hoechst  standard degassing modules.
     Sales to date to Celgard/Hoechst have been in excess of $100,000. They have
     introduced  our  technology  as a separate  product line for  degassing low
     surface energy fluids.
(5)  Our portable membrane systems for supplying oxygen for respiratory care has
     been  developed  and  will be  submitted  shortly  for FDA  approval.  Five
     separate   companies   have   presented   proposals   to  CMS   for   joint
     commercialization  of this  technology.  One  company  (Chad  Therapeutics)
     commissioned a market research study that  identified a market  opportunity
     of $30,000,000 (20,000 units per year at $1500 per system).
(6)  E.I. DuPont, from whom we have licensed the original technology,  continues
     to show  interest in our  technology.  DuPont has provided CMS in excess of
     $100,000 of key  equipment  (e.g. GC and mass  spectrometer)  and access to
     other facilities (e.g. SEMs and computer  models).  They also have supplied
     us  with  research  materials  that  are  not  available   commercially  or
     developmentally.
(7)  We have filed nine  patents  and four have been  either  issued or allowed.
     These patents will provide us with a sustainable competitive advantage.



                                       14



Please refer to the Biographical  Sketches and Bibliography  section for details
on key personnel, including consultants.


D.  EXPERIMENTAL DESIGN AND METHODS

         The protocols described below will demonstrate the improved performance
achieved  with the  Sybiol(R)  system by improving the function of the in-series
oxygenator.  It is critical for CMS and its  collaborators  to demonstrate  such
advantages before moving to commercialization.

1.       Fabrication of CMS Oxygenators
         ------------------------------

         Compact   Membrane   Systems,   Inc.  (CMS)  will  fabricate   improved
oxygenators appropriate for use with the Sybiol(R) device. Subtasks include:

1. SELECT MODULES  APPROPRIATE  FOR USE WITH  MICROCARRIERS - The primary design
consideration  will be choosing a configuration  which will allow passage of the
hepatocyte  microcarriers.  Although  Phase I  hepatocyte  testing  will not use
microcarriers,  CMS  plans to  design  the  oxygenator  so  microcarrier  use is
possible.  Exten  Industries has used  microcarriers  in the past, but has found
that in a recirculating  system,  attachment is not necessary for function (42).
For future commercialization,  CMS believes that the ability to function with or
without microcarriers, for use with either Sybiol(R) or similar devices, will be
advantageous.  Typical  microcarriers  such as those  proposed for the Sybiol(R)
device are  150-200(mu)m  in  diameter.  This  requires  the  development  of an
oxygenator  which  will  not  entrap  microcarriers.  There  are  at  least  two
approaches  to avoid this  problem.  First,  we could use  modules  with a lower
packing density (fewer fibers per unit area) so microcarriers  could flow freely
on the outside (shell) of the fibers with oxygen/air on the inside (lumen).  The
second design option is to use large diameter  fibers so that the perfusate with
microcarriers  can pass  through the lumen with gas in the shell.  The former is
preferable  to obtain  higher mass  transfer  rates.  CMS has a number of module
options  available  to address  this  issue.  We plan to  purchase  commercially
available  polypropylene  (PP)  hollow  fiber (HF)  modules  from  Celgard  (see
attached letter).  In a routine process,  CMS currently applies the CMS membrane
to Celgard PP modules  for  commercial  sale by Celgard  for  industrial  liquid
degassing.  However,  for this BAL project we will require modules with either a
lower fiber packing density or a larger fiber inside diameter (ID).

         Although CMS does not anticipate  problems with availability of Celgard
modules in the  appropriate  configurations,  other  options are available to us
should the Celgard  modules not be feasible.  We have  experience  with in-house
fabrication of modules using commercially  available fibers, and have fabricated
such  modules  in a variety  of  configurations,  sizes,  and with a variety  of
different  fiber   materials  and  IDs.  In  addition,   recently  CMS  acquired
Intravenous Oxygenator (IVOX) fabrication equipment and will soon begin in-house
fabrication  for a Phase II NIH SBIR project.  This  equipment and the knowledge
gained from this project will be applicable to in-house module fabrication. This
would permit design and fabrication of either low packing density or large fiber
diameter modules.  CMS also has access to polysulfone  fibers in larger IDs with
the CMS membrane applied to the outside from Innovative  Membrane  Systems,  Inc
(IMS)(see attached letter).  Once the CMS membrane is applied to the polysulfone
support,  "wet  out" is no  longer a  problem.  Thus,  CMS  does not  anticipate
problems with obtaining the  appropriate  module  configurations  for oxygenator
fabrication.

2.  APPLY THE CMS  MEMBRANE  - Applying  the CMS-7  membrane  to HF modules is a
routine  procedure  at  CMS.  First  the  CMS-7  polymer  is  dissolved  in  the
appropriate perfluorosolvent,  then pushed through the module shell (for outside
coating) or fiber bore (for inside  coating).  The solution is then removed from
the module,  taking into  consideration  the need to remove all residual solvent
and polymer. After allowing the module to sit for an appropriate period of time,
the module is dried to remove any residual  solvent.  Our in-situ  technique for
applying the CMS  membrane  lends  itself to easy scale up and  multiplicity  of
production  units.  As shown in Tables 5 and 6, CMS is able to coat  either  the
inside or outside  of a variety  of module  types.  Key  variables  that we will
consider are coating solution concentration and in-situ coating conditions, such
as solution  pressure and flow rate.  We will focus on assuring that there is no
significant   change  in  fiber  ID  while  developing  high  transmembrane  gas
transport.   We  will  also  be  sensitized  to  any  issues   associated   with
biocompatibility and potential system leaks.



                                       15


3. TEST  GAS/GAS  PERFORMANCE  OF  MODULES  - After  these  membranes  have been
fabricated,  we will do initial  non-destructive,  in-house,  gas-gas testing to
determine  if these  modules  are  meeting  our  target  performance  goals.  We
routinely use  oxygen/nitrogen  selectivity and membrane  thickness  (calculated
based on nitrogen GPUs, Gas Permeation Units) to establish membrane quality.

4. TEST PERFORMANCE WITH MICROCARRIERS - Successfully fabricated modules will be
tested for performance  with unseeded  microcarriers  to visualize  microcarrier
flow  patterns.  Using a dye to  color  the  microcarriers  will  make  tracking
microcarrier flow easier.  This subtask will allow us to determine which modules
will perform  best with the  microcarriers.  If any problems are noted,  we will
consider other module sources and configurations.  The best performing module(s)
will be used for mass transfer testing in Task 2.


2.       Testing of Oxygen Flux of CMS Oxygenators
         -----------------------------------------

         Modules successfully fabricated in Task 1 will be used for initial mass
transfer testing to determine oxygen flux and operating range.  With the current
silicone  rubber-based  passive oxygenation system used for in Sybiol(R) device,
control of oxygen flux is not possible.  For each module type or configuration a
comparable module without the CMS membrane will be used as a control.

         Initial oxygen flux testing will use an oxygen sweep on the unsupported
(no CMS-7  membrane)  side of the PP fibers and water on the  supported/membrane
side.  The rate of oxygen  uptake  with time and the mass  transfer  coefficient
(K1a) will be measured.  In our studies, we focus on oxygen transfer rather than
carbon  dioxide  transfer,  because if O2  transport  is  optimized,  the faster
permeating  CO2 will be maximized as well.  The pressure will be kept low enough
to prevent bubbling.  Water and media flow rate will be similar to the flow rate
currently  used  for the  Sybiol(R)  system,  and we will  vary  oxygen  flow to
determine  optimal  flow  rate  and  pressure.   In  testing  conducted  for  an
aquaculture  project, CMS observed that oxygen removal from water did not differ
significantly  between  modules  with and  without  the CMS  membrane,  but that
differences could be observed between manufacturers. We are currently developing
oxygen mass transfer  testing as a means to determine  membrane  suitability for
gas/liquid  applications,  so it is appropriate  to include such testing.  After
preliminary  tests with water, we will repeat these tests using Chee's essential
media,  the cell  culture  media we will  use for the  hepatocytes.  To test the
operating  range,  the gas  pressure  will be increased  and a suitable  surface
wetting agent will be added. Increased pressurization tends to cause fouling and
wet out (liquid  penetrations)  with  uncoated PP. The  experiment  will then be
rerun as described above.  With this task, we will  demonstrate  which module(s)
provides  the most  appropriate  oxygen  flux  into  water and  media,  and what
conditions (ie oxygen flow rate and pressure) are needed.


3.       Hepatocyte Isolation
         --------------------

         Primary porcine hepatocytes will be isolated by established  techniques
(27).  Briefly,  a  modification  of  Seglen's  two step  collagenase  digestion
procedure will be used.  Female  Yorkshire swine (~12 kg) will be  anesthetized,
intubated,  and supported with supplemental  oxygen. The liver perfusion will be
performed in situ under sterile  conditions.  The liver will be perfused via the
vena cava with a calcium  free buffer until clear of blood.  Collagenase  buffer
solution will be perfused until the liver is visibly  digested and then excised.



                                       16


The liver will be minced  gently and washed  three  times with an iced  buffered
salt solution and sedimented by centrifugation. The final hepatocyte slurry will
be resuspended in supplemented Chee's essential media (Gibco,  GrandIsland,  NY)
to a concentration  of ~35 x 10(6) cells/ml.  Typical  hepatocyte  yield is 17 x
10(9)  at  85%  viability.  Porcine  hepatocytes  have  been  chosen  for  these
investigations based on the following:

1.  MultiCell  Associates  (MCA) has nearly 10 years of experience  with porcine
hepatocytes  having  developed in vitro growth and maintenance  requirements and
developed   proprietary   procedures   for   their   isolation,    culture   and
cryopreservation.

2. Porcine hepatocytes are the cell of choice in most ongoing clinical trials of
temporary liver support  systems.  Vitagen,  Inc. uses their  proprietary  human
tumor-derived  C3A  cell  line,  which  in a study  comparing  them  to  porcine
hepatocytes in vitro expressed much lower detoxification functions.

3. Human hepatocytes,  while theoretically  optimal,  are in limited supply. The
scarcity of donor human livers for transplantation severely limits the potential
to procure human  hepatocytes  in  commercially  feasible  numbers for temporary
liver support systems. In addition,  the function of human hepatocytes is highly
variable. Specifically, enzymatic function decays substantially within the first
24-48 hours after cell isolation.

         Unlike porcine  hepatocytes,  the  methodologies  to procure and freeze
large quantities of human  hepatocytes have not been well  established.  MCA has
tested human hepatocyte  cultures produced by  Biowhittaker/Clonetics,  S. Strom
and  others but found them to be of poor  quality,  with no P450  detoxification
expression  in vitro.  Currently,  we feel they are a poor choice of cell to use
for liver assist device design and  optimization.  Rat hepatocytes would be more
readily  available and far less costly than pig, but in our  experience and that
of others they can not be easily  scaled-up to clinical  size  devices,  are not
representative  of either human or porcine  hepatocyte  function;  and have very
different  requirements  for in  vitro  maintenance  than  either  pig or  human
hepatocytes.  MCA is developing an immortalized  nontumorigenic human hepatocyte
cell  line  which  may be  used in  future  studies,  however,  their  stage  of
characterization  makes it premature to use. The zoonotic concerns raised by the
use  of  porcine  hepatocytes  remain  unresolved.  The  findings  that  porcine
endogenous  retrovirus (PERV) (Patience,  et al., 1997) could infect human cells
in vitro led to a moratorium on clinical trials  involving  porcine tissue.  The
FDA is now examining each clinical trial on a case-by-case basis and has allowed
many to go forward including the Phase III pivotal of Circe Biomedical's porcine
hepatocyte-based  extracorporeal liver support system,  "HepatASSIST." Among the
requirements for these studies to continue are the archiving donor and recipient
sera and tissues and patient  follow-up  protocols.  While France and the United
Kingdom are still on clinical holds,  clinical  trials have been  reactivated in
Holland,  Germany,  Italy,  and  Belgium.  While the debate  continues,  we must
proceed  cautiously under the prevailing  guidelines and regulations of the FDA,
but we should not rule out the clinical use of  porcine-derived  hepatocytes  at
this time.


4.       In Vitro CMS Oxygenator Performance with Recirculating Hepatocytes
         ------------------------------------------------------------------

         The  Sybiol(R)  Bio-Liver  Device,  as  described  in section  B.2. and
diagrammed  in  Figure  1, is  based on  recirculation  of  hepatocyte  cells in
suspension.  Preliminary  tests  will  include a  recirculating  loop of primary
porcine  hepatocytes  isolated as described above with oxygen delivery  provided
in-series  by the CMS  oxygenator.  This will allow for initial  cell  viability
testing before  integrating with the entire  Sybiol(R)  Bio-Liver Device to test
detoxification  function.  In  all  experiments,   monloayer  cultures  will  be
established  as controls,  maintained  and tested in parallel to the  bioreactor
cultures to ascertain viability of the isolated hepatocyte population. To reduce
the number of animals needed for this study,  only the most promising one or two
CMS oxygenators will be used for this testing. We may also choose to use smaller
scale/lower volume systems for these test.

         In these studies,  the freshly  isolated cells will be inoculated  into
Chee's  modified  media at a  density  of 35 x 10(6)  hepatocytes/cc  of  system
volume. Initial viability will be assessed with Trypan Blue staining.  Viability
of the  hepatocytes  will be  monitored  over  the  culture  period  by  lactate
dehydrogenase (LDH) leakage into the media  reservoir.(35)  Assay of LDH leakage
offers a non-invasive  method to evaluate plasma membrane  integrity  confirming
that  metabolism of the test substrate is not due to  "persistence of microsomal
activity in non-viable cells."



                                       17


         Morphologic  evaluation  of the  hepatocytes  maintained  will  also be
performed by sampling the cell culture media at regular intervals.  Samples will
be extracted and the cells evaluated using  fluorescein  diacetate and propidium
iodide labeling to detect viability by fluorescence microscopy. We recognize the
critical  importance  of the multiple in vitro  environmental  factors which can
influence  cell  function  beyond  simple  oxygenation.  In fact,  in an  effort
supported by Circe Biomedical to develop the biological component of their liver
support   system.(36,37);   MCA  scientists  have  studied  media  formulations,
substrate  requirements,  and other conditions of porcine  hepatocyte culture to
develop proprietary methods for their isolation,  culture,  and cryopreservation
(USPN5,795,711; USSn 08/5,411,462).

         A key objective of this program is to use our high gas flux  non-porous
membranes  to supply  needed  dissolved  oxygen in order to maintain  hepatocyte
viability.  If  cell  viability  is  not  maintained  by the  testing  procedure
described  above we will first  consider  exploring  other  types of modules and
membrane   configurations   available   to  address  this   problem.   If  these
modifications  are not successful we will consider media related  modifications.
Previous studies using rat hepatocytes  showed Chee's media supported pO2 levels
up to 100 mmHg.  We will soon begin a similar NIH SBIR project on  bioartificial
livers (based on a dual fiber  bioreactor)  that should address issues of oxygen
carrying capacity of the media; thus, for this project, we will have established
the media  limitations and requirements.  Nevertheless,  if higher O2 levels are
necessary  for  porcine  hepatocytes,  we  will  explore  the  incorporation  of
hemoglobin and/or  perfluorinated  species to improve oxygen carrying  capacity.
(38,39)


5.       In Vitro CMS Oxygentator Performance with the Sybiol(R) System
         --------------------------------------------------------------

         The CMS oxygenator  will be placed in line with the complete  Sybiol(R)
Bio-Liver  Device (see Fig. 1),  including the HF cartridge  that acts as a cell
culture media/blood interface.  Before using the device for patients, trial runs
are recommended to test the hepatocyte  suspension  quality.  Standard operating
procedures  for these trials will be the model for this  task.(40) The Sybiol(R)
will be filled with 250ml of hepatocyte  suspension in the hepatocyte loop, with
300ml of albumin  solution or frozen plasma in the blood loop,  functioning in a
"closed loop"  configuration.  A stock solution of 100 mM ammonium chloride will
be prepared,  and 5.5ml will be added to the blood loop. Urea production will be
measured. Three additional substrates will be used: acetaminophen,  diazepam and
7-ethoxycoumarin  (7-EC).  (Refer to the  "Significance"  section for details on
hepatocyte  function).  Levels of albumin (a  hepatocyte  specific  protein)  in
culture  media will also be measured  by ELISA.  Diazepam  (50 ug/ml),  7-EC (50
mg/mL),  and  acetaminophen  (5mM)  will  be  added  to the  blood  loop.  These
preliminary  tests will last 6-8 hours.  Prior testing with the Sybiol(R) device
has  demonstrated  sufficient urea  production (83% of ammonium  chloride added)
after six hours (40).  The cultures will be incubated  with the test  substrates
for three hours,  at which time media  samples  will be collected  from each and
stored at -30(degree)C  for later assay.  Diazepam and 7-EC  metabolites will be
analyzed by high  performance  liquid  chromatography  (HPLC) methods  described
previously by Jauregui et al (33). Acetaminophen will also be determined by HPLC
(34).  The conversion of ammonia to urea will be measured by a kit assay (Sigma,
St Louis,  MO). As with Task 4 we will  monitor  hepatocyte  viability  over the
culture period by lactate  dehydrogenase (LDH) leakage into the media reservoir.
Monolayer  cultures  will be  established  as controls to  ascertain  functional
integrity of the isolated hepatocyte population.

