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The oviparous Port Jackson shark Heterodontus portusjacksoni embryo has a long incubation of 10–11 months during which it undergoes major morphological changes. Initially the egg capsule is sealed from the external environment by mucous plugs in either end of the capsule. Four months into incubation, the egg capsule opens to the surrounding sea water. Fifteen stages of development are defined for this species, the first 10 occur within the sealed capsule, the remaining five after capsule opening to hatching. The functional significance of major definitive characters such as circulation within the yolk membrane and embryo, rhythmic lateral movement of the embryo, external gill filaments, heart activity, internal yolk supplies, egg jelly and the significance of the opening of the egg capsule are described. The egg jelly in the sealed capsule functions to mechanically protect the embryo during early development, however, it eventually creates a hypoxic environment to the embryo as the available oxygen is used up. This generates several physiological challenges to the developing embryo. It is able to overcome these problems by morphological changes such as increasing the effective surface area for gaseous exchange with the development of external gill filaments, fins and extensive circulation in both the embryo and attached external yolk sac. These adaptations become limiting as the embryo grows and respiratory needs outweigh the available oxygen. At this time, the mucous plugs dissolve and the capsule becomes open to the external environment. [ABSTRACT FROM AUTHOR]