FORM 10-KSB
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(MARK ONE)

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 OR

[_]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 FOR THE TRANSITION

          PERIOD FROM ______________ TO ______________

                        Commission file number: 333-87224
                        ---------------------------------

                       ELECTRONIC SENSOR TECHNOLOGY, INC.
-------------------------------------------------------------------------------
              (Exact name of small business issuer in its charter)

                  (formerly known as Bluestone Ventures, Inc.)

            Nevada                                  98-0372780
---------------------------------      -----------------------------------
 (State or other jurisdiction          (I.R.S. Employer Identification No.)
  of incorporation or organization)

       1077 Business Center Drive,
        Newbury Park, California                   91320
-----------------------------------------       ---------------
(Address of principal executive offices)         (Zip Code)

                    Issuer's telephone number: (805) 480-1994

         Securities Registered Under Section 12(b) of the Exchange Act:
                                      None

         Securities Registered Under Section 12(g) of the Exchange Act:
                         Common Stock, $0.001 par value
                                (Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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
[X] No [ ]

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

State issuer's revenues for most recent fiscal year:  $0

The number of shares of the  Registrant's  common  stock,  par value  $0.001 per
share,  outstanding as of March 31, 2005 was  53,968,643.  The aggregate  market
value of the voting and non-voting  common equity held by  non-affiliates of the
Registrant  on March 31,  2005,  based on the  average  bid and ask price on the
Over-The-Counter  Bulletin  Board of $2.32 as of such  date,  was  approximately
$108,058,795.44.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 53,968,643.

Documents Incorporated by Reference:  None.

Transitional Small Business Format.   Yes [  ]   No [X]


<PAGE>
                    NOTE REGARDING FORWARD LOOKING STATEMENTS

         Certain  information  contained  herein  constitutes   "forward-looking
statements,"  including without limitation  statements  relating to goals, plans
and  projections  regarding the Company's  financial  position and the Company's
business strategy.  The words or phrases "would be," "will allow," "intends to,"
"may  result," "are expected  to," "will  continue,"  "anticipates,"  "expects,"
"estimate," "project," "indicate," "could," "potentially,"  "should," "believe,"
"considers"  or similar  expressions  are intended to identify  "forward-looking
statements",  as well as all  projections  of future  results of  operations  or
earnings.  Such  forward-looking  statements  involve  known and unknown  risks,
uncertainties   and  other  factors  which  may  cause  the  actual  results  or
achievements  of the  Registrant  to be  materially  different  from any  future
results or achievements expressed or implied by such forward-looking statements.
Such factors  include,  but are not limited to, the following:  risks related to
risks of technological change; the Registrant's dependence on key personnel; the
Registrant's  ability to protect its intellectual  property  rights;  government
regulation  of  homeland  security  companies;  risks of  technological  change;
uncertainty regarding infringing  intellectual property rights of others and the
other risks and uncertainties described in this report.

            We do not  undertake  any  responsibility  to release  publicly  any
revisions to these  forward-looking  statements  to take into account  events or
circumstances that occur after the date of this filing. Additionally,  we do not
undertake  any   responsibility   to  update  you  on  the   occurrence  of  any
unanticipated  events  that may  cause  actual  results  to  differ  from  those
expressed or implied by the forward-looking statements contained in this filing.
Please read  carefully  the risk  factors  disclosed in this report and in other
filings we make with the Securities and Exchange Commission.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

         We are  engaged  in the  development,  manufacturing,  and  sales  of a
patented  product we call  zNose(R):  a device  designed  to detect and  analyze
chemical  odors and vapors,  or, in another  words,  an  electronic  "nose".  We
believe the  zNose(R) is superior  to other  electronic  "noses"  because of its
speed,  specificity  and  sensitivity.  The zNose(R) is capable of measuring and
quantifying the chemistry of any compound,  fragrance,  vapor or odor with parts
per  trillion  sensitivity  in 10 seconds.  We also believe the zNose(R) has the
unique  ability to quantify and speciate the subject  chemical vapor by creating
visual  olfactory  images.  This enables the measured odor or vapor to be easily
identified by the user.

         We  believe  that our  products  will have  broad  applications  in the
homeland  security and laboratory  instrumentation  markets.  We are involved in
ongoing product  research and development  efforts in that regard.  We have also
concentrated our efforts on further product development, testing and proving and
assembling our sales and support organization.