         Performance of the oxygenation  fibers (based on ability to deliver the
required oxygen, resistance to breakthrough, etc.) will also be monitored during
testing. If possible, once testing is complete, the oxygenators will be returned
to CMS for oxygen  transfer  rate  testing to see if any changes  have  occurred
while the oxygenators were in use. Results will be statistically  analyzed using
ANOVA and student's t test.




                                       18


6.   Evaluation of Results and Preparation for Phase II
     --------------------------------------------------

         Success will be  determined  by our ability to fabricate  polypropylene
hollow fiber modules  appropriate  for  oxygenation  of the Sybiol(R)  Bio-Liver
Device that do not severely inhibit microcarrier passage and that provide oxygen
transfer  equal or  superior  to that of  comparable  modules  without the CMS-7
membrane.  We will  demonstrate  that,  when  the  Sybiol(R)  system  is used in
conjunction  with the CMS  oxygenator,  hepatocyte  viability is  comparable  or
superior to that of cells  oxygenated  with  control  oxygenators.  We will also
demonstrate  that the CMS  oxygenator  significantly  enhances  primary  porcine
hepatocyte  phase 1 and 2  detoxifications  when the CMS  oxygenator  is  placed
in-series in the Sybiol(R) system. Furthermore, we will demonstrate that the CMS
oxygenator  provides  longer term  performance  due to resistance to wet out and
fouling.  This  will set the  stage  for  Phase  II,  which  will  include  more
comprehensive  short-term  testing of primary and immortalized  hepatocytes (MCA
has  developed  a cell line that  functions  best in  suspension),  longer  term
functionality  tests,  and in vivo  animal  trials.  Working  with MCA and Exten
Industries will be important factors in determining project success.




 Timeline of Scheduled Tasks and Responsibilities:
 -----------------------------------------------------------------------------------------------------------
                Tasks                                          Months                        Key
                                           1   2   3   4   5    6   7   8   9   10  11   12  Responsibility
 -----------------------------------------------------------------------------------------------------------
 1) Fabricate Oxygenators                  ---------->                                       CMS
 2) Oxygen Mass Transfer Testing                      ------->                               CMS
 3) Hepatocyte Isolation                                      -------->                      MCA
 4) Test with recirculating hepatocytes                           ---------------->          MCA
 5) Test with Sybiol(R)                                                         ---------->  MCA/Exten
 6) Plan Phase II                                                                      ----> CMS/MCA/Exten
 -----------------------------------------------------------------------------------------------------------


F.  VERTEBRATE ANIMALS

MCA's (Dr. Jauregui) primary facility (~ 4500 sq ft.) is located in Warwick,  RI
where  activities  focus on the  development  of human  origin  cell  lines  for
therapeutic  and  diagnostic  applications.  Additionally  MCA has a contractual
agreement  with Rhode  Island  Hospital  (RIH)  leasing ~750 sq ft of office and
laboratory  space for their porcine  hepatocyte-based  activities.  Through this
agreement,  MCA has access to RIH's AALAC  accredited  Central  Animal  Facility
which includes sterilization,  surgical, and husbandry facilities. Additionally,
the  RIH-MCA  agreement  provides  for MCA  access  to  numerous  Core  Research
Laboratory  services  including:  electron  microscopy,  digital  imaging,  flow
cytometry  etc. on a fee for service  basis.  MCA  anticipates  IACUC review and
approval of the animal procedures  described in this Phase 1 SBIR proposal to be
completed by May 2000.


G.  CONSULTANTS - See attached letters


H.  CONTRACTUAL AGREEMENTS

         Contractual  agreements have been established with Dr. Hugo Jauregui of
MultiCell Associates, Inc. and Barbara Corbett of Exten Industries.


I.  LITERATURE CITED

1.   Bonn, D. Hybrid devices offer hope for the failing liver.  The Lancet.  Nov
     16, 1996. 348(9038): 1372(1).
2.   Rotem, A, M Toner, S Bhatia, BD Foy, RG Tompkins, ML Yarmush.  1994. Oxygen
     is a factor determining in vitro tissue assembly: Effects on attachment and
     spreading of hepatocytes. Biotechnol Bioeng. 43:654-660.
3.   Sussman,  NL, JH Kelly.  1996.  Artificial liver support.  Clin Invest Med.
     19(5):393-99.



                                       19


4.   Jauregui,  HO, C.J-P Mullon, BA Solomon.  1997.  Extracorporeal  artificial
     liver support.  Chapter 30. In Principles of Tissue Engineering.  RP Lanza,
     et al. R. G. Landes Co. Austin, TX: 463-479.
5.   Qiang, S, Y Yaotiong, L Hongyin, H Klinkmann.  1997. Comparative evaluation
     of different  membranes for the construction of an artificial liver support
     system. Int J Artif Org. 20(2):119-124.
6.   Gerlach, JC, N Schnoy, J Vienken, M Smith, P Neuhaus.  1996.  Comparison of
     hollow fibre membranes for hepatocyte immobilisation in bioreactors.  Int J
     Artif Org. 19(10):610-616.
7.   Gerlach, JC. 1996.  Development of a hybrid liver support system: a review.
     Int J Artif Org 19(11):645-654.
8.   Catapano, G. 1996. Mass transfer limitations to the performance of membrane
     bioartificial liver support devices. Int J Artif Org 19(1):18-35.
9.   Flendrig, LM, AA TeVelde, RAFM Chamuleau.  1997. Semipermeable hollow fiber
     membranes  in  hepatocyte  bioreactors:  A  prerequisite  for a  successful
     bioreactor? Artif Org. 21(11): 1177-1181.
10.  Nishikawa,  M, J Uchino,  M Michiaki,  M Takahashi,  K Taguchi,  M Koike, H
     Kamachi,  H Kon. 1996.  Optimal oxygen tension  conditions for  functioning
     cultured hepatocytes in vitro. Artif Org. 20(2):169-77.
11.  Smith, MD, DE Cairns, R Veitch, RB Cousins,  JDS Gaylor.  1997. Analysis of
     oxygen transfer in hollow fibre hepatocyte  bioreactors.  Artif Org. 21(6):
     531(219).
12.  Gerlach,  J, K Kloppel,  P Stoll,  J Vienken,  C Muller.  1990.  Gas supply
     across  membranes  in  bioreactors  for  hepatocyte  culture.   Artif  Org.
     14(5):328-333.
13.  Smith, MD, D Cairns,  JM Courtney,  RB Cousins,  MH Ekevall,  MH Grant, JDS
     Gaylor. 1997. Characterisation of a hybrid artificial liver bioreactor with
     integral membrane oxygenation. Artif Org. 21(6): 531 (220).
14.  Gerlach,  JC, J Encke,  O Hole,  C Muller,  JM Courtney,  P Neuhaus.  1994.
     Hepatocyte culture between three  dimensionally  arranged  biomatrix-coated
     independent  artificial  capillary systems and sinusoidal  endothelial cell
     co-culture compartments. Int J Artif Org. 17(5):301-306.
15.  Cheng,  BT, EF Leonard.  1995.  Light  microscopic  visualization of plasma
     intrusion into microporous HF's. ASAIO J. 41:863-872.
16.  Kasai,  S, M  Sawa,  M  Mito.  1994.  Is the  biological  artificial  liver
     clinically  applicable?  A historic review of  bioartificial  lvier support
     systems. Artif Org. 18(5):348-354.
17.  Miller, WM, HW Blanch. Regulation of animal cell metabolism in bioreactors.
     In  Animal  Cell  Bioreactors.   Eds.  CS  Ho,  DIC  Wag.   Stoneham,   MA:
     Cutterworth-Heinemann, 1991. 127.
18.  Peng, HA, BO Palsson.  1996.  Determination of specific oxygen uptake rates
     in human hematopoietic cultures and implications for bioreactor design. Ann
     Biomed Engin. 24:373-381.
19.  Smith,  MD, AD Smirthwaite,  DE Cairns,  RB Cousins,  JD Gaylor.  Jan 1996.
     Techniques  for  measurement  of oxygen  consumption  rates of  hepatocytes
     during attachment and post-attachment. Int J Artif Org. 19:1, 36-44.
20.  Graham, M. 1998.  Testing a CMS-coated  gas-exchange  cartridge in a hollow
     fiber system. Cellex Biosciences. Personal communication.
21.  Ash, SR. Aug 1998. Hemocleanse, Inc. Personal communication.
22.  Rotem, A, M Toner, RG Tompkins,  ML Yarmush.  1992.  Oxygen uptake rates in
     cultured rat hepatocytes. Biotech and Bioengin. 40:1286-1291.
23.  Algenix, Inc. 1998.  Company Profile.   [http://wsh2.cems.umn.edu/Algenix2/
     page2.html]
24.  Majumdar,  S, KK Sirkar. 1992.  Hollow-fiber  contained liquid membrane. In
     Membrane Handbook. WSW Ho, KK Sirkar. Chapman & Hall, NY.
25.  Jauregui,  HO, S Naik, H  Santaggini,  J Pan, D Trenkler,  C Mullon.  1994.
     Primary  cultures of rate  hepatocytes in hollow fiber  chambers.  In Vitro
     Cell Dev Biol. 30A:23-29.



                                       20


26.  Liu J, P Jing, S Naik, H Santangini,  D Trenkler,  N Thompson,  A Rifai, JR
     Chowdhury,  HO Jauregui.  Characterization and evaluation of detoxification
     functions of a Nontumorigenic  Immortalized  Hepatocyte Cell Line (HepLiu).
     Submitted to Cell Transplantation, 1998.
27.  S Naik. 1996.  Isolation and culture of porcine  hepatocytes for artificial
     liver support. Cell Trans. 5(1) 107-115.
28.  Basile,  AS, EA Jones, P Skolnick.  1991. The pathogenesis and treatment of
     hepatic  encephalopathy:  Evidence for the  involvement  of  benzodiazepine
     receptor ligands. Pharmacol. Rev. 43:27-71.
29.  Butterworth,  RF, JE Gigu6re,  J Michaud,  J Lavoie,  GP Layrargues.  1987.
     Ammonia:  Key  factor  in  the  pathogenesis  of  hepatic   encephalopathy.
     Neurochem. Pathol. 6:1-12.
30.  Clayton, DF, M Weiss, JED Darnell.  1985.  Liver-specific RNA metabolism in
     hepatoma cells:  Variations in  transcription  rates and MRNA levels.  Mol.
     Cell. Biol. 5:2633-2641.
31.  Kaplowitz,  N. Drug metabolism and hepatotoxicity.  In: Kaplowitz,  N., ed.
     Liver and Biliary Diseases. Baltimore: Williams & Wilkins; 1992:82-97.
32.  Reid,   LM,  DM   Jefferson.   1984.   Culturing   hepatocytes   and  other
     differentiated cells. Hepatology. 4:548-559.
33.  Jauregui,  HO, SF Ng, KL Gann,  DJ Waxman.  1991.  Xenobiotic  induction of
     P-450 PB-4 (11B1) and P-450c (1A1) and associated  monooxygenase activities
     in primary cultures of adult rat hepatocytes. Xenobiotica. 21:1091-1106.
34.  Colin,  P,  G  Sirois.  1986.  Simultaneous   determination  of  the  major
     metabolites of styrene and acetominophen, and of unchanged acetominophen in
     urine by ion-pairing high-performance liquid chromotography. J. Chromatogr.
     377:243-251.
35.  Jauregui, H.O., Hayner, N.T., Driscoll, J.L., Williams-Holland, R., Lipsky,
     M.H., Galletti, P.M. 1981. Trypan blue dye uptake and lactate dehydrogenase
     in adult rat hepatocytes - freshly isolated cells,  cell  suspensions,  and
     primary monolayer cultures. In Vitro 17)12):1100-1110.
36.  Jauregui, H.O., Naik, S., Santangini, H.A., Trenkler, D.M., Mullon, C.J.-P.
     The use of microcarrier-roller bottle culture for large-scale production of
     porcine hepatocytes. Tissue Engineering 3(1):17-25; 1997.
37.  Naik, S., Santangini, H.A., Trenkler, D.M., Mullon, C.J.-P., Solomon, B.A.,
     Pan, J., Jauregui,  H.O. 1997.  Functional  recovery of porcine hepatocytes
     after hypothermic or cryogenic preservation for liver support systems. Cell
     Transplantation 6(5):447-454.
38.  Lowe, KC; Davey MR, Powell JB 1998 "Perfluorochemicals:  Their applications
     and benefits to cell culture; Trends in Biotechnical; June (6) 272-7
39.  Smith,  MD,  Smirthwaite,  Ad,  Cairns  DE,  Cousins  RB,  Gaylor  JD 1996.
     "Techniques  for  measurement  of oxygen  consumtion  rates of  hepatocytes
     during  attachment  and post  attachment;  J. of Artificial  Organs,  19/1:
     36-44.
40.  Teca SOP No. 96-01 for Sybiol. Section 4, pg. 4-10.
41.  Macdonald,  JM, Griffin, JP, Kubota, H, Griffith, L, Fair, J, and Reid, LM.
     "Chapter 21: Bioartificial Livers." 252-286.
42.  Bhatia,  SN, MD, PhD. March 2000.  Assistant  Professor of  Bioengineering,
     Division of  Gastroenterology/Hepatology,  University  of  California,  San
     Diego. Personal communication.





                                       21

EX-10

                                                                   EXHIBIT


                           LOAN AND SECURITY AGREEMENT


         This  Loan  and  Security  Agreement  (this  "Agreement"),  dated as of
(date), is entered into between the LENDERS  IDENTIFIED HEREIN (each, a "Lender"
and collectively,  "Lenders") and EXTEN INDUSTRIES,  INC. ("Borrower") as of the
date first set forth above. The above information is subject to all of the terms
and conditions of this Agreement. The parties agree as follows:

         1.       Loan and Payments.  The Lenders are concurrently  making loans
                  -----------------
(collectively,  the "Loan") to Borrower in the amounts and percentages set forth
opposite the  respective  Lender's  name on Schedule I hereto,  in the aggregate
principal amount of up to $(amount).  This Agreement acknowledges the receipt of
$(amount) from Lendor on this date. The Lenders  acknowledge  and agree that the
Loan  will be used by  Borrower  to  acquire  the  capital  stock  of  MultiCell
Associates,  Inc.  ("MultiCell").  The Loan may be prepaid  at any time  without
penalty, but the Loan may not be repaid and reborrowed.

                  (a)      Conditions Precedent.  Notwithstanding any provisions
                           --------------------
herein to the contrary,  unless waived by the Lenders, the Loan will not be made
hereunder  until (i) all  filings  have been  completed  that are  necessary  or
appropriate  to  perfect  the  security  interest  of  Lenders in the Shares (as
defined below); (ii) Lenders have received all documents reasonably requested by
Lenders in connection  with this  Agreement,  including the warrants to purchase
stock referred to below;  and (iii) all other matters  relating to the Loan have
been completed to Lenders' satisfaction.

                  (b)      Interest. Borrower shall pay interest on the Loan and
                           --------
other monetary Obligations at a fixed rate equal to ten percent (10%) per annum.
Interest  shall be  calculated  on the  basis of a 360-day  year for the  actual
number of days elapsed, and shall be due and payable on the Maturity Date.

                  (c)      Voluntary Conversion. Each Lender may convert the pro
                           --------------------
rata portion of the outstanding principal balance of the Loan, together with all
accrued but unpaid interest, owing to such Lender, and no less than such amount,
into  Borrower's  Common Stock,  at the option of such Lender,  on the terms and
conditions set forth herein.

         If any Lender elects to exercise its right to convert, then such Lender
must give written  notice of its  intention to convert not less than thirty (30)
days prior to the date of such intended conversion.

         In the event that a Lender  exercises the  conversion  right  described
herein,  it shall receive  Borrower's Common Stock at a price per share equal to
(i) $.10,  if  converted  during the first  twelve (12) months after the date of
this Agreement; (ii) $.15, if converted after the twelfth (12th) and through the
twenty-fourth (24th) month of this Agreement; and (iii) $.20, if converted after
the  twenty-fourth  (24th) month and prior to the  Original  Maturity  Date.  No
fractional shares will be issued upon such conversion; in lieu of any fractional
share to which a Lender would  otherwise be entitled,  the Borrower will pay the
cash value of such fractional share to the Lender.

         Upon conversion of the Loan pursuant hereto,  the Lender,  by execution
hereof,  agrees  to  deliver  to the  Borrower  the  executed  original  of this
Agreement,  marked "cancelled," within thirty (30) days of such conversion,  and
to execute a standard form of Stock Purchase  Agreement and other  agreements as
are  necessary to document the issuance of the Common  Stock.  On, or as soon as
reasonably practicable after, such conversion and execution,  the Borrower shall
issue and deliver to such Lender a certificate or certificates for the number of
Common Stock to which the Lender is entitled and a check or cash with respect to
any fractional interest in any share of Common Stock.




         If the Borrower declares or pays a dividend on its common stock payable
in common stock, or other securities, or subdivides the outstanding common stock
into a greater amount of common stock, then upon conversion of the Loan pursuant
hereto,  for each share of Common  Stock  acquired,  the Lender  shall  receive,
without cost to the Lender, the total number of Common Stock to which the Lender
would have been  entitled  had the Lender owned the Common Stock of record as of
the  date the  dividend  or  subdivision  occurred.  Upon any  reclassification,
exchange, substitution, or other event that results in a change of the number of
the securities  issuable upon conversion hereof, the Lender shall be entitled to
receive,  upon conversion hereof, the number of securities that the Lender would
have  received for the Common Stock if the Loan had been  converted  immediately
before  such  reclassification,  exchange,  substitution,  or other  event.  The
Borrower shall not, by amendment of its Certificate of  Incorporation or through
a reorganization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities or any other voluntary action,  avoid or seek to avoid the
observance  or  performance  of any of the  terms to be  observed  or  performed
hereunder by the Borrower.

                  (d)      Warrants.  Borrower is  concurrently  issuing to each
                           --------
Lender a Warrant to Purchase Stock on the terms and conditions set forth therein
(the "Warrant").

                  (e)      Maturity  Date;  Extension.  All amounts  outstanding
                           --------------------------
hereunder are due and payable on June 19, 2005 (the "Original  Maturity  Date").
However,  provided that an Event of Default does not exist or is not continuing,
Borrower  may  extend the  Original  Maturity  Date for one (1) ninety  (90) day
period (the "Extended  Maturity  Date") by providing the Lead Lender (as defined
in Schedule I hereto),  at least thirty (30) days prior to the Original Maturity
Date, with written notice that Borrower  wishes to extend the Original  Maturity
Date.  Extensions of the Extended  Maturity Date, if any, may be provided in the
sole discretion of the individual Lenders.

                  (f)      Late Payment. If any payment of interest or any other
                           ------------
amount  owing to  Lenders  is not made  within ten (10) days after the due date,
Borrower  shall pay Lenders a late  payment fee equal to the lesser of 2% of the
amount of such late payment or the maximum  amount  permitted by law.  After the
occurrence and during the  continuance of an Event of Default,  the  Obligations
shall bear  interest at a rate equal to the greater of 15% per annum or 5% above
the rate  otherwise  applicable  under this  Agreement.  The  provisions in this
paragraph  shall not be construed as Lenders'  consent to Borrower's  failure to
pay any amounts in strict accordance with this Agreement.

         2.       Grant of Security  Interest.  Effective  immediately  upon the
                  ---------------------------
acquisition  by  Borrower  of  the  issued  and  outstanding  capital  stock  of
Multi-Cell  (the "Shares"),  Borrower  grants the Lead Lender,  as agent for the
Lenders on a pari passu and pro rata basis according to the Lenders'  respective
percentage of the Loan, a security  interest in and to the Shares (the "Shares")
to secure the following (the  "Obligations"):  the obligation to repay the Loan,
and all other debts, liabilities,  obligations, guaranties, covenants and duties
now or hereafter owing by Borrower to Lenders, of any kind or nature, whether or
not evidenced by any note,  guaranty or other instrument,  whether arising under
or in connection with this Agreement,  or any other present or future instrument
or  agreement,  whether  arising  by reason of an  extension  of  credit,  loan,
guaranty,  indemnification or in any other manner.  Borrower shall take all such
actions as Lenders  reasonably  request from time to time to perfect or continue
the perfection of the security interest granted  hereunder,  including  physical
delivery to the Lead Lender,  as agent for the Lenders,  of the  certificate  or
certificates for the Shares

         3.       Representations and Warranties. Borrower represents to Lenders
                  ------------------------------
as  follows  (which  shall  be  deemed  continuing  throughout  the term of this
Agreement):

                  (a)      Authorization.  Borrower is and will  continue to be,
                           -------------
duly  organized,  validly  existing and in good  standing  under the laws of the
jurisdiction  of its  incorporation,  and  Borrower  is and will  continue to be
qualified and licensed to do business in all  jurisdictions in which any failure
to do so would have a Material  Adverse  Effect;  the  execution,  delivery  and
performance by Borrower of this Agreement,  and all other documents contemplated
hereby have been duly and validly authorized by all necessary  corporate action,
and do not violate  Borrower's  articles or  certificate  of  incorporation,  or
by-laws,  or any law or any material  agreement or  instrument  which is binding
upon Borrower or its property.

                  (b)      Title to Shares;  Permitted Liens. After consummation
                           ---------------------------------
of the acquisition of the Shares,  Borrower will own the Shares,  free of liens,
claims and interests of any kind.

                  (c)      Other  Indebtedness.  A  promissory  note was entered
                           -------------------
into on November 30, 2000, in which Borrower,  for value  received,  promised to
pay The Cooke  Family  Trust  ("Cooke")  the  principal  amount of Five  Hundred
Thousand  Dollars  ($500,000)  together with interest at the rate of ten percent
(10%) on May 31, 2001 (the  "Note").  Subsequently,  Borrower and Cooke  entered
into that  certain  Forbearance  and Payoff  Agreement  dated May 11,  2001 (the
"Payoff Agreement"),  wherein Cooke agreed to forbear from declaring any default
under the Note in exchange  for certain  payments by Borrower to Cooke to payoff
the Note more specifically described in the Payoff Agreement.



                                       2



         4.       Intellectual  Property.  Borrower  shall cause  Multi-Cell  to
                  ----------------------
execute  and deliver to Lenders an  Intellectual  Property  Security  Agreement,
granting  Lenders the rights set forth  therein,  including but not limited to a
security interest in Multi-Cell's intellectual property.

         5.       Appointment of the Lead Lender; Related Matters.
                  -----------------------------------------------

                  (a)      Each Lender  irrevocably  appoints the Lead Lender as
its agent for the  purposes of this  Agreement  and  authorizes  the Lead Lender
(whether or not by or through  employees  or agents) to take such action on such
Lender's behalf and to exercise such rights, remedies, powers and discretions as
are specifically  delegated to the Lead Lender by this Agreement,  together with
such powers and  discretions  as are  reasonably  incidental  thereto.  The Lead
Lender shall not,  however,  have any duties,  obligations or liabilities to the
Lenders beyond those expressly stated in this Agreement.

                  (b)      No  Liability  of the Lead  Lender.  The Lead  Lender
                           ----------------------------------
shall not be liable to any Lender for any  action  taken or omitted  under or in
connection with this Agreement  unless caused by its gross negligence or willful
misconduct.

                  (c)      Reimbursement   and  Indemnity.   Each  Lender  shall
                           ------------------------------
reimburse  the Lead Lender  (ratably in  accordance  with such Lender's pro rata
proportion of the Loan), to the extent that the Lead Lender is not reimbursed by
the  Borrower,  for the  charges  and  expenses  incurred  by the Lead Lender in
connection  with the  contemplation  of, or otherwise in  connection  with,  the
enforcement of, or the  preservation of any rights under, or in carrying out its
duties under,  this Agreement  including (in each case) the fees and expenses of
legal or other  professional  advisers.  Each Lender  shall  indemnify  the Lead
Lender  (ratably in  accordance  with such  Lender's pro rata  proportion of the
Loan) against all liabilities,  damages, costs and claims whatsoever incurred by
the Lead Lender in  connection  with this  Agreement or the  performance  of its
duties  under this  Agreement  or any action taken or omitted by the Lead Lender
under this Agreement,  unless such liabilities,  damages,  costs or claims arise
from the Lead Lender's own gross negligence or willful misconduct.

                  (d)      (i) Subject to Clause 5(d)(ii) below, the Lead Lender
may,  with the consent of the Lenders  holding at least two thirds  (2/3) of the
outstanding dollar amount of the Loan (the "Majority Lenders") (or if and to the
extent  expressly  authorized by the other  provisions of this  Agreement),  (a)
agree to amendments or  modifications to this Agreement with the Borrower and/or
(b)  vary  or  waive  breaches  of,  or  defaults  under,  or  otherwise  excuse
performance of, any provision of this Agreement by the Borrower. Any such action
so authorized and effected by the Lead Lender shall be documented in such manner
as the Lead Lender shall (with the approval of the Majority Lenders)  determine,
shall be  promptly  notified  to the  Lenders  by the Lead  Lender  and shall be
binding on all the Lenders.  (ii) Except with the prior  written  consent of all
the Lenders,  the Lead Lender shall not have  authority on behalf of the Lenders
to agree with the Borrower to any amendment or modification to this Agreement or
to grant  waivers  in  respect  of  breaches  or  defaults  or to vary or excuse
performance  of or under this  Agreement by the Borrower,  if the effect of such
amendment,  modification,  waiver,  variation or excuse would be to (a) postpone
the due date or reduce the amount of any payment of principal, interest or other
amount  payable by the Borrower  under this  Agreement,  (b) change the terms or
provisions  of Section  1(c) of this  Agreement,  (c) change the  definition  of
"Majority  Lenders," (d) change any provision of this Agreement  which expressly
or  impliedly  requires the approval or consent of all the Lenders such that the
relevant  approval or consent may be given  otherwise  than with the sanction of
all the Lenders, or (e) change this Section 5(d)(ii).



                                       3


                  (e)      The Lead  Lender may retire from its  appointment  as
Lead Lender  under this  Agreement  having given to the Borrower and each of the
Lenders not less than 30 days' prior  written  notice of its intention to do so,
provided  that no such  retirement  shall  take  effect  unless  there  has been
appointed by the Lead Lender as a successor agent (i) a Lender  nominated by the
Majority  Lenders  or,  failing  such  a  nomination,  (ii)  any  reputable  and
experienced bank or financial institution with offices in San Diego,  California
and  nominated  by the Lead  Lender  or, in the event of a  disagreement  by the
Majority Lenders with such nomination,  the Majority  Lenders,  which shall have
consented to such appointment.  Upon the death,  incapacity or unavailability of
the Lead Lender,  the Majority  Lenders shall  nominate a successor Lead Lender.
The  Majority  Lenders may remove and  replace the Lead Lender at any time,  and
from time to time, in the sole discretion of the Majority Lenders.

         6.       Events  of  Default.  Any one or more of the  following  shall
                  -------------------
constitute an Event of Default under this Agreement:

                  (a)      Borrower  shall  fail  to  pay  any  principal  of or
interest  on the Loan or any other  monetary  Obligations  within  ten (10) days
after the date due; or

                  (b)      Borrower   shall  fail  to  comply   with  any  other
provision  of this  Agreement,  which  failure is not cured within ten (10) days
after such failure occurs; or

                  (c)      Any warranty,  representation,  statement,  report or
certificate  made or delivered to Lenders by Borrower or on  Borrower's  behalf,
taken  together,  shall be untrue or misleading in a material  respect as of the
date given or made; or

                  (d)      There  shall be a change in the record or  beneficial
ownership of an aggregate of more than 51% of the outstanding shares of stock of
Borrower; or

                  (e)      Dissolution,  termination of existence, or insolvency
of Borrower;  or Borrower fails to meet its debts as they mature; or appointment
of a  receiver,  trustee  or  custodian,  for  all or any  material  part of the
property of,  assignment for the benefit of creditors by, or the commencement of
any  proceeding by or against  Borrower  under any  reorganization,  bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect (except that, in the
case of a proceeding  commenced  against  Borrower,  Borrower shall have 60 days
after the date such proceeding was commenced to have it dismissed); or

         The occurrence of a "Material  Adverse Effect",  which shall mean (i) a
material  adverse  change in the  business,  prospects,  operations,  results of
operations,  assets,  liabilities  or financial or other  condition of Borrower,
(ii) the  impairment  of  Borrower's  ability to perform its  Obligations  or of
Lenders' ability to enforce the Obligations or realize upon the Shares, or (iii)
a material adverse change in the value of the Shares.

         7.       Remedies.
                  --------

                  (a)      Remedies.   Upon  the   occurrence   and  during  the
                           --------
continuance of any Event of Default,  Lenders,  by the Lead Lender, as agent for
the Lenders,  at their option, may do any one or more of the following,  without
notice  except for such  notices as are  required  by law:  (a)  Accelerate  and
declare  the  Obligations  to be  immediately  due,  payable,  and  performable,
notwithstanding  any deferred or installment  payments allowed by any instrument
evidencing or relating to any  Obligation;  (b) Take possession of any or all of
the Shares;  (c) Sell or otherwise  dispose of the Shares, at one or more public
or private sales, in lots or in bulk, for cash,  exchange or other property,  or
on credit,  and to adjourn any such sale from time to time without  notice other
than oral announcement at the time scheduled for sale.  Borrower recognizes that
Lenders  may be  unable  to make a public  sale of any or all of the  investment
property, by reasons of prohibitions  contained in applicable securities laws or
otherwise,  and  expressly  agrees that a private sale to a restricted  group of
purchasers for investment and not with a view to any distribution  thereof shall
be considered a commercially  reasonable  sale. All reasonable  attorneys' fees,
expenses, costs, liabilities and obligations incurred by Lenders with respect to
the foregoing shall be added to and become part of the Obligations, and shall be
due on demand.

                  (b)      Application of Proceeds. All proceeds realized as the
                           -----------------------
result of any sale or other  disposition  of the Shares  shall be applied by the
Lead Lender first to the reasonable costs,  expenses,  liabilities,  obligations
and attorneys' fees incurred by Lenders in the exercise of its rights under this
Agreement, second to the interest due upon any of the Obligations,  and third to
the  principal  of the  Obligations,  in such  order  as the Lead  Lender  shall
determine in its sole discretion. Any surplus shall be paid to Borrower or other
persons legally  entitled  thereto;  Borrower shall remain liable to Lenders for
any deficiency.



                                       4


                  (c)      Remedies  Cumulative.  In  addition to the rights and
                           --------------------
remedies set forth in this  Agreement,  Lenders  shall have all the other rights
and remedies  accorded a secured party under the California  Uniform  Commercial
Code and under all other  applicable  laws,  and under any other  instrument  or
agreement now or in the future  entered into between  Lenders and Borrower,  and
all of such rights and remedies are cumulative  and none is exclusive.  Exercise
or partial  exercise by Lenders of one or more of its rights or  remedies  shall
not be deemed an election,  nor bar Lenders from subsequent  exercise or partial
exercise  of any other  rights or  remedies.  The failure or delay of Lenders to
exercise any rights or remedies shall not operate as a waiver  thereof,  but all
rights and  remedies  shall  continue in full force and effect  until all of the
Obligations have been fully paid and performed.

                  (d)      Power of Attorney.  After the  occurrence  and during
                           -----------------
the continuance of an Event of Default,  Borrower  irrevocably appoints the Lead
Lender,  as agent  for the  Lenders  (and any of the  Lead  Lender's  designated
employees or agents) as Borrower's  true and lawful attorney in fact to: execute
and deliver all notices,  instruments  and  agreements  in  connection  with the
perfection of the security  interest  granted in this Agreement;  sell, lease or
otherwise dispose of all or any part of the Shares; and take any other action or
sign any  other  documents  required  to be  taken or  signed  by  Borrower,  or
reasonably  necessary to enforce  Lenders' rights or remedies or otherwise carry
out the  purposes  of this  Agreement.  The  appointment  of the Lead  Lender as
Borrower's  attorney in fact,  and each of the Lead Lender's  rights and powers,
being coupled with an interest,  are irrevocable  until all Obligations owing to
Lenders have been paid and performed in full.

         8.       Waivers.  The  failure  of  Lenders  at any  time or  times to
                  -------
require Borrower to strictly comply with any of the provisions of this Agreement
or any other present or future agreement  between Borrower and Lenders shall not
waive or  diminish  any right of  Lenders  later to demand  and  receive  strict
compliance  therewith.  Any waiver of any default  shall not waive or affect any
other default, whether prior or subsequent,  and whether or not similar. None of
the provisions of this Agreement or any other  agreement shall be deemed to have
been waived  except by a specific  written  waiver signed by the Lead Lender and
delivered to Borrower.  Borrower waives demand,  protest,  notice of protest and
notice of  default  or  dishonor,  notice of payment  and  nonpayment,  release,
compromise,   settlement,   extension  or  renewal  of  any  commercial   paper,
instrument,  account, general intangible,  document or guaranty at any time held
by Lenders on which  Borrower is or may in any way be liable,  and notice of any
action taken by Lenders, unless expressly required by this Agreement.

         9.       Costs; Indemnity.  Borrower shall reimburse Lenders for all of
                  ----------------
the  following  ("Costs"):  all  reasonable  attorneys'  fees  and  all  filing,
recording, search, title insurance, appraisal, audit, and other reasonable costs
incurred  by  Lenders,  pursuant  to, in  connection  with,  or relating to this
Agreement or its enforcement  (whether or not any lawsuit is filed),  including,
but not limited  to, any  reasonable  attorneys'  fees and costs  Lenders  incur
relating to  preparation  and  negotiation  of this  Agreement and the documents
relating to this Agreement. Lenders shall provide an itemized statement of Costs
to Borrower,  if so requested by Borrower.  If either  Lenders or Borrower files
any lawsuit  against the other  predicated  on a breach of this  Agreement,  the
prevailing  party in such action  shall be  entitled  to recover its  reasonable
costs,  including  (but not limited to) reasonable  attorneys'  fees incurred in
connection therewith.  Borrower shall indemnify Lenders for any losses,  claims,
actions,  causes  of  action,  penalties,  and  reasonable  costs  and  expenses
(including reasonable attorneys' fees), which Lenders may sustain or incur based
upon or  arising  out of  this  Agreement,  any of the  Obligations,  any  other
relationship  or agreement  between  Lenders and  Borrower,  or any other matter
relating to Borrower or the  Obligations,  except any such amounts  sustained or
incurred as the result of the gross negligence or willful  misconduct of Lenders
or any of their directors,  officers, employees, agents, attorneys, or any other
person  affiliated with or  representing  Lenders.  The indemnity  agreement set
forth in this Section shall survive any  termination of this Agreement and shall
continue in full force and effect.



                                       5


         10.      Notices.  All notices under this Agreement shall be in writing
                  -------
and shall be deemed to have been given (a) upon receipt,  when delivered by hand
or by  electronic  facsimile  transmission,  or  (b)  upon  actual  delivery  by
overnight courier,  or (c) three days after mailing by regular  first-class mail
or  certified  mail return  receipt  requested,  addressed  to each party at the
addresses indicated on Schedule I hereto.

         11.      Governing  Law;  Jurisdiction;  Venue.  This Agreement and all
                  -------------------------------------
acts and  transactions  hereunder and all rights and  obligations of Lenders and
Borrower  shall be governed by the  internal  laws (and not the conflict of laws
rules) of the State of California.  As a material part of the  consideration  to
Lenders to enter into this  Agreement,  Borrower (i) agrees that all actions and
proceedings relating directly or indirectly to this Agreement shall, at Lenders'
option, be litigated in courts located within California, and that the exclusive
venue therefor shall be San Diego County;  (ii) consents to the jurisdiction and
venue of any such court and consents to service of process in any such action or
proceeding by personal  delivery or any other method permitted by law; and (iii)
waives any and all rights Borrower may have to object to the jurisdiction of any
such court, or to transfer or change the venue of any such action or proceeding.

         12.      Mutual Waiver of Jury Trial.  Borrower and Lenders each hereby
                  ---------------------------
waive the right to trial by jury in any action or proceeding based upon, arising
out of, or in any way relating to, this Agreement or any other present or future
instrument or agreement  between Lenders and Borrower,  or any conduct,  acts or
omissions  of  LendersS  or  Borrower  or  any  of  their  directors,  officers,
employees,  agents,  attorneys or any other persons  affiliated with LendersS or
Borrower, in all of the foregoing cases, whether sounding in contract or tort or
otherwise.

         13.      General. Should any provision of this Agreement be held by any
                  -------
court of competent  jurisdiction to be void or unenforceable,  such defect shall
not affect the remainder of this  Agreement,  which shall continue in full force
and effect.  This  Agreement  and such other written  agreements,  documents and
instruments as may be executed in connection  herewith are the final, entire and
complete  agreement  between  Borrower and Lenders and  supersede  all prior and
contemporaneous  negotiations and oral  representations  and agreements,  all of
which  are  merged  and  integrated  in  this  Agreement.   There  are  no  oral
understandings,  representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith. Any Lender may assign all or any part of its interest in
this  Agreement  and  the  Obligations  to any  person  or  entity,  or  grant a
participation  in, or security  interest  in, any  interest  in this  Agreement,
without notice to, or consent of,  Borrower.  Borrower may not assign any rights
under or interest in this  Agreement  without the Lead  Lender's  prior  written
consent.  This  Agreement may be executed in two or more  counterparts,  each of
which  shall be  deemed  an  original,  but all of which  shall  constitute  one
agreement.








                   [balance of page intentionally left blank]




                                       6




"Borrower"

EXTEN INDUSTRIES, INC.


   By:  /S/ Gregory Szabo
        ---------------------
        Gregory Szabo
Title:  President


Address for notices:






Attn:
Fax:




                                       7




                                   SCHEDULE I


                  LENDER                    LOAN AMOUNT   PRO RATA INTEREST
  --------------------------------------- --------------- -----------------

  W. Gerald Newmin                              $496,000            38.12%
  --------------------------------------- --------------- -----------------

  First Regional Bank Custodial for              $20,000             1.54%
  W. Gerald Newmin IRA
  --------------------------------------- --------------- -----------------

  Clifton L. Cooke, Jr. ("Lead Lender")         $100,000             7.69%
  --------------------------------------- --------------- -----------------

  Wm. Pittman                                   $100,000             7.69%
  --------------------------------------- --------------- -----------------

  Robert Goldsmith                               $60,000             4.61%
  --------------------------------------- --------------- -----------------

  Thomas Page                                   $150,000            11.53%
  --------------------------------------- --------------- -----------------

  Shirley Corbett                               $100,000             7.69%
  --------------------------------------- --------------- -----------------

  Gregory F. Szabo                               $50,000             3.84%
  --------------------------------------- --------------- -----------------

  Roger McDonald                                 $20,000             1.54%
  --------------------------------------- --------------- -----------------

  Diane Palley                                    $5,000              .38%
  --------------------------------------- --------------- -----------------

  Sharon Donahoo                                 $50,000             3.84%
  --------------------------------------- --------------- -----------------

  Robert C. Hinman                                $5,000              .38%
  --------------------------------------- --------------- -----------------

  R. Christopher Hinman                          $20,000             1.54%
  --------------------------------------- --------------- -----------------

  Douglas Egger                                  $20,000             1.54%
  --------------------------------------- --------------- -----------------

  First Regional Bank Trustee FBO                $10,000              .77%
  John M. Burns IRA
  --------------------------------------- --------------- -----------------

  Sasha Corporation Pension Fund                 $20,000             1.54%
  --------------------------------------- --------------- -----------------

  Patsy Millard                                   $5,000              .38%
  --------------------------------------- --------------- -----------------

  Larry Dillion                                  $29,000             2.23%
  --------------------------------------- --------------- -----------------

  Barbara Corbett                                $31,000             2.38%
  --------------------------------------- --------------- -----------------

  Robert Driver                                  $10,000              .77%
  --------------------------------------- --------------- -----------------

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

  TOTAL                                       $1,306,000           100.00%
  --------------------------------------- --------------- -----------------




                                       8

EX-10

                                                                    EXHIBIT

                                      NAME



THIS WARRANT AND THE SHARES ISSUABLE  HEREUNDER HAVE NOT BEEN  REGISTERED  UNDER
THE  SECURITIES  ACT OF  1933,  AS  AMENDED,  AND MAY NOT BE  SOLD,  PLEDGED  OR
OTHERWISE  TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY  SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.


                            WARRANT TO PURCHASE STOCK


Corporation:                    EXTEN INDUSTRIES, INC., a Delaware Corporation
Number of Shares:               200,000
Class of Stock:                 Common
Initial Exercise Price:         $.10 per share
Issue Date:                     June 19, 2002
Expiration Date:                June 19, 2009 (Subject to Article 4.1)

         THIS WARRANT  CERTIFIES THAT, in  consideration of the payment of $1.00
and  for  other  good  and  valuable  consideration,  (name),  or  his  assignee
("Holder")  is entitled to purchase  the number of fully paid and  nonassessable
shares  of the  class of  securities  (the  "Shares")  of the  corporation  (the
"Company") at the initial  exercise price per Share (the "Warrant Price") all as
set forth above and as adjusted  pursuant to Article 2 of this warrant,  subject
to the provisions and upon the terms and conditions set forth in this warrant.


ARTICLE 1.        EXERCISE.
                  --------

         1.1      Method of  Exercise.  Holder  may  exercise  this  warrant  by
                  -------------------
delivering this warrant and a duly executed Notice of Exercise in  substantially
the form attached as Appendix 1 to the principal  office of the Company.  Unless
Holder is exercising the conversion right set forth in Section 1.2, Holder shall
also  deliver to the  Company a check for the  aggregate  Warrant  Price for the
Shares being purchased.

         1.2      Conversion  Right.  In  lieu of  exercising  this  warrant  as
                  -----------------
specified in Section 1.1,  Holder may convert this warrant,  in whole and not in
part,  into a number of Shares  determined  by dividing (a) the  aggregate  fair
market value of the Shares or other securities  otherwise issuable upon exercise
of this warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market  value  of one  Share.  The fair  market  value  of the  Shares  shall be
determined pursuant to Section 1.3.

         1.3      Fair Market  Value.  The fair market value of the Shares shall
                  ------------------
be the  average  closing  price  of the  Shares  (or the  closing  price  of the
Company's stock into which the Shares are convertible) reported for the ten (10)
trading day  immediately  before  Holder  delivers its Notice of Exercise to the
Company.

         1.4      Delivery of Certificate and New Warrant. Promptly after Holder
                  ---------------------------------------
exercises  or  converts  this  warrant,  the  Company  shall  deliver  to Holder
certificates for the Shares.

         1.5      Replacement  of  Warrants.  On receipt of evidence  reasonably
                  -------------------------
satisfactory  to the Company of the loss,  theft,  destruction  or mutilation of
this warrant and, in the case of loss,  theft or destruction,  on delivery of an
indemnity  agreement  reasonably  satisfactory in form and amount to the Company
or, in the case of mutilation,  on surrender and  cancellation  of this warrant,
the Company at its expense shall execute and deliver, in lieu of this warrant, a
new warrant of like tenor.

         1.6      Repurchase on Sale, Merger, or Consolidation of the Company.
                  -----------------------------------------------------------

                  1.6.1    "Acquisition."  For  the  purpose  of  this  warrant,
                            -----------
"Acquisition"   means  any  sale,  license,  or  other  disposition  of  all  or
substantially  all  of  the  assets  (including  intellectual  property)  of the
Company,  or any reorganization,  consolidation,  or merger of the Company where
the holders of the Company's securities before the transaction  beneficially own
less than 50% of the outstanding voting securities of the surviving entity after
the transaction.





                  1.6.2    Assumption  of  Warrant.  If upon the  closing of any
                           -----------------------
Acquisition the successor  entity assumes the obligations of this warrant,  then
this warrant shall be exercisable for the same securities, cash, and property as
would be payable  for the  Shares  issuable  upon  exercise  of the  unexercised
portion of this  warrant as if such Shares were  outstanding  on the record date
for the Acquisition and subsequent closing.  The Warrant Price shall be adjusted
accordingly.  The Company  shall use  reasonable  efforts to cause the surviving
corporation to assume the obligations of this warrant.

                  1.6.3    Nonassumption. If upon the closing of any Acquisition
                           -------------
the successor  entity does not assume the obligations of this warrant and Holder
has not otherwise exercised this warrant in full, then Holder shall be deemed to
have been automatically  converted pursuant to Section 1.2 and thereafter Holder
shall  participate in the  Acquisition on the same terms as other holders of the
same class of securities of the Company.


ARTICLE 2.        ADJUSTMENTS TO THE SHARES.
                  -------------------------

         2.1      Stock Dividends,  Splits, Etc. If the Company declares or pays
                  -----------------------------
a dividend on its common stock payable in common stock, or other securities,  or
subdivides the  outstanding  common stock into a greater amount of common stock,
then upon  exercise  of this  warrant,  for each Share  acquired,  Holder  shall
receive,  without  cost to Holder,  the total number and kind of  securities  to
which Holder  would have been  entitled had Holder owned the Shares of record as
of the date the dividend or subdivision occurred.

         2.2      Reclassification,   Exchange   or   Substitution.   Upon   any
                  ------------------------------------------------
reclassification,  exchange,  substitution,  or other  event  that  results in a
change of the number  and/or class of the  securities  issuable upon exercise or
conversion of this warrant,  Holder shall be entitled to receive,  upon exercise
or  conversion of this  warrant,  the number and kind of securities  that Holder
would  have  received  for  the  Shares  if  this  warrant  had  been  exercised
immediately  before  such  reclassification,  exchange,  substitution,  or other
event. The Company or its successor shall promptly issue to Holder a new warrant
for such new  securities.  The new warrant shall provide for  adjustments  which
shall be as nearly equivalent as may be practicable to the adjustments  provided
for in this Article 2 including, without limitation,  adjustments to the Warrant
Price and to the number of securities or property  issuable upon exercise of the
new  warrant.  The  provisions  of this  Section  2.2 shall  similarly  apply to
successive reclassifications, exchanges, substitutions, or other events.

         2.3      Adjustments for Combinations,  Etc. If the outstanding  Shares
                  ----------------------------------
are combined or consolidated,  by reclassification  or otherwise,  into a lesser
number of shares, the Warrant Price shall be proportionately increased.

         2.4      No  Impairment.  The Company  shall not, by  amendment  of its
                  --------------
Certificate of  Incorporation or through a  reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed  under this  warrant by the  Company,  but
shall at all times in good faith  assist in carrying out all the  provisions  of
this Article 2 and in taking all such action as may be necessary or  appropriate
to protect Holder's rights under this Article against impairment. If the Company
takes  any  action  affecting  the  Shares or its  common  stock  other  than as
described above that adversely  affects Holder's rights under this warrant,  the
Warrant Price shall be adjusted  downward and the number of Shares issuable upon
exercise  of this  warrant  shall be  adjusted  upward in such a manner that the
aggregate Warrant Price of this warrant is unchanged.

         2.5      Certificate  as to  Adjustments.  Upon each  adjustment of the
                  -------------------------------
Warrant  Price,   the  Company  at  its  expense  shall  promptly  compute  such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer
setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall,  upon written request,  furnish Holder a certificate  setting
forth  the  Warrant  Price in effect  upon the date  thereof  and the  series of
adjustments leading to such Warrant Price.



                                       2



ARTICLE 3.        REPRESENTATIONS AND COVENANTS OF THE COMPANY.
                  --------------------------------------------

         3.1      Representations and Warranties.  The Company hereby represents
                  ------------------------------
and warrants to the Holder as follows:

                  (a)      The initial  Warrant  Price  referenced  on the first
page of this  warrant is not greater than the fair market value of the Shares as
of the date of this warrant.

                  (b)      All Shares  which may be issued upon the  exercise of
the purchase right  represented  by this warrant,  and all  securities,  if any,
issuable  upon  conversion  of  the  Shares,   shall,  upon  issuance,  be  duly
authorized, validly issued, fully paid and nonassessable,  and free of any liens
and  encumbrances  except for  restrictions  on transfer  provided for herein or
under applicable federal and state securities laws.

                  (c)      The Company's  capitalization  table attached to this
warrant is true and complete as of the Issue Date.

         3.2      Notice of Certain Events.  If the Company proposes at any time
                  ------------------------
(a) to declare any dividend or  distribution  upon its common stock,  whether in
cash,  property,  stock,  or other  securities and whether or not a regular cash
dividend;  (b) to offer for subscription pro rata to the holders of any class or
series  of its stock  any  additional  shares of stock of any class or series or
other rights; (c) to effect any  reclassification  or recapitalization of common
stock;  or (d) to merge or consolidate  with or into any other  corporation,  or
sell,  lease,  license,  or convey all or substantially all of its assets, or to
liquidate,  dissolve or wind up, then, in connection  with each such event,  the
Company shall give Holder (1) at least 20 days prior written  notice of the date
on which a record will be taken for such dividend, distribution, or subscription
rights (and  specifying  the date on which the  holders of common  stock will be
entitled  thereto) or for determining  rights to vote, if any, in respect of the
matters  referred  to in (a) and (b) above;  and (2) in the case of the  matters
referred  to in (c) and (d) above at least 20 days prior  written  notice of the
date when the same will take place (and specifying the date on which the holders
of common stock will be entitled to exchange  their common stock for  securities
or other property deliverable upon the occurrence of such event).


ARTICLE 4.        MISCELLANEOUS.
                  -------------

         4.1      Term.  This warrant is exercisable in whole or in part, at any
                  ----
time and from time to time on or before the Expiration  Date set forth above. If
this warrant has not been exercised  prior to the Expiration  Date, this warrant
shall be deemed to have been  automatically  exercised on the Expiration Date by
"cashless" conversion pursuant to Section 1.2.

         4.2      Legends.  This  warrant  and the  Shares  (and the  securities
                  -------
issuable,  directly or indirectly,  upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:

THIS  SECURITY HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED,  AND MAY NOT BE SOLD,  PLEDGED  OR  OTHERWISE  TRANSFERRED  WITHOUT  AN
EFFECTIVE  REGISTRATION  THEREOF  UNDER SUCH ACT OR  PURSUANT  TO RULE 144 OR AN
OPINION OF COUNSEL  REASONABLY  SATISFACTORY  TO THE CORPORATION AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.

         4.3      Registration of Shares.  The Company shall use best efforts to
                  ----------------------
register the Shares under the  Securities Act of 1933 within ninety (90) days of
the Issue Date.  Upon  registration  thereof,  the legend referred to in section
4.2, above, may be removed.

         4.4      Compliance with Securities Laws on Transfer.  This warrant and
                  -------------------------------------------
the Shares issuable upon exercise of this warrant (and the securities  issuable,
directly  or  indirectly,  upon  conversion  of the  Shares,  if any) , prior to
registration  thereof as set forth in Section 4.3, above, may not be transferred
or assigned in whole or in part without  compliance with applicable  federal and
state securities laws by the transferor and the transferee  (including,  without
limitation, the delivery of investment representation letters and legal opinions
reasonably satisfactory to the Company). The Company shall not require Holder to
provide an opinion of counsel if the transfer is to an affiliate of Holder or if
there is no material  question as to the availability of current  information as
referenced  in Rule 144(c),  Holder  represents  that it has complied  with Rule
144(d) and (e) in reasonable  detail,  the selling broker represents that it has
complied  with Rule 144(f),  and the Company is provided with a copy of Holder's
notice of proposed sale.



                                       3


         4.5      Transfer Procedure.  Subject to the provisions of Section 4.4,
                  ------------------
Holder  may  transfer  all but not  less  that all this  warrant  or the  Shares
issuable upon exercise of this warrant (or the securities issuable,  directly or
indirectly,  upon conversion of the Shares, if any) by giving the Company notice
that the  warrant  is being  transferred  setting  forth the name,  address  and
taxpayer  identification  number of the transferee and surrendering this warrant
to the Company for  reissuance to the  transferee(s);  provided,  however,  that
Holder may transfer all or part of this warrant to its  affiliates,  at any time
without notice to the Company,  and such affiliate shall then be entitled to all
the rights of Holder  under this  warrant  and any related  agreements,  and the
Company shall cooperate fully in ensuring that any stock issued upon exercise of
this warrant is issued in the name of the affiliate  that exercises the warrant.
The terms and  conditions  of this warrant shall inure to the benefit of, and be
binding upon, the Company and the holders hereof and their respective  permitted
successors and assigns.

         4.6      Notices. All notices and other communications from the Company
                  -------
to the Holder, or vice versa, shall be deemed delivered and effective when given
personally  or mailed by  first-class  registered  or  certified  mail,  postage
prepaid,  at such  address  as may have been  furnished  to the  Company  or the
Holder,  as the case may be, in writing by the  Company or such Holder from time
to time. All notices to the Holder shall be addressed as follows:

                          Gregory Szabo
                          425 5TH  Avenue, Suite 201
                          Escondido, CA 92025

         4.7      Waiver.  This  warrant  and any term  hereof  may be  changed,
                  ------
waived,  discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.

         4.8      No Fractional  Shares or Scrip. No fractional  shares or scrip
                  ------------------------------
representing  fractional  shares  shall  be  issued  upon the  exercise  of this
Warrant,  but in lieu of such  fractional  shares the Company  shall make a cash
payment therefore on the basis of the Warrant Price then in effect.

         4.9      Attorneys'  Fees.  In the  event of any  dispute  between  the
                  ----------------
parties  concerning  the  terms  and  provisions  of  this  warrant,  the  party
prevailing in such dispute shall be entitled to collect from the other party all
costs incurred in such dispute, including reasonable attorneys' fees.

         4.10     Governing Law. This warrant shall be governed by and construed
                  -------------
in accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.

                                      EXTEN INDUSTRIES, INC.


                                      By:
                                         -------------------------------------

                                      Name:
                                           -----------------------------------

                                      Title:
                                            ----------------------------------


                                      By:
                                         -------------------------------------

                                      Name:
                                           -----------------------------------

                                      Title:
                                            ----------------------------------





                                       4





                                   APPENDIX I


                               NOTICE OF EXERCISE
                               ------------------


         1.       The     undersigned      hereby     elects     to     purchase
 ______________________  shares  of the  ______________________  stock  of Exten
 Industries,  Inc.,  pursuant to the terms of the attached warrant,  and tenders
 herewith payment of the purchase price of such shares in full.

         1.       The undersigned  hereby elects to convert the attached warrant
 into  shares  in the  manner  specified  in the  warrant.  This  conversion  is
 exercised  with respect to  _________________________  of the shares covered by
 the warrant.


         [Strike paragraph that does not apply.]


         2.       Please issue a certificate or certificates  representing  said
 shares in the name of the  undersigned  or in such other  name as is  specified
 below:

                  NAME

                  -----------------------
                  -----------------------
                  -----------------------
                  Or Registered Assignee


         3.       The  undersigned  represents it is acquiring the shares solely
 for its own  account  and not as a nominee  for any other  party and not with a
 view  toward the  resale or  distribution  thereof  except in  compliance  with
 applicable securities laws.


 NAME or Registered Assignee


 ---------------------------
 (Signature)


 ---------------------------
 (Date)





                                       5

EX-10

                                                                  EXHIBIT


                                 LOAN AGREEMENT



         This Loan Agreement (this  "Agreement"),  dated as of October 13, 2001,
is entered into between  George Colin  ("Lender"),  and EXTEN  INDUSTRIES,  INC.
("Borrower")  as of the date first set forth  above.  The above  information  is
subject to all of the terms and conditions of this Agreement.  The parties agree
as follows:

         1.       Loan and Payments.  The Lender is making loans  (collectively,
                  -----------------
the "Loan") to Borrower in the amount of Fifty Thousand ($50,000)  Dollars.  The
Loan may be prepaid at any time without penalty.

                  (a)      Interest. Borrower shall pay interest on the Loan and
                           --------
other  monetary  Obligations  at a fixed rate equal to twelve percent (12 %) per
annum.  Interest  shall be  calculated  on the basis of a  360-day  year for the
actual number of days elapsed.  Interest  shall be payable  monthly within seven
(7) business days of the last day of the previous month.

                  (b).     Voluntary Conversion. Each Lender may convert the pro
                           --------------------
rata portion of the outstanding principal balance of the Loan, together with all
accrued but unpaid interest, owing to such Lender, and no less than such amount,
into  Borrower's  Common Stock,  at the option of such Lender,  on the terms and
conditions  set  forth  herein.  The stock  will be  delivered  within  ten (10)
business days of the  conversion  date and the shares will have no  restrictions
relative to their sale and disposition.

                  (e)      Penalties.  Should  any  interest  payment  be  late,
                           ---------
certain penalties shall become effective.  The conversion price of the shares of
common  stock shall  decline by $.01 for each week,  or fraction  thereof,  that
interest payment is not received.

                  If Lender  elects to exercise  his right to convert  then such
Lender must give  written  notice of his  intention to convert not less than ten
(10) business days prior to the date of such  intended  conversion.  Lender must
concurrently  execute a  standard  form of Stock  Purchase  Agreement  and other
agreements as are  necessary to document the issuance of the Common  Stock.  The
Borrower  shall  issue and  deliver  to such  Lender,  within  the same ten (10)
business days, a certificate or  certificates  for the number of Common Stock to
which the Lender is entitled and a check or cash with respect to any  fractional
interest in any share of Common Stock.  Upon receipt of the shares,  Lender,  by
execution  hereof,  agrees to deliver to the Borrower  the executed  original of
this Agreement, marked "cancelled," within ten (10) days of such conversion,

                  In the event  that a Lender  exercises  the  conversion  right
described herein, he shall receive  Borrower's Common Stock at a price per share
equal to $.07,  if converted  during the term of this  Agreement.  No fractional
shares will be issued upon such  conversion;  in lieu of any fractional share to
which a Lender would otherwise be entitled, the Borrower will pay the cash value
of such fractional share to the Lender.

                  If the  Borrower  declares  or pays a  dividend  on its common
stock  payable  in  common  stock,  or  other  securities,   or  subdivides  the
outstanding  common  stock  into a greater  amount of  common  stock,  then upon
conversion of the Loan pursuant hereto, for each share of Common Stock acquired,
the Lender shall receive, without cost to the Lender, the total number of Common
Stock to which the Lender  would  have been  entitled  had the Lender  owned the
Common Stock of record as of the date the dividend or subdivision occurred. Upon
any reclassification,  exchange,  substitution, or other event that results in a
change of the number of the  securities  issuable upon  conversion  hereof,  the
Lender  shall be entitled  to receive,  upon  conversion  hereof,  the number of
securities  that the Lender would have received for the Common Stock if the Loan
had  been  converted   immediately  before  such   reclassification,   exchange,
substitution,  or other  event.  The  Borrower  shall not, by  amendment  of its
Certificate of  Incorporation or through a  reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Borrower.

                  (e)      Warrants.  Borrower is  concurrently  issuing to each
                           --------
Lender a Warrant to Purchase Stock on the terms and conditions set forth therein
(the "Warrant").



                                       1





                  (d)      Maturity  Date;  Extension.  All amounts  outstanding
                           --------------------------
hereunder are due and payable on October 1, 2002 (the "Original Maturity Date').
However,  provided that an Event of Default does not exist or is not continuing,
Borrower  may  extend the  Original  Maturity  Date for one (1) ninety  (90) day
period (the "Extended  Maturity  Date") by providing the Lead Lender (as defined
in Schedule I hereto),  at least thirty (30) days prior to the Original Maturity
Date, with written notice that Borrower  wishes to extend the Original  Maturity
Date.  Extensions of the Extended  Maturity Date, if any, may be provided in the
sole discretion of the individual Lender.

         2.       Representations and Warranties.  Borrower represents to Lender
                  ------------------------------
as  follows  (which  shall  be  deemed  continuing  throughout  the term of this
Agreement).

                  (a)      Authorization.  Borrower is and will  continue to be,
                           -------------
duly  organized,  validly  existing and in good  standing  under the laws of the
jurisdiction  of its  incorporation,  and  Borrower  is and will  continue to be
qualified and licensed to do business in all  jurisdictions in which any failure
to do so would have a Material  Adverse  Effect;  the  execution,  delivery  and
performance by Borrower of this Agreement,  and all other documents contemplated
hereby have been duty and validly authorized by all necessary  corporate action,
and do not violate  Borrower's  articles or  certificate  of  incorporation,  or
by-laws,  or any law or any material  agreement or  instrument  which is binding
upon Borrower or its property.

                  (b)      Title to Shares;  Permitted Liens. After consummation
                           ---------------------------------
of the acquisition of the Shares,  Borrower will own the Shares,  free of liens,
claims and interests of any kind.

         3.       Events  of  Default.  Any one or more of the  following  shall
                  -------------------
constitute an Event of Default under this Agreement:

                  (a)      Borrower  shall  fail  to  pay  any  principal  of or
interest  on the Loan or any other  monetary  Obligations  within  ten (10) days
after the date due; or

                  (b)      Borrower   shall  fail  to  comply   with  any  other
provision  of this  Agreement,  which  failure is not cured within ten (10) days
after such failure occurs; or

                  (e)      Any warranty,  representation,  statement,  report or
certificate  made or  delivered to Lender by Borrower or on  Borrower's  behalf,
taken  together,  shall be untrue or misleading in a material  respect as of the
date given or made; or

                  (d)      There  shall be a change in the record or  beneficial
ownership of an aggregate of more than 51% of the outstanding shares of stock of
Borrower, or

                  (e)      Dissolution,  termination of existence, or insolvency
of Borrower;  or Borrower fails to meet its debts as they mature; or appointment
of a  receiver,  trustee  or  custodian,  for  all or any  material  part of the
property of,  assignment for the benefit of creditors by, or the commencement of
any  proceeding by or against  Borrower  under any  reorganization,  bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect (except that, in the
case of a proceeding  commenced  against  Borrower,  Borrower shall have 60 days
after the date such  proceeding  was  commenced  to have it  dismissed);  or The
occurrence  of a  "Material  Adverse  Effect",  which  shall mean (i) a material
adverse change in the business,  prospects,  operations,  results of operations,
assets,  liabilities  or  financial or other  condition  of  Borrower,  (ii) the
impairment  of  Borrower's  ability to  perform  its  Obligations  or of Lender'
ability to  enforce  the  Obligations  or realize  upon the  Shares,  or (iii) a
material adverse change in the value of the Shares.



                                       2



         4.       Remedies.
                  --------

                  (a)      Remedies.   Upon  the   occurrence   and  during  the
                           --------
continuance of any Event of Default,  Lender,  at his option,  may do any one or
more of the following, without notice except for such notices as are required by
law: (a) Accelerate and declare the Obligations to be immediately due,  payable,
and performable, notwithstanding any deferred or installment payments allowed by
any instrument evidencing or relating to any Obligation;  (b) Take possession of
any or all of the Shares; (e) Sell or otherwise dispose of the Shares, at one or
more public or private sales,  in lots or in bulk,  for cash,  exchange or other
property,  or on credit,  and to adjourn any such sale from time to time without
notice other than oral  announcement  at the time  scheduled for sale.  Borrower
recognizes  that Lender may be unable to make a public sale of any or all of the
investment  property,  by  reasons  of  prohibitions   contained  in  applicable
securities  laws or  otherwise,  and  expressly  agrees that a private sale to a
restricted  group  of  purchasers  for  investment  and  not  with a view to any
distribution  thereof shall be considered a  commercially  reasonable  sale. All
reasonable  attorneys'  fees,  expenses,   costs,  liabilities  and  obligations
incurred by Lender with  respect to the  foregoing  shall be added to and become
part of the Obligations, and shall be due on demand.

         5.       Waivers. The failure of Lender at any time or times to require
                  -------
Borrower to strictly  comply with any of the provisions of this Agreement or any
other present or future agreement between Borrower and Lender shall not waive or
diminish  any right of Lender  later to demand  and  receive  strict  compliance
therewith.  Any  waiver of any  default  shall  not  waive or  affect  any other
default,  whether prior or subsequent,  and whether or not similar.  None of the
provisions of this Agreement or any other agreement shall be deemed to have been
waived except by a specific written waiver signed by the Lender and delivered to
Borrower.  Borrower  waives  demand,  protest,  notice of protest  and notice of
default or  dishonor,  notice of payment and  nonpayment,  release,  compromise,
settlement,  extension or renewal of any commercial paper, instrument,  account,
general  intangible,  document  or  guaranty at any time held by Lender on which
Borrower  is or may in any way be  liable,  and  notice of any  action  taken by
Lender, unless expressly required by this Agreement.

         6.       Costs;  Indemnity.  Borrower shall reimburse Lender for all of
                  -----------------
the  following  ("Costs"):  all  reasonable  attorneys'  fees  and  all  filing,
recording, search, title insurance, appraisal, audit, and other reasonable costs
incurred  by Lender,  pursuant  to, in  connection  with,  or  relating  to this
Agreement or its enforcement  (whether or not any lawsuit is filed),  including,
but not  limited  to, any  reasonable  attorneys'  fees and costs  Lender  incur
relating to  preparation  and  negotiation  of this  Agreement and the documents
relating to this Agreement.  Lender shall provide an itemized statement of Costs
to Borrower, if so requested by Borrower. If either Lender or Borrower files any
lawsuit  against  the  other  predicated  'on a breach  of this  Agreement,  the
prevailing  party in such action  shall be  entitled  to recover its  reasonable
cost,  including  (but not limited to)  reasonable  attorneys'  fees incurred in
connection  therewith.  Borrower shall indemnity Lender for any losses,  claims,
actions,  causes  of  action,  penalties,  and  reasonable  costs  and  expenses
(including  reasonable attorneys' fees), which Lender may sustain or incur based
upon or  arising  out of  this  Agreement,  any of the  Obligations,  any  other
relationship  or  agreement  between  Lender and  Borrower,  or any other matter
relating to Borrower or the  Obligations,  except any such amounts  sustained or
incurred as the result of the gross negligence or willful misconduct of Under or
any of their directors,  officers,  employees,  agents,  attorneys, or any other
person affiliated with or representing Lender. The indemnity agreement set forth
in this  Section  shall  survive any  termination  of this  Agreement  and shall
continue in full force and effect.

         7.       Notices.  All notices under this Agreement shall be in writing
                  -------
and shall be deemed to have been given (a) upon receipt,  when delivered by hand
or by  electronic  facsimile  transmission,  or  (b)  upon  actual  delivery  by
overnight courier,  or (e) three days after mailing by regular  first-class mail
or  certified  mail return  receipt  requested,  addressed  to each party at the
addresses indicated on Schedule I hereto.

         8.       Governing  Law,  Jurisdiction;  Venue.  This Agreement and all
                  -------------------------------------
acts and  transactions  hereunder and all rights and  obligations  of Lender and
Borrower  shall be governed by the  internal  laws (and not the conflict of laws
rules of the State of  California.  As a material part of the  consideration  to
Lender to enter into this  Agreement,  Borrower  (i) agrees that all actions and
proceedings  relating directly or indirectly to this Agreement shall, at Lender'
option, be litigated in courts located within California, and that the exclusive
venue therefore shall be San Diego County; (ii) consents to the jurisdiction and
venue of any such court and consents to service of process in any such action or
proceeding by personal  delivery or any other method permitted by law; and (iii)
waives any and all rights Borrower may have to object to the jurisdiction of any
such court, or to transfer or change the venue of any such action or proceeding.



                                       3




         9.       Mutual  Waiver of Jury Trial.  BORROWER AND LENDER EACH HEREBY
                  ----------------------------
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING
OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT  BETWEEN  LENDER AND BORROWER,  OR ANY CONDUCT,  ACTS OR
OMISSIONS OF LENDERS OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS,  ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH LENDERS OR BORROWER,  IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

         10.      General. Should any provision of this Agreement be held by any
                  -------
court of competent  jurisdiction to be void or unenforceable,  such defect shall
not affect the remainder of this  Agreement,  which shall continue in full force
and effect.  This  Agreement  and such other written  agreements,  documents and
instruments as may be executed in connection  herewith are the final, entire and
complete  agreement  between  Borrower  and Lender and  supersede  all prior and
contemporaneous  negotiations and oral  representations  and agreements,  all of
which  are  merged  and  integrated  in  this  Agreement.   There  are  no  oral
understandings,  representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith. Any Lender may assign all or any part of its interest in
this  Agreement  and  the  Obligations  to any  person  or  entity,  or  grant a
participation  in, or security  interest  in, any  interest  in this  Agreement,
without notice to, or consent of,  Borrower.  Borrower may not assign any rights
under or interest in this  Agreement  without the Lead  Lender's  prior  written
consent.  This  Agreement may be executed in two or more  counterparts,  each of
which  shall be  deemed  an  original,  but all of which  shall  constitute  one
agreement.


                                       4





 "Borrower"

 EXTEN INDUSTRIES, INC.



 By:      /S/ Gregory F. Szabo
          -----------------------
          Gregory F. Szabo

 Title:   President
          -----------------------


 Address for notices:

 425 W. 5th Ave #201
 Escondido, CA 92025


 Attn: Gregory F. Szabo
 Fax:  (760) 781 3919




 "Lender"

 Name: George Colin
       ------------


 Signed ________________________



 Address for notices:

 23412 Pacific Park Dr. #20H
 Aliso Viejo, CA 92656-3341




                                       5

EX-10

                                                                    EXHIBIT 10.7


                        Collaborative Research Agreement

This  agreement  dated as of  November  1, 2001  between  Pfizer Inc, a Delaware
corporation,  having a principal  place of business  at 235 E 42nd  Street,  New
York, New York 10017 and its Affiliates  ("Pfizer") and MultiCell  Technologies,
Inc.,  having a  principal  place of  business  at 55 Access  Road,  Suite  700,
Warwick, RI 02886 ("MultiCell")


                                  WITNESSETH;

Whereas, Pfizer wishes to identify hepatocyte cell lines with bile canaliculated
morphology  and function  and to identify  cell lines  predictive  of CYP enzyme
induction in humans and cell lines that approximates metabolic response of liver
to  glucocorticoids  and to  assess  the  functional  carbohydrate  metabolizing
activity of such cell lines; and

Whereas,  MultiCell has a library of hepatocyte  cell lines and the expertise to
test cell lines for morphology, function, induction and metabolic response; and

Whereas,  Pfizer wishes to engage  MultiCell to test their library of hepatocyte
cell lines for morphology, function, induction and metabolic response;

Now Therefore,  in consideration  of the promises and mutual  covenants  herein,
MultiCell and Pfizer agree as follows:

1. Definitions
   -----------

         1.1    "Affiliate"  shall mean any  corporation,  firm,  partnership or
                 ---------
                other  entity  which   directly  or  indirectly   controls,   is
                controlled  by, or is under  common  control  with either of the
                parties.

         1.2    "Compound" shall mean a compound from Pfizer's  chemical library
                 --------
                and commercially  available  compounds provided to MultiCell for
                testing in the Research Plan.

         1.3    "Contract  Period" means the period  beginning  November 1, 2001
                 ----------------
                and ending October 31, 2002.







                                        2


         1.4    "MultiCell Confidential Information" shall mean all information,
                 ----------------------------------
                including,  but not  limited to  MultiCell  Materials,  which is
                disclosed by MultiCell to Pfizer and  designated  "Confidential"
                in writing by MultiCell at the time of  disclosure  to Pfizer or
                within thirty (30) days following  disclosure to the extent that
                such  information  is not (i)  known to Pfizer as of the date of
                disclosure   to  Pfizer   other   than  by  virtue  of  a  prior
                confidential  disclosure to Pfizer by MultiCell;  or (ii) is not
                disclosed in published literature,  or otherwise generally known
                to the public  through no fault of omission of Pfizer;  or (iii)
                is not obtained  from a third party free from any  obligation of
                confidentiality to MultiCell.

         1.5    "MultiCell  Material"  shall mean any materials,  including cell
                 -------------------
                lines  and/or  progeny  derived  from cell  lines,  provided  by
                MultiCell to Pfizer for testing in the Research Plan.

         1.6    "Pfizer   Confidential   Information"   means  all  information,
                 -----------------------------------
                including,  but not limited to Compounds  and Pfizer  Materials,
                which  is  disclosed  by  Pfizer  to  MultiCell  and  designated
                "Confidential' in witting by Pfizer at the time of disclosure to
                MultiCell or within thirty (30) days following disclosure to the
                extent that such information is not (i) known to MultiCell as of
                the date of  disclosure  to MultiCell  other than by virtue of a
                prior confidential disclosure to MultiCell by Pfizer; or (ii) is
                not disclosed in published  literature,  or otherwise  generally
                known to the public  through no fault or omission of  MultiCell;
                or  (iii)  is not  obtained  from a third  party  free  from any
                obligation of confidentiality to Pfizer.

         1.7    "Pfizer Material" shall mean any materials provided by Pfizer to
                 ---------------
                MultiCell for testing in the Research Plan.

         1.8    "Research  Plan"  shall mean the  written  plan  describing  the
                 --------------
                research  and  testing  of  Compounds,   Pfizer   Materials  and
                MultiCell  Materials to be carried out by MultiCell  and Pfizer.
                The  Research  Plan  is  appended  to and  made a part  of  this
                Agreement as Exhibit A.





                                        3

         1.9    "Results" shall mean all data generated from testing  Compounds,
                 -------
                Pfizer  Materials  and  MultiCell  Materials  according  to  the
                Research Plan.


2. Collaborative Research Program
   ------------------------------

         2.1.1  Purpose.  MultiCell  and Pfizer shall  conduct the Research Plan
                -------
                throughout  the Contract  Period.  The objective of the Research
                Plan is to identify  hepatocyte  cell lines with bile canaliculi
                morphology   and  function  and  to  identify   cell  lines  for
                prediction of CYP enzyme induction in humans and cell lines that
                approximate  metabolic response of liver to glucocorticoids  and
                to assess the functional  carbohydrate  metabolizing activity of
                such cell lines.

         2.1.2  Modifications  to Research  Plan  Modifications  to the Research
                --------------------------------
                Plan  shall be  appended  to  Exhibit  A and  made  part of this
                Agreement. Any modifications to the Research Plan must be agreed
                to in writing by both parties.

         2.2    Research Committee
                ------------------

         2.2.1  Purpose. Pfizer and MultiCell each shall appoint, in their sole,
                -------
                unfettered  discretion,  members of the Research Committee,  the
                responsibility of which shall include:

                (a) the review and  evaluation  of progress  under the  Research
                    Plan;

                (b) the preparation of any amendments to the Research Plan;

                (c) the  coordination  and monitoring of publication of research
                    results  obtained from and the exchange of  information  and
                    materials that relate to the Research  Plan.  (This function
                    shall survive the termination of this Agreement).

         2.2.2  Membership.  Substitutes for Committee  members may be appointed
                ----------
                at any time. The members initially shall be:






                                        4



                     Pfizer:               Jessica Mills
                     ------                Rob Poker
                                           Len Buckbinder
                                           Judy Treadway

                     MultiCell:            Ron Faris
                     ---------             Donna Trenkler
                                           Stephanie Cascio
                                           Jin Liu



         2.2.3  Chair.   The  Research   Committee   shall  be  chaired  by  two
                -----
                co-chairpersons, one appointed by Pfizer and the other appointed
                by MultiCell.

         2.2.4  Meetings.  The Research  Committee will meet at least once every
                --------
                quarter, in person, at places and on dates to be mutually agreed
                by both  parties.  Representatives  of Pfizer and  MultiCell  or
                both,  in addition to the  Research  Committee,  may attend such
                meetings at the invitation of both parties.

         2.2.5  Minutes.  The Research  Committee shall keep accurate minutes of
                -------
                its  deliberations  which  record  all  proposed  decisions  and
                actions  recommended  or  taken.  Drafts  of  minutes  shall  be
                delivered  to all  Research  Committee  members  within ten (10)
                business days after each meeting.  Draft minutes shall be edited
                by the  co-chairpersons  and shall be issued in final  form with
                their approval and agreement.

         2.2.6  Decisions.  All technical  decisions shall be made by Pfizer and
                ---------
                MultiCell, with final authority residing with Pfizer.

         2.2.7  Expenses,  Pfizer and  MultiCell  shall each bear all  expenses,
                --------
                including  reasonable  travel,  related to the  participation of
                theft   designated   members   of   the   Research    Committee,
                respectively.

         2.3    Reports and Materials.
                ---------------------

         2.3.1  Reports. During the Contract Period,  MultiCell shall furnish to
                -------
                the Research  Committee a quarterly  written report fifteen (15)
                days prior to the Research




                                        5

                Committee  meeting,  describing  the progress under the Research
                Plan and discussing and evaluating the results of such work.

         2.3.2  Compounds  and Pfizer  Materials.  During the  Contract  Period,
                --------------------------------
                Pfizer shall furnish to MultiCell Compounds and Pfizer Materials
                (a) as a matter of course as described in the Research  Plan, or
                (b)  upon  MultiCell's'  written  request.  MultiCell  will  not
                elucidate  the  structures  of any Compound or Pfizer  Material,
                shall use them only for testing  under the terms and  conditions
                of this  Agreement,  shall supply to Pfizer but  otherwise  keep
                confidential   the  Results  of  any  tests  conducted  on  such
                Compounds and Pfizer  Materials,  and shall at Pfizer's election
                either  return or  destroy  any  portion of such  Compounds  and
                Pfizer Materials remaining after the conclusion of the testing.

         2.3.3  MultiCell Materials. During the Contract Period, MultiCell shall
                -------------------
                furnish to Pfizer MultiCell  Materials (a) as a matter of course
                as described in the Research Plan, or (b) upon Pfizer's  written
                request.  Pfizer shall use them only for testing under the terms
                and conditions of this Agreement,  shall supply to MultiCell but
                otherwise keep  confidential  the Results of any tests conducted
                on such MultiCell  Materials,  and shall at MultiCell's election
                either return or destroy any portion of such MultiCell Materials
                remaining after the conclusion of the testing.

         2.4    Laboratory  Facilities and Personnel.  MultiCell and Pfizer each
                ------------------------------------
                shall provide laboratory facilities, equipment and personnel, in
                each case  suitable to the need,  for  carrying out the Research
                Plan.

         2.5    Training.  MultiCell  will provide  training as described in the
                --------
                Research  Plan,  at Pfizer's sole  expense.  The training  shall
                occur on  mutually  agreeable  dates and Pfizer  will pay actual
                costs for  supplies  during the  training,  travel  and  lodging
                expenses  in  connection  with  the  training  sessions.  Pfizer
                scientists may also seek  MultiCell's  advice by phone or email,
                from time to time on specific questions.




                                        6


3. Funding the Research Plan.
   -------------------------

         3.1.   In  consideration  for its  performance  of the  Research  Plan,
                Pfizer will pay  MultiCell  a total of seven  hundred and twenty
                four thousand five hundred dollars ($724,500.00) upon receipt of
                invoice from  MultiCell,  payable as follows:

                (a)  Within thirty (30) days of the execution of this Agreement,
                     a fee of four  hundred  and  seventy  seven  thousand  five
                     hundred dollars ($477,500.00).

                (b)  On  the  first  business  day  of  each  calendar  quarter,
                     starting  January 1, 2002,  a payment of sixty one thousand
                     seven  hundred  and  fifty  dollars   ($61,750.00)  against
                     MultiCell's  Invoice for such calendar  quarter for work to
                     be  performed  and costs to be  incurred  in such  calendar
                     quarter.


4. Treatment of Confidential Information
   -------------------------------------

         4.1    Confidentiality
                ---------------

         4.1.1  Pfizer and  MultiCell  each  agree that  during the term of this
                Agreement  and for  three  (3)  years  thereafter,  it will keep
                confidential,   and   will   cause   its   Affiliates   to  keep
                confidential,  all Pfizer Confidential  Information or MultiCell
                Confidential  Information and Results,  as the case may be, that
                is disclosed to it, or to any of its Affiliates pursuant to this
                Agreement.  Neither  Pfizer  nor  MultiCell  nor  any  of  their
                Affiliates  shall use such  Confidential  Information  except as
                expressly permitted in this Agreement.

         4.1.2  Pfizer  and  MultiCell  each agree  that any  disclosure  of the
                other's  Confidential  Information  to any officer,  employee or
                agent of the other  party or of any of its  Affiliates  shall be
                made  only  if and to the  extent  necessary  to  carry  out its
                responsibilities  under this  Agreement  and shall be limited to
                the   maximum    extent    possible    consistent    with   such
                responsibilities.   Pfizer  and  MultiCell  each  agree  not  to
                disclose  the  other's  Confidential  Information  to any  third
                parties under any circumstance  without written  permission from
                the other party.  Each party shall take such  action,  and shall
                cause  its  Affiliates  to take such  action,  to  preserve  the
                confidentiality of each other's  Confidential  Information as it
                would  customarily take to preserve  confidentiality  of its own
                Confidential Information.  Each party, upon the other's request,
                will return all the  Confidential  Information  disclosed to the
                other party pursuant to this Agreement, I






                                        7


                including  all copies and  extracts of  documents,  within sixty
                (60) days of the request upon the  termination of this Agreement
                except  for one (1) copy  which may be kept for the  purpose  of
                complying with continuing obligations under this Agreement.

         4.1.3  Pfizer and MultiCell  each  represent that all of its employees;
                and  any   subcontractors   or   consultants   to  such   party,
                participating  in the  Research  Plan who shall  have  access to
                Pfizer  Confidential   Information  and  MultiCell  Confidential
                Information are bound by agreement to maintain such  information
                in confidence.

         4.2    Publication.   Notwithstanding   any   matter   set  forth  with
                -----------
                particularity  in  this  Agreement  to  the  contrary,   Results
                obtained in the course of this  Agreement  may be submitted  for
                publication  following scientific review and subsequent approval
                by Pfizer's management, which approval shall not be unreasonably
                withheld.  After receipt of the proposed publication by Pfizer's
                management,  written  approval or disapproval  shall be provided
                within  thirty (30) days for a manuscript  and within sixty (60)
                days for an abstract  for  presentation  at, or inclusion in the
                proceedings of a scientific meeting,  and for a transcript of an
                oral presentation to be given at a scientific meeting and within
                sixty (60) days for a transcript of an oral  presentation  to be
                given at a  scientific  meeting  in order  for  Pfizer to delete
                Pfizer Confidential Information,

         4.3    Publicity.  No press releases or other  statements in connection
                ---------
                with this  Agreement  intended  for use in the public or private
                media  shall be made by Pfizer or  MultiCell  without  the prior
                written  consent of the other party. If either party is required
                by law or governmental  regulation to describe its  relationship
                to the other, it shall promptly give the other party notice with
                a copy of any  disclosure  it  proposes  to make.  In  addition,
                neither  party shall use the other  party's  name in  connection
                with any  products,  promotion,  or  advertising  without  prior
                written permission of the other party.

         4.4    Permitted Disclosure.
                --------------------

         4.4.1  Disclosure  Required by Law.  If either  party is  requested  to
                ---------------------------
                disclose the Confidential Information in connection with a legal
                or administrative  proceeding or is otherwise required by law to
                disclose the Confidential Information,  such party will give the
                other party prompt notice of such request.  The disclosing party
                may seek an  appropriate  protective  order or other  remedy  or
                waive compliance with the provisions of this Agreement.  If such
                party seeks a protective order or other remedy, the other party





                                        8


                will cooperate. If such party fails to obtain a protective order
                or  waive  compliance  with  the  relevant  provisions  of  this
                Agreement,  the other party will  disclose  only that portion of
                Confidential  Information which its legal counsel  determines it
                is required to disclose.


5. Intellectual  Property Rights.  The following  provisions relate to rights in
   -----------------------------
the  intellectual  property  developed by or for  MultiCell or Pfizer,  or both,
during the course of carrying out the Research Plan.

         5.1    Ownership.
                ---------

                (i)  All  MultiCell   Confidential   Information  and  MultiCell
                     Materials shall be owned by MultiCell.

                (ii) All  Pfizer  Confidential  Information,  Compounds,  Pfizer
                     Materials and Results shall be owned by Pfizer.

         5.2.   MultiCell  acknowledges  that  Pfizer will use the Results as it
                sees fit in its  research  and the  discovery,  development  and
                commercialization  of chemical and biological  products  without
                further compensation to MultiCell.

         5.3.   Pfizer acknowledges MultiCell will use the Results,  pursuant to
                the terms and  conditions of this  Agreement,  as it sees fit in
                its efforts to develop  and  commercialize  MultiCell  Materials
                without further  compensation to Pfizer,  provided such use does
                not require  disclosure of Pfizer  Confidential  Information  or
                compete  with  development  and   commercialization   of  Pfizer
                products.

6. Term, Termination and Disengagement.
   -----------------------------------

         6.1    Term.  Unless  sooner   terminated,   as  provided  below,  this
                ----
                Agreement shall expire on October 31, 2002.

         6.2    Events of  Termination.  The following  events shall  constitute
                ----------------------
                events of termination ("Events of Termination"):

                (a)  any written  representation  or warranty  by  MultiCell  or
                     Pfizer, or any of its officers, made under or in connection
                     with this  Agreement  shall prove to hare been incorrect in
                     any material respect when made;

                (b)  MultiCell or Pfizer  shall fail in any material  respect to
                     perform  or observe  any term,  covenant  or  understanding
                     contained in this Agreement or in any of the



                                        9


                     other  documents  or  materials  delivered  pursuant to, or
                     concurrently  with,  this  Agreement,  and any such failure
                     shall remain  unremedied for thirty (30) days after written
                     notice to the failing party.

         6.3    Termination.
                -----------

         6.3.1  Upon the occurrence of any Event of  Termination,  the party not
                responsible  may, by notice to the other party,  terminate  this
                Agreement.

         6.3.2  Termination  of this  Agreement  for any reason shall be without
                prejudice to:

                (a)  the rights and obligations of the parties provided in those
                     Sections of the Agreement which by virtue of their term and
                     condition extend beyond any termination of this Agreement;

                (b)  any other remedies which either party may otherwise have.


7. Representations and Warranties. MultiCell and Pfizer each represents and
   ------------------------------
warrants as follows:

         7.1    It is a corporation  duly organized,  validly existing and is in
                good  standing  under the laws of Rhode  Island and the State of
                Delaware,  respectively,  is  qualified to do business and is in
                good standing as a corporation in each jurisdiction in which the
                conduct  of its  business  or the  ownership  of its  properties
                requires  such  qualification  and has all  requisite  power and
                authority,  corporate or  otherwise,  to conduct its business as
                now being  conducted,  to own,  lease and operate its properties
                and to  execute,  deliver and perform  this  Agreement,

         7.2    The execution,  delivery and performance by it of this Agreement
                have been duly authorized by all necessary  corporate action and
                do not and will not (a)  require  any consent or approval of its
                stockholders,  (b)  violate  any  provision  of any  law,  rule,
                regulations,   order,  writ,  judgment,   injunctions,   decree,
                determination award presently in effect having  applicability to
                it or any  provision  of its  certificate  of  incorporation  or
                by-laws  or (c)  result in a breach of or  constitute  a default
                under any material agreement,  mortgage,  lease, license, permit
                or other  instrument  or obligation to which it is a party or by
                which it or its properties may be bound or affected.

         7.3    This  Agreement is a legal,  valid and binding  obligation of it
                enforceable   against  it  in  accordance  with  its  terms  and
                conditions,  except as such  enforceability  may be  limited  by
                applicable bankruptcy, insolvency, moratorium, reorganization or
                similar laws, from time to time in effect,  affecting creditor's
                rights generally.




                                       10

         7.4    It is not  under  any  obligation  to  any  person,  or  entity,
                contractual or otherwise, that is conflicting or inconsistent in
                any  respect  with the  terms of this  Agreement  or that  would
                impede the diligent and complete fulfillment-of its obligations.


         7.5    It has good and marketable  title to or valid leases or licenses
                for, all of its properties,  rights and assets necessary for the
                fulfillment  of its  responsibilities  under the Research  Plan,
                subject to no claim of any third party  other than any  relevant
                lessors or licensors of which it is aware.

8. Indemnification.  Pfizer and MultiCell will indemnify each other for damages,
   ---------------
settlements,  costs, legal fees and other expenses incurred in connection with a
claim by a third party (including  without  limitation by any employee of Pfizer
or  MultiCell,  as the case may be) against  either party based on any action or
omission of the indemnifying party's agents,  employees,  or officers related to
its obligations  under this  Agreement;  provided,  however,  that the foregoing
shall  not  apply  (i) to the  extent  the  claim is found to be based  upon the
negligence,   recklessness   or  willful   misconduct   of  the  party   seeking
indemnification;  or (ii) if such  party  fails to give the other  party  prompt
notice of any claim it receives and such failure materially prejudices the other
party with  respect to any claim or action to which its  obligation  pursuant to
this Section  applies.  Notwithstanding  the foregoing,  Pfizer shall  indemnify
MultiCell  with respect to any and all claims  arising from  Pfizer's use of the
Results,  to the  extent  the  claim is found to be based  upon the  negligence,
recklessness  or  willful  misconduct  of  MultiCell.  Each  party,  in its sole
discretion,  shall choose legal counsel, shall control the defense of such claim
or action and shall have the right to settle  same on such terms and  conditions
it deems advisable;  provided  however,  it shall obtain the other party's prior
consent to such part of any settlement which requires payment or other action by
the  other  party or is likely to have a  material  adverse  effect on the other
party's business.

9. Notices.  All notices shall be in writing mailed via certified  mail,  return
   -------
receipt requested, courier, or facsimile transmission addressed as follow, or to
such other address as may be designated from time to time:

               If to Pfizer:        Pfizer Global Research & Development
                                    Eastern Point Road
                                    Groton, CT 06340






                                       11


                                    Attention:  Vice President Strategic
                                    Alliances--PGRD
                                    copy to: Assistant General Counsel--PGRD
               If to MultiCell:     MultiCell Technologies, Inc.
                                    55 Access Road, Suite 700
                                    Warwick, RI 02886
                                    Attention: Dr. Ron Paris
                                    Copy to: Exten Industries

         Notices shall be deemed given as of the date sent.


10.  Governing  Law.  This  Agreement  shall be  governed  by and  construed  in
     --------------
accordance with the laws of the State of New York.


11. Miscellaneous,
    -------------

         11.1   Binding  Effect.  This Agreement shall be binding upon and inure
                ---------------
                to the  benefit  of  the  parties  and  their  respective  legal
                representatives, successors and permitted assigns.

         11.2   Headings.  Paragraph  headings are inserted for  convenience  of
                --------
                reference only and do not form a part of this Agreement.

         11.3   Counterparts.  This Agreement may be executed  simultaneously in
                ------------
                two or more  counterparts,  each of  which  shall be  deemed  an
                original.

         11.4   Amendment.  Waiver.  This  Agreement  may be amended,  modified,
                ------------------
                superseded or canceled, and any of the terms may be waived, only
                by a written  instrument  executed by each party or, in the case
                of waiver, by the party or parties waiving compliance. The delay
                or  failure  of any  party  at any  time  or  times  to  require
                performance  of any  provisions  shall in no manner  affect  the
                rights at a later  time to  enforce  the same.  No waiver by any
                party of any condition or of the breach of any term contained in
                this Agreement,  whether by conduct, or otherwise, in any one or
                more  instances,  shall be  deemed to be,  or  considered  as, a
                further or  continuing  waiver of any such  condition  or of the
                breach of such term or any other term of this Agreement.

         11.5   No Third  Party  Beneficiaries.  No third  party  including  any
                ------------------------------
                employee of any party to this  Agreement,  shall have or acquire
                any rights by reason of this Agreement.




                                       12


                Nothing   contained  in  this  Agreement   shall  be  deemed  to
                constitute  the  parties  partners  with each other or any third
                party.

         11.6   Assignment and Successors. Unless the other party first consents
                -------------------------
                in writing,  neither  party may assign this  Agreement or any of
                its  duties  under  this  Agreement,   other  that  to  (a)  and
                Affiliate;   (b)  any   successor   entity   due  to  merger  or
                consolidation;  or (c) any purchaser of all or substantially all
                of its assets.

         11.7   Force Majeure.  Neither Pfizer nor MultiCell shall be liable for
                -------------
                failure of or delay in performing  obligations set forth in this
                Agreement,  and  neither  shall  be  deemed  in  breach  of  its
                obligations,  if  such  failure  or  delay  is  due  to  natural
                disasters or any causes  reasonably beyond the control of Pfizer
                or MultiCell.

         11.8   Severability.  If any provision of this  Agreement is or becomes
                ------------
                invalid  or  is  ruled   invalid  by  any  court  of   competent
                jurisdiction or is deemed unenforceable,  it is the intention of
                the parties  that the  remainder of the  Agreement  shall not be
                affected.  IN WITNESS  WHEREOF,  the  parties  have  caused this
                Agreement   to   be   executed   by   their   duly    authorized
                representatives.

                                      PFIZER INC

                                      Vice President

                                      Title:  Strategic Alliances
                                              -------------------




                                      MultiCell Associates, Inc.

                                      By:________________________

                                      Title:  Vice President Strategic Alliances
                                              ----------------------------------



cc: Pfizer Inc, Legal Division, Groton, CT 06340









                                    Exhibit A
                                    ---------

                         Collaborative Research Proposal
                         -------------------------------
                              MultiCell Associates
                                       and
                                   Pfizer Inc









Part 1.  Identification of an appropriate  cell system for assessment of biliary
excretion.

Part 2.  Identification and validation of appropriate  cell lines for predictive
of CYP enzyme induction in humans.

Part 3.  To identify an  immortalized liver  cell line  and/or a standard source
and  method  for  primary  hepatocyte  culture,  that  approximates  the  normal
metabolic response of liver to glucocorticoids  (e.g. induction of gluconeogenic
enzymes).

Part 4.  To identify an appropriate  human hepatocyte cell  line for utilization
in experiments to examine basal and hormone regulated  carbohydrate and or lipid
metabolism.








 MultiCell Research Proposal Part 1(J. Xu & R. Polzer, CEO)
 ---------------------------------------------------------

Aim:  Identification  of an  appropriate  cell system for  assessment of biliary
excretion.

Proposed Plan of Action:

1)  Identification  of  appropriate  cell  or  cell  line  for  bile  canaliculi
morphology and function. Goal: To identify a hepatocyte cell/cell line with bile
canaliculi morphology and function.

Preferred   Approach:   To   use   carboxydichlorofluorescein    diacetate   and
rhodamine-123  as fluorescent  probes to assess bile  canaliculi  morphology and
function.  Digital pictures of key images (both  fluorescent and phase contrast)
should be provided from all studies. Expected timeframe is 3 to 6 months.

Description.   Using  phase  contrast,   fluorescent  microscopy,  and  confocal
microscopy,  Liu et al.  Described  and  photographed  the biliary  excretion of
carboxydichlorofluorescein,  a fluorescent MRP2 probe (Liu et al., AmericanJ. of
Physiology,  Vol. 277,  Issue 1,  G12-G21,  July 1999).  Similarly,  Sai et al..
Described and photographed the biliary excretion of rhodamine-123  into the bile
canaliculi of WIF-B cells,  a polarized  liver derived cell line (Sai et al., J.
of Cell Sci., vol. 112, 4535-4545,  1999). These two publications form the basis
of the studies proposed herein.

Part I. Fixed time-point screen (performed by MultiCell  scientists at MultiCell
Associate).  Hepatocyte  monolayers  are rinsed with buffer  (e.g.,  MultiCell's
media F without phenol red). Carboxydichlorofluorescein diacetate (2 ug/ml final
is a  suggested  initial  concentration)  or  rhodamine-123  (0.5 uM  final is a
suggested  initial  concentration)  is added to this  buffer and  incubation  is
allowed at 37C for 10min. Thereafter,  the monolayers are rinsed four times with
buffer  to  remove  extracellular  probe  before  viewing/photographing  with  a
fluorescent microscope. If a cell or cell line form tight cell junction and bile
canaliculi,  a fluorescent network (as pictured by fluorescent  microscope) will
co-localize with inter-cellular bile canaliculi (as pictured by phase contrast).

Part II. Time-course  experiment (performed by MultiCell scientists at MultiCell
Associate). Hepatocyte or hepatocyte clones that passed Part I study are subject
to this time-course experiment.  The goal of this experiment is to show that the
fluorescent  network is indeed caused by probe uptake into hepatocytes  followed
by efflux into bile canalicular (as opposed to direct bile canalicular  uptake).
Basically,  hepatocytes  are  rinsed  with  buffer.  Carboxydichlorofluorescein,
diacetate or  rhodamine-123 is added to this buffer and incubation is allowed at
37C for 2 min this time.  The  monolayers  are  quickly  rinsed  four times with
buffer  to  remove  extracellular  probe.  Every 2 min  afterwards,  cells  were
viewed/photographed   with  a   fluorescent   microscope.   If  a  decrease   in
intracellular fluorescence is observed with a concomitant increase of canaliculi
fluorescence, a good cell/cell line is identified.


                                        1




Expected Outcome. This study will be conducted by MultiCell Associates. For this
study,   MultiCell  scientists  will  also  optimize  culturing  conditions  for
multiwell  plate formats (either the Permanox  plastic plates or  Glass-bottomed
multiwell plate).

If one or more cell or cell lines are identified  that exhibits  functional bile
canaliculi,  Pfizer  scientists  will go to MultiCell or MultiCell  will come to
Pfizer to learn/teach the culturing and experimentation with these cells. Pfizer
will also acquire the necessary  material  (cell or cell lines,  media,  buffer,
protocol, etc.) to carry out biliary excretion studies in-house.


 Specific Aims and Timeline
 --------------------------

 1.      Set up and validate assay using shod-term primary  hepatocyte  cultures
         (human) (4-6 week.).

 2.      Expand and  screen  top 100 human  clones in  monolayer  culture  using
         carboxydichlorfluorescein and rhodamine-123. (3-4 months)

                       Project cost:      $219,000







                                       2




 MultiCell Research Proposal Part 2 (S. de Morais & J. Mills, CEG)
 ----------------------------------------------------------------

Aim:  Identification  and validation of appropriate cell lines for predictive of
CYP enzyme induction in humans.

Proposed Plan of Action:

2)  Identification  and validation of an appropriate cell line for predictive of
CYP enzyme induction in humans.

Preferred  Approach:  To assess CYP3A4 induction in the human hepatocytes clones
and  pooled  cryopreserved  hepatocytes.  Induction  should  be  consistent  and
predictive of human in vivo.  Studies for each of the cell lines are  described.
Photographs of cell morphology should be provided in all studies.

Step 1: Quick assessment of calls for rifampin induction of CYP3A4

Human Hepatocyte  Clones.  MultiCell will culture human hepatocyte clones in the
presence of vehicle and 10 uM rifampin for 72 hours. Total RNA will be extracted
from cell lysates at MultiCell  and shipped to Pfizer.  Pfizer  scientists  will
quantitate  levels of mRNA for CYP3A4  using the  Invader(R)  assay  (Third Wave
Technologies,  www.twt.com).  A clone will be deemed  successful if the level of
CYP3A4 mRNA in the  rifampin-treated  sample is >5 fold higher than that seen in
vehicle-treated  sample. If more than one clone meets this criteria,  the clones
will be  assessed  based on 2  criteria:  1) the level of  induction  (increased
degree of induction is  preferable)  and 2) presence of other drug  metabolizing
enzyme mRNAs (i.e. CYP1 A2).

Cryopreserved  Human  Hepatocytes.  MultiCell will culture  cryopreserved  human
hepatocyte  pooled  from  multiple  donors in the  presence of vehicle and 10 uM
rifampin for 72 hours.  Assessment  of CYP3A4  activity  will be  determined  by
endpoint assay for the formation of 6-(beta)  -hydroxytestosterone  by MultiCell
scientists.  Total RNA will be  extracted  from cell  lysates at  MultiCell  and
shipped to Pfizer.  Pfizer scientists will quantitate levels mRNA for CYP3A4 and
other drug  metabolizing  enzymes using the Invader(R) assay. Data for levels of
CYP3A4 mRNA and enzyme activity  endpoint data will be compared for correlation.
This cellsystem will be deemed  acceptable if the magnitude of CYP3A4  induction
is comparable to that seen in primary human hepatocytes, based on the literature
or from a parallel study.  MultiCell will provide training to Pfizer  scientists
under the terms of the Agreement.

Step 2:  Assessment  of  induction  with a panel of inducers on those cells that
showed optimum CYP3A4 Induction with rifampin.

MultiCell  will culture cells in the presence of inducer for 72 hours (see Table
1).  Assessment of CYP3A4  activity will be determined by endpoint assay for the
formation of  6-(beta)-hydroxytestosterone by MultiCell scientists. Cell lysates
should  be  frozen  for  future  total  RNA  extractions.  When  possible,  this
experiment should be repeated using fresh primary human hepatocyte  cultures for
comparison.  This  cell  line will be  deemed  acceptable  if the rank  order of
inducers is comparable to that seen in humans, based on the


                                       3



literature  or from the  parallel  study in primary  human  hepatocytes.  If the
results are  positive,  total RNA will be extracted  from frozen cell lysates at
MultiCell and shipped to Pfizer.  Pfizer  scientists will  quantitate  levels of
mRNA for CYP3A4 using the Invader(R)  assay.  Data for levels of OYP3A4 mRNA and
enzyme activity endpoint data will be compared for correlation.


        Inducer                               CYP3A4*  Conc.

   1    Reserpine                             P               10 uM
   2    Rifampicin                            P               10 uM
   3    Troglitazone                          P               10 uM
   4    Mifepristone (RU-486)                 P               10 uM
   5    Clotrimazole                          M-P             l0 uM
   6    Phenobarbital-Na                      M-P           1000 uM
   7    Dexamethasone                         M               50 uM
   8    Rifabutin                             W               10 uM
   9    Midazolam                             W-none          10 uM
   10   B-naphthotlavone                      none            10 uM
   11   Chrysin                               none            25 uM
   12    Vehicle                              none

   * expected induction: P = potent; M = moderate; W = weak



2) Validation and Optimization of the Chosen Cell System(s).

Preferred Approach: Tao assess CYP3A4 and CYP1A2 induction in the cell system(s)
chosen from the initial  studies.  Induction should be consistent and predictive
of human in vivo.  Photographs  of cell  morphology  should be  provided  in all
studies.  Expected  timeframe is 3 to 6 months.  Validation.  The cell system(s)
chosen  from the initial  set of  experiments  will be  validated  by  MultiCell
scientists  repeating the study for the panel of inducers described  previously.
This study will serve to assess  reproducibility  of results.  In addition,  the
study will involve assessment of earlier timepoints (16, 24 and/or 48 hours) and
Include CYP1A2 enzyme activity endpoint assay for some of the samples. Total RNA
will be extracted  from cell lysates at MultiCell and shipped to Pfizer.  Pfizer
scientists will quantitate levels of mRNA for CYP3A4 and other drug metabolizing
enzymes using the Invader(R) assay.

Optimization.  Pfizer  will  work  with  Nunc  (or  comparable  vendor)  for the
development of Permanox  multi-well plates.  MultiCell  scientists will optimize
culturing conditions for multiwell plate formats.



                                       4




         Specific Alms and timeline for conducting experiments (1 year)

1.     Perform drug  metabolism  experiment  with  cryopreserved  individual and
       pooled human hepatocytes (6 weeks)

2.     Prepare RNA from 100 human hepatocyte cell lines that had been exposed to
       either vehicle or rifampin (3-4 months).  It is highly  recommended  that
       MCA also prepare  cryopreserved  cells from each clone that would be used
       if further studies were warranted.

3.     Perform  testosterone  assay and prepare  RNA from top 5-10 clonal  lines
       exposed to a panel of CYP3A4  inducers  using up to 10  different  clonal
       cell lines. (1-3 months)

4.     Validation and  optimization of "Induction  bioassay" using top three MCA
       clones  (Human and  porcine) (3 months)  Optimize  and  validate  culture
       conditions for multiwell plate format (3-6 months)

       Project Cost:      $275,000





                                       5





 MultiCell Research Proposal Part 3 (L. Buckbinder, AI2.)
 -------------------------------------------------------

Aims:  1) To  Identify an  immortalized  liver cell line that  approximates  the
normal  metabolic  response  of  liver to  glucocorticoids  (e.g.  induction  of
gluconeogenic enzymes).

Approach  1) to identify  one or more  immortal  cell clones from the  MultiCell
hepatocyte  collection  that  meets  the  criteria  of  glucocorticoid-regulated
expression of the  gluconeogenic  enzymes TAT and PEPCK.  For the initial study,
MultiCell will culture human  hepatocyte  clones for ~18 hours in the absence or
presence of 50 and 500 nM  dexamethasone  and prepare total RNA (~5 ug). The RNA
will be transferred to Pfizer and Pfizer will test the RNA for the expression of
gluconeogenic  enzymes (e.g.  TAT  [tyrosine  amino  transferase]  and PEPCK) by
TaqMan analysis.  All/selected cell clones with Inducible  TAT/PEPCK  expression
(>8 fold) will then be  characterized  by Pfizer  Scientists for  glucocorticoid
responsiveness.  MultiCell will provide the candidate cell clones along with the
preferred  growth media (minus  glucocorticoid  source).  A clone will be deemed
successful if there is a significant and dose  responsive  increase (>8 fold) in
the  level of TAT in  response  to  glucocorticoids  addition  (e.g.  a range of
dexamethasone between 10 nM and 10 uM) and which is competed- by-the addition of
the- glucocorticoid  antagonist (RU486). -TAT enzyme activity will be-correlated
with RNA induction in follow-up assays conducted by Pfizer Scientists. Cell line
screening may occur by processing  selected subsets of clones (10-25  individual
lines)  until  one or  more  suitable  lines  is/are  identified.  Screening  of
additional  cell lines will  continue  until one or more  successful  clones are
identified  or until all  immortal  lines have been  examined or if both parties
agree that  reasonable and sufficient  effort has been extended,  Data developed
using reference compounds (e.g. cortisol,  dexamethasone,  RU486) will be shared
with MultiCell.  Sharing of data generated with Pfizer  compounds will be solely
Pfizer's  discretion.

Expected time: frame:  process and deliver specified RNA samples from 60 or more
clones each quarter.

Optional Assays and Publication: If the primary or immortal cell clones prove to
be  a  good  model  for  metabolic  responses,  we  may  extend  the  cell  line
characterization  to include expression  profiling using reference and/or Pfizer
compounds.  If this expression analysis is pursued, we will share with MultiCell
the results  obtained with reference  compounds as indicated  above.  Additional
work may include assessing if the anti-inflammatory  activity of glucocorticoids
in the chosen MultiCell clones.  For example,  we may assay for the upregulation
of cytokines,  acute phase proteins,  etc. in response to typical inducers (PMA,
IL-1, etc.).


                          Specific Aims and Timeline.

1.     MCA will  prepare and provide  5ug of RNA from 100 human  clones  treated
       with vehicle,  50 and 500 nM  dexamethasone.  (Note:  if done at the same
       time as the experiments in Project 2, then this would entail only require
       making an  additional  aliquot  of RNA from the common  vehicle  control.
       Otherwise,  it will  entail one more  sample be  prepared).  It should be
       noted that these  samples  will have been treated  with  methanol,  (this
       would be OK if we first  validate  the  methanol  vehicle  has no adverse
       effect on TAT induction in the primary hepatocytes),  the vehicle control
       for project 2 (3-6 months).

       Cost of study:     $150,000


                                       6




MultiCell Research Proposal (J.L Treadway, R. K. McPherson,  and K. Landschultz,
CVMD/Diabetes)

Aim: Identification of an appropriate human hepatocyte cell line for utilization
in experiments to examine basal and hormone regulated  carbohydrate and or lipid
metabolism.

Part 1:

Goal:    To assess the functional carbohydrate metabolizing activity of the cell
         line(s) identified in Project 3.

Approach:  Up to ten (10) cell lines identified from Project #3 will be provided
by MultiCell in a suitable format and tested by Pfizer in functional assays that
will  assess  their  metabolic  activity.  The  results  will be compared to the
results of standardized  hepatocyte preparations presently used in the lab (e.g.
freshly  isolated  rat  hepatocytes  and  commercially-prepared   primary  human
hepatocytes). The following assays will be performed:

         Glucogenesis:   The   ability   of  the   cell   line(s)   to   convert
         [14C][14C]-labeled  lactic acid to [][14C]-labeled  glucose under basal
         and hormone  (e.g.  glucagon)  stimulated  conditions  will be assessed
         using a  routinely  used  assay that  involves  the  separation  of the
         substrate  from the product by mixed-bed  ion  exchange  chromatography
         (1).

         Glucose  Output:  The cell line(s) will be tested for their  ability to
         release  glucose  into the  incubation  medium  under basal and hormone
         (e.g.  glucagon)  stimulated  conditions,  using an assay that involves
         sequential  sampling  of the assay media for  determination  of glucose
         concentration (2).

         Glycogenolysis:   Basal  and   hormone   (e.g.   glucoagon)   regulated
         glycogenolysis  will be  examined in either of two ways.  One  approach
         involves  prelabelling  the cells  with  [14C]-labeled  glucose  (using
         insulin  to  stimulate  glycogenesis)  and  then  examine  the  loss of
         glycogen-associated  radioactivity after stimulation with glucagon, The
         second  approach  would be to directly  measure the  cellular  glycogen
         content in untreated and glucagon-treated cells (3).



References:

1.  Blackmore,  P.  F.,  McPherson,  R.  K.,  and  Stevenson,  R. W.  Metabolism
    42(12):1583-1587, 1993.
2.  Parker, J. C., et al. Diabetes 47:1630-1638, 1998.
3.  Martin, W. H., et al. PNAS 95:1776-1781, 1998.


    Project Cost:   $80,000.00


                                       7

EX-31

Exhibit 31.1

Form 10-KSB Certifications

I, W. Gerald Newmin, certify that:
1.	I have reviewed this annual report on Form 10-KSB of Exten Industries, Inc.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
	a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
	b)	evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
	c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6.	The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
			Date: November 17, 2003
			/S/ W. Gerald Newmin W. Gerald Newmin Chief Executive Officer

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EX-31

Exhibit 31.2

I, Gregory F. Szabo, certify that:
1.	I have reviewed this annual report on Form 10-KSB of Exten Industries, Inc.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
	a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
	b)	evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
	c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.	The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6.	The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
			Date: November 17, 2003
			/S/ Gregory F. Szabo Gregory F. Szabo Treasurer

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EX-32

Exhibits

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Exten Industries, Inc. (the "Company") on Form 10-KSB for the period ending November 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gerald W. Newmin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
		Dated	November 17, 2003
		By:	/s/ Gerald W. Newmin
		Name:	Gerald W. Newmin
		Title:	Chief Executive Officer

EX-32

Exhibits

CERTIFICATION OF TREASURER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Exten Industries, Inc. (the "Company") on Form 10-KSB for the period ending November 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gregory F. Szabo, Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
		Dated	November 17, 2003
		By:	/s/ Gregory F. Szabo
		Name:	Gregory F. Szabo
		Title:	Treasurer

- 20 -
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