         Electronic   Sensor   Technology,   Inc.  ("EST")  was  originally
incorporated under the name "Bluestone  Ventures,  Inc.", on July 12, 2000. From
inception  until  February 1, 2005,  we engaged in the  business  of  acquiring,
exploring  and  developing  certain  mining  properties  in  Canada.   Upon  the
acquisition of Electronic  Sensor  Technology,  LP (the "ELP"), we abandoned our
mining  business and adopted ELP's  business of  developing,  manufacturing  and
selling  the vapor  analysis  device.  Prior to the closing of the  Mergers,  on
January 26, 2005, we changed our name to "Electronic Sensor Technology, Inc."

<PAGE>

         Our  executive  offices are  located at 1077  Business  Center  Circle,
Newbury Park, California 91320 and our telephone number is (805) 480-1994.

HISTORY AND BACKGROUND

         We were incorporated under the laws of the state of Nevada as Bluestone
Ventures,  Inc.  on July 12,  2000.  From the  date of our  incorporation  until
February 1, 2005, we were in the business of acquiring  and exploring  potential
mineral properties in Ontario,  Canada. We changed our name to Electronic Sensor
Technology,  Inc. on January 26, 2005 in connection  with the acquisition of two
corporations  that had together  owned ELP.  Since the  acquisition  of ELP, our
business  has been the  development,  manufacture  and  sale of  chemical  vapor
analysis technology devices. We have abandoned our mining exploration business.

         Electronic Sensor Technology, LP Acquisition

         On February 1, 2005, pursuant to the terms of an Agreement and Plan of
Merger ("Merger  Agreement") by and among the Registrant;  Amerasia  Technology,
Inc., a California  corporation  ("Amerasia") and holder of approximately 55% of
the partnership  interests of ELP; L & G Sensor  Technology,  Inc., a California
corporation and holder of approximately 45% of the partnership  interests of ELP
("L&G");  Amerasia  Acquisition  Corp.,  a  Nevada  corporation  ("AAC")  and  a
wholly-owned  subsidiary of the Registrant;  and L&G Acquisition Corp., a Nevada
corporation  and a  wholly-owned  subsidiary  of  the  Registrant  ("LAC"),  the
Registrant acquired 100% of the outstanding equity partnership  interest of ELP.
Under the Merger  Agreement,  (i) Amerasia merged with and into AAC such that it
became a  wholly-owned  subsidiary of the  Registrant,  (ii) L&G merged with and
into LAC such that L&G became a wholly-owned subsidiary of the Registrant, (iii)
as a result of the  mergers  of (i) and (ii)  (the  "Mergers"),  the  Registrant
indirectly  acquired the  partnership  interests of ELP, and (iv) the Registrant
issued 20,000,000 shares of its common stock to the shareholders of Amerasia and
L&G.

         In  November  2004,  ELP also  sold  $200,000  in  limited  partnership
interests to certain bridge  investors.  Concurrent  with the Mergers,  these LP
interests  were  directly  exchanged  into  200,000  EST shares and  warrants to
purchase 200,000 EST shares at $1.00 per share to certain investors.

         The Registrant also entered into various  Subscription  Agreements with
certain investors on January 31, 2005. Under these Subscription Agreements,  the
Registrant  issued and sold 3,985,000  shares of its common stock ("Shares") and
warrants to purchase  3,985,000  Shares at $1.00 per share to certain  investors
for gross  proceeds of $3,985,000  ("Financing").  The  Registrant  received the
gross  proceeds of the sale of these shares on February 1, 2005.  The Registrant
received net proceeds of approximately  $3,821,000 less fees,  including counsel
fees for the investors and ELP of approximately $164,000.



                                       2
<PAGE>

         Immediately following the Mergers and the Financing (collectively,  the
"Transaction"), the pre-Transaction shareholders of Bluestone held approximately
50.0% of our common stock and the  pre-Transaction  shareholders of Amerasia and
L&G held approximately 42.2% of our common stock.

         In conjunction  with the Mergers,  all of the officers and directors of
Bluestone resigned and Dr. Edward Staples was appointed  President of Bluestone.
Dr. Staples, along with Mr. Francis Chang and Dr. Teong Lim were named directors
of Bluestone and the prior operations of Bluestone were  terminated.

         Following the Mergers, and through April 1, 2005, we (1) assumed as our
principal  operations,  the  operations  of ELP  and  (2)  appointed  additional
officers.  In March  2005,  we expanded  our board of  directors  and  appointed
additional directors.

OVERVIEW OF PAST OPERATIONS OF ELECTRONIC SENSOR TECHNOLOGY, LP

         Following the Mergers,  our operations are a continuation of operations
originally conducted by ELP.

         ELP was formed in 1995 to develop and  manufacture,  the  zNose(R),  an
advanced  technology in chemical vapor detection and analysis.  The zNose(R) has
been developed  with over $10 million in funding,  primarily from equity funding
from existing equity holders.

         In 1999,  ELP  completed  beta  testing of its  product  and  commenced
commercial  sales of our products to the  analytical  instrumentation  / quality
control market as well as the homeland security market.

         In order to finance its  operations,  ELP  obtained a 4% loan of $1.975
million from East West Bank in September 2003. This loan was guaranteed by three
officers of ELP. In connection with the Mergers, we assumed the then outstanding
balance of $1.8 million from ELP, and the guarantees were released. In addition,
we have agreed to pledge a $900,000  certificate  of deposit as  collateral  for
repayment under the loan.

INDUSTRY OVERVIEW

Although there are a vast number of applications  for the zNose(R)  product,  we
believe that the most significant demands for our product will be in two general
market  categories - Homeland  Security and  Analytical  Instrumentation/Quality
Control.

         Homeland Security. According to published sources, the overall homeland
security  market was  projected to be $98 - 114 billion in 2004. We believe that
detection  and  analysis  of  chemical  compounds  will aid  greatly  in various
homeland security efforts including:

                                       3
<PAGE>

o      Building  Security.  There  is a  need  for a  continuous  and  real-time
       chemical  detection system to monitor the ambient air in buildings and in
       confined spaces.  Detecting hazardous gases and poisonous chemical agents
       such  as  sarin,   VX  explosives,   and  contrabands  for  security  and
       environmental safety purposes are the main concerns.  We believe that the
       addressable commercial building security market segment may be as high as
       $1.2  billion  based on the top 4% of the high-end  commercial  buildings
       that would seek protection from a chemical detection system.

o      Marine Smart  Containers.  Over seven million sea cargo containers arrive
       in the U.S.  every  year and only  four  percent  (4%) of them are  being
       inspected by the U.S. Customs  Department.  Cargo container security is a
       top  priority  with  the  U.S.  government.  We seek to  incorporate  the
       zNose(R) product into the smart container program.

o      Airports.  Our zNose(R) products may be used to complement existing X-Ray
       and bomb detection technologies.

o      Drug  Interdiction.  The  zNose(R)  has been used to detect  contrabands,
       including illicit controlled substances along U.S. borders.


         Analytical  Instrumentation  / Quality  Control.  The zNose(R) has been
serving the chemical vapor analysis needs in various  manufacturing  industries.
We estimate that the market for mass-spectrometry  products such as zNose(R) may
reach as much as $50 million  during the next few years.  The  zNose(R) has been
used for a host of analytical instrumentation applications such as:

         o        Screening incoming raw materials;

         o        Checking ingredients in processed food and pharmaceutical
                  products;

         o        Inspecting packaging materials and finished goods;

         o        Detecting hazardous gas leaks in chemical plants;


CONVENTIONAL ELECTRONIC NOSE TECHNOLOGY

         Conventional  electronic  noses  are  unable  to meet the  needs of the
market  because of their  fundamental  construction.  It utilizes non- or weakly
specific arrays of physical sensors to produce a response equal to the number of
sensors of specific vapor mixtures (fragrances). Unfortunately, electronic noses
using  uncorrelated  sensor arrays only produce chaotic  patterns that cannot be
recognized except with sophisticated computer software. Unable to speciate, this
type of  electronic  nose  cannot be  calibrated  with  chemical  standards  and
therefore,  is not  acceptable  for use in  quantitative  scientific  methods of
measurement.



                                       4
<PAGE>

         Another  shortcoming is that the  conventional  electronic noses use an
array of sensor each  coated with  different  polymers  for  reaching to certain
specific  compounds.  Since they are polymer  coated,  they tend to drift and be
unstable.

THE ZNOSE(R) SOLUTION

         Speed,  precision  and  versatility  are the key characteristics of the
zNose(R) product. Based on surface acoustic wave (SAW) technology,  zNose(R) has
been  developed  to replace  the  conventional  electronic  nose.  The  zNose(R)
operates  as quickly as a  conventional  electronic  nose while  delivering  the
precision and accuracy of a much more expensive gas  chromatography  instrument.
The  zNose(R)  has  advanced   chemical   analysis   technology   by  performing
part-per-trillion  chromatography  within 10  seconds.  The  performance  of the
zNose(R) has been  verified by the U.S.  Environmental  Protection  Agency under
Environmental  Technology  Verification program and by the White House Office of
National Drug Control Policy for drug interdiction. Tests have been performed at
the Midwest  Research  Institute's  Surety  Laboratory in Kansas City and at the
U.S. Army Dugway Proving Ground in Utah both proven  zNose(R)  effectiveness  in
detecting  chemical  agents such as sarin gases. We believe that the zNose(R) is
currently the only  electronic  nose  approved for purchase  through the General
Services Administration pre-approved procurement program.

         VaporPrint(TM)  imaging  ability  is  another  major  advantage  of the
zNose(R)  product.  With the  patented  imaging  technology,  zNose(R)  as a gas
chromatograph,  is able to produce a coherent  10 second  spectrum  of the vapor
pressure of the  chemicals  present in any odor or  fragrance.  Equipped with an
integrating SAW detector, it can produce  high-resolution  visual images of odor
intensity as well.

OUR PRODUCTS

         zNose(R)

         We currently  manufacture two zNose(R) models  designated as Model 4200
and Model 7100.  Either model can be produced in one of two basic vapor  sensing
configurations:  volatile  and  semi-volatile.  The volatile  configuration  can
detect  volatile  organic   compounds,   such  as  benzene.   The  semi-volatile
configuration  can detect  heavier  vapors such as those found in explosives and
drugs.

         All zNose(R) models analyze vapors in a two-step process.  In the first
step,  typically lasting 10 seconds,  the instrument  collects a small sample of
the vapor to be analyzed. The sample is then injected in to a gas chromatography
column where the individual  chemicals  present are separated and measured.  The
chemical  analysis  requires  only 10 seconds to produce  the  vapor's  chemical
signature  we call  "VaporPrint".  The system  software  can also  produce  full
chromatograms.

         We currently  sell two versions of the zNose(R) - Model 4200  (Handheld
Unit) and Model 7100 (Bench Top Unit).  Model 4200 is designed  for  portability
and for applications  requiring quick and accurate vapor screening in the field.
Model 7100 is designed for laboratory testing and is ideal for testing water and
product quality control samples.



                                       5
<PAGE>

         We are also developing Models 7100B and 7100C.  Model 7100B is designed
as a fixed  installation unit for both indoor and outdoor ambient air monitoring
instrument.   It  can  be  used  for  building   security  as  well  as  outdoor
environmental  monitoring  applications.  It is designed to be operated remotely
from a central control  station via a radio  frequency (RF) control link.  Model
7100C is designed to be used for shipping  containers  and truck  monitoring for
both commercial and homeland  security  applications.  It is designed to be used
with a remote sampling kit which enables  multiple  samples to be collected then
taken to the zNose(R) to be analyzed.

         We have  designs to produce a hand-held  zNose(R)  that is smaller than
the Model 4200 for commercial  market.  This model is designed to meet the needs
of  law  enforcement,   manufacturing  process  monitoring,   and  environmental
monitoring . We plan to develop a separate version of the mini-zNose(R)  will be
developed to be used as a personal  nerve  agents  detector for the military and
security markets.

         Accessories

         We  offer  several  lines of  accessory  products  such as  calibration
devices, sample desorbers, MicroSense Software(C), and GPS receivers. An example
is our Model 3100 which provides a calibrated vapor source as well as a tool for
extracting vapors from solid and liquid samples.

         Technical Support

         All  zNose(R)  instruments  sold are equipped  with a software  package
called  PCAnywhere.  PCAnywhere  allows a  technical  support  person  at EST to
operate an instrument  anywhere in the world  through the internet.  This better
enables an EST technician to be available to address any customer problem.

SALES AND DISTRIBUTION

         We  sell  our zNose(R)  product through distribution channels including
equipment  distributors and sales  representatives in over 20 foreign countries,
e-commerce  and customer  referrals.  We have  entered  into an  agreement  with
eScreen Sensor Solutions to be our exclusive  distributor for a five-year period
in Israel, the Caribbean, the State of Florida, and Central and South America on
October 16, 2003. As part of this agreement,  eScreen paid us an up-front fee of
$250,000 in 2004. There are no other exclusive distributor relationships.

         All sales  representatives  and  distributors  are required to attend a
three-day  training  course  conducted  at our  headquarters  in  Newbury  Park,
California.   We  advertise  in  selected  industry  trade  journals  and  trade
conventions.  In the future, we intend to build a dedicated  marketing and sales
team.  We believe  that 50% of our sales are in the U.S.  while the 50% are from
international customers. All of our customers pay us in U.S. dollars.



                                       6
<PAGE>

CUSTOMERS

          We  have  approximately  80  customers. In  2004,  a distributor named
eScreen  Sensor  Solutions  paid us $250,000  for the right to be our  exclusive
distributor  in  certain  countries  and the State of  Florida  for a  five-year
period.

MANUFACTURING

         We design,  prototype and manufacture our products at our headquarters.
Our  manufacturing  facilities  adhere  to  ISO9000  manufacturing  methods.  We
contract  out  the  manufacturing  and  assembling  of  certain   components  to
subcontractors. Our current annual manufacturing capacity is approximately 1,000
zNose(R) units. The principal  components to the Company's products are computer
chips,  circuit boards,  transformers and sensory devices.  The prices for these
components are subject to market forces  largely  beyond the Company's  control,
including energy costs,  market demand,  and freight costs. The prices for these
components have varied  significantly in the past and may vary  significantly in
the future.

COMPETITION

         We are unaware of any direct  competitor to the zNose(R) product on the
market  today.  In the  homeland  security  markets,  we face  competition  from
manufacturers of X-Ray machines,  ion-mobility  spectrometers (IMS) and chemical
coated sensors.

         X-Ray machines have been widely used for security purposes in detecting
metal objects but not for chemical compounds.

         IMS   equipment  is  a  vapor   detector  and  is  designed  to  detect
nitro-chemical  compounds but is blind to all other non-nitro compounds.  Hence,
it can only see a small dot in a space but  cannot  see the  total  picture.  It
employs a different  sample  collection  technique by wiping the surfaces of the
object placed for screening.  IMS also uses  radioactive  beta foil materials in
its construction which may be offensive to users in other countries.

         Chemical coated sensors are the conventional electronic noses. They use
an array of chemical sensors each coated with different polymers for reacting to
certain specific  compounds.  As mentioned  earlier,  electronic noses cannot be
calibrated  with  chemical  standards  and  therefore  it  cannot  be  used  for
quantitative analysis.

         We  have  another  set  of  competitors   manufacturing   portable  gas
chromatography  products for the instrumentation  market from major corporations
such as Agilent Technologies,  Inc. (A:NYSE),  Perkin-Elmer, Inc. (PKI:NYSE) and
Varian,  Inc.  (VARI:Nasdaq).  However,  we believe that our zNose(R) product is
competitive with these companies' products based on speed and cost.



                                       7
<PAGE>

         Many of our  current and  potential  competitors  have larger  customer
bases,  including the previously listed  competitors,  greater brand recognition
and significantly  greater  financial,  marketing and other resources than we do
and may enter into  strategic or  commercial  relationships  with  larger,  more
established  companies.  Some of our competitors may be able to secure alliances
with customers and affiliates on more favorable terms,  devote greater resources
to marketing,  advertising  and promotional  campaigns and devote  substantially
more  resources  to  research  and  development  than we do.  In  addition,  new
technologies  and the  expansion  of  existing  technologies  may  increase  the
competitive pressures on us.

         We  cannot  assure  you  that we will be able to  compete  successfully
against current or future  competitors,  and  competitive  pressures faced by us
could harm our business,  operating results and financial  condition.  We do not
currently represent a significant  competitive presence in the homeland security
or analytic instrumentation markets.

PATENTS, TRADEMARKS AND OTHER PROPRIETARY RIGHTS

         We regard our patents, trademarks,  tradenames and similar intellectual
property as critical to our success. We rely on patent and trademark laws, trade
secret protection and confidentiality  agreements with employees,  distributors,
customers, partners and others to protect our proprietary rights.

         We own four  United  States  patents  covering  our  zNose(R)  product,
including:

         o No. 5,289,715, "Vapor Detection Apparatus and Method Using an
Acoustic Interferometer" issued March 1, 1994;

         o No. 5,970,803, "Method and Apparatus for Identifying and Analyzing
Vapor Elements", issued October 26, 1999;

         o No. 6,212,938, "Method of Detecting Smell of a Vapor and Producing a
Unique Visual Representation thereof," issued April 10, 2001;

         o No. 6,354,160, "Method and Apparatus for Identifying and Analyzing
Vapor Elements," issued December 3, 2002.

         We may not be able to obtain patent  protection for any derivative uses
of zNose(R),  or for any other products we may later acquire or develop. We also
cannot  assure  you that we will be able to  obtain  other  foreign  patents  to
protect our products.

         We have copyright our MicroSense Windows software and Xilinx gate array
firmware,  which controls the operation of the  instrument  and converts  output
signals into precise  chromatograms or visual images. These images,  trademarked
as VaporPrints(TM),  make it possible to display  chromatographic  data from any
gas  chromatographic  system,  as unique  visual images and  facilitate  pattern
recognition of complex odors and fragrances.



                                       8
<PAGE>

         At March 31, 2005, we held  registered  trademarks for zNose(R) and had
applied for a trademark for VaporPrints(TM).  We intend to evaluate the possible
application for new patents and trademarks as needed to cover current and future
applications of our technology and product developments.  We intend to undertake
all steps  necessary  to  preserve  and  protect  our  patents,  trademarks  and
intellectual property generally.

         We are not aware that our  products,  trademarks  or other  proprietary
rights  infringe  the  rights  of  third  parties,  nor  are  we  aware  of  any
infringements  of our  proprietary  rights.  We continually  evaluate  potential
infringements of our proprietary  rights and intend to take such legal and other
actions as may be necessary to protect  those rights.  However,  there can be no
assurance that third parties will not assert  infringement  claims against us in
the future with respect to current or future products or that any such assertion
may not  require  us to enter  into  royalty  arrangements  or  result in costly
litigation.

RESEARCH AND DEVELOPMENT

         Our   research  and   development   program   consists  of   developing
technologies  related to enhancing our electronic nose product.  Fees related to
research and development, include consulting fees, technical fees, and research,
development and testing of our zNose(R) product.

GOVERNMENT REGULATION

         Government  agencies,  in particular,  the  Department of Defense,  are
principal customers for our products. We are required to comply with the Federal
Acquisition  Regulations,  a  comprehensive  set of  regulations  governing  how
vendors do business with the U.S. federal government,  to the extent we contract
with  departments  or  agencies  of the  U.S.  government,  as well  as  similar
regulations to the extent we contract with state or local governments.  Sales to
or  grants  from  foreign  governments  or  organizations  will  have  their own
regulatory framework,  which may or may not be similar to present U.S. standards
or requirements.


EMPLOYEES

         As of March 31, 2005 we had a total of 19 staff  persons,  including 15
full time  staff,  3  consultants  and 1  part-time  employee.  In  addition  to
management,  we employ sales people,  administrative  staff, and development and
technical personnel. From time to time, we may employ independent consultants or
contractors  to support  our  research  and  development,  marketing,  sales and
support,  and  administrative  organizations.  No  collective  bargaining  units
represent our employees. We believe our relations with our employees are good.

                                  RISK FACTORS

         Our  business  is subject to a number of risks as  outlined  below.  An
investment in our securities is speculative in nature and involves a high degree
of risk. You should read this annual report carefully and consider the following
risk factors:



                                       9
<PAGE>

RISKS RELATED TO OUR COMPANY

WE HAVE A SIGNIFICANT ACCUMULATED DEFICIT AND HAVE RECEIVED AN OPINION FROM OUR
AUDITORS REGARDING OUR ABILITY TO CONTINUE AS A GOING CONCERN, AND WE MAY NEVER
ACHIEVE PROFITABILITY.

         We have incurred significant net losses every year since our inception,
including net losses in 2004 and 2003.  These losses have  resulted  principally
from expenses incurred in our research and development  programs and general and
administrative  expenses.  To  date,  we  have  not  yet  generated  significant
recurring revenues.  Our limited revenues that derive from sales of the zNose(R)
product have not been and may not be  sufficient to sustain our  operations.  We
anticipate that we will continue to incur substantial  operating losses based on
projected  sales revenues less  manufacturing,  general and  administrative  and
other  operating  costs for an  indefinite  period of time.  We expect  that our
revenues will not be sufficient to sustain our  operations  for the  foreseeable
future,  notwithstanding any anticipated  revenues we may receive when our vapor
detection  products  obtain  increased  visibility  in our  markets,  due to the
significant costs associated with the development and marketing of our products.
No assurances can be given when we will ever be profitable.

         Our independent  auditors have added an explanatory  paragraph to their
audit opinions  issued in connection  with the financial  statements for each of
the years ended  December 31, 2004 and 2003  relative to the  substantial  doubt
about  our  ability  to  continue  as a going  concern.  Our  ability  to obtain
additional  funding will  determine our ability to continue as a going  concern.
Our financial  statements do not include any adjustments  that might result from
the outcome of this uncertainty.

We expect to continue to experience  losses until the time, if ever, when we are
able to sell products  sufficient to generate  revenues  adequate to support our
operations.  If we  fail  to  become  profitable,  we may  be  forced  to  cease
operations.

OUR LIMITED MANUFACTURING EXPERIENCE AND CAPACITY MAY LIMIT OUR ABILITY TO GROW
OUR REVENUES.

         To be successful,  we must  manufacture our products in compliance with
industry standards and on a timely basis, while maintaining  product quality and
acceptable  manufacturing  costs.  We also  currently  use a  limited  number of
sources for most of the supplies and services  that we use in the  manufacturing
of our vapor detection and analysis  technology.  We do not have agreements with
our suppliers. Our manufacturing strategy presents the following risks:

         o        delays in the quantities needed for product development could
                  delay commercialization of or products in development;

         o        if market demand for our products increases suddenly, our
                  current suppliers might not be able to fulfill our commercial
                  needs, which would require us to seek new supply arrangements
                  and may result in substantial delays in meeting market demand;
                  and



                                       10
<PAGE>

o        we may not  have  intellectual  property  rights,  or may have to share
         intellectual  property rights, to any improvements in the manufacturing
         processes or new manufacturing processes for our products.

Any of  these  factors  could  delay  commercialization  of our  products  under
development,  entail higher costs and result in our being unable to  effectively
sell our products.

WE FACE SIGNIFICANT COMPETITION AND OUR BUSINESS AND FINANCIAL RESULTS COULD
SUFFER FROM COMPETITION.

         While  we are  unaware  of any  competitor  that  has  created  a vapor
analysis device similar to the zNose(R), there are companies that offer products
and services  that compete  with the  zNose(R) in our markets.  See  "Business -
Competition."   We  believe   that   manufacturers   of  X-Rays,   Ion  Mobility
Spectroscopy, and other electronic noses compete with us in the security-related
markets.  In the  analytic  instrumentation  markets,  we compete  with many gas
chromatograph   manufacturers  including  Perkin-Elmer  (PKI:NYSE)  and  Agilent
Technologies  (A:NYSE).  Many of our existing  and  potential  competitors  have
longer operating histories, greater experience, greater name recognition, larger
customer  bases and  significantly  greater  financial,  technical and marketing
resources than we do. Because of their greater  resources,  our  competitors are
able to undertake  more  extensive  marketing  campaigns for their  products and
services,  and make more  attractive  offers to potential  employees,  strategic
partners,  and others.  We may not be able to compete  successfully  against our
current or future  competitors  and our business  and  financial  results  could
suffer from such competition.

IF OUR PRODUCTS DO NOT ACHIEVE A SIGNIFICANT LEVEL OF MARKET ACCEPTANCE, IT IS
HIGHLY UNLIKELY THAT WE EVER WILL BECOME PROFITABLE.

          To  our  knowledge,  electronic  nose  technology,  and  our  zNose(R)
product,  has yet to receive  widespread market acceptance in the markets we are
focused  on. The  commercial  success of our current  and future  products  will
depend upon the adoption of our zNose(R)  technology by our customers.  In order
to be  successful,  our  future  products  must  meet  the  technical  and  cost
requirements  for the markets we intend to  penetrate.  Market  acceptance  will
depend on many factors, including:

         o        our ability to convince potential customers to adopt our
                  products;

         o        the willingness and ability of potential customers to adopt
                  our products;

         o        our ability to sell and service sufficient quantities of our
                  products; and

         o        new, advanced technology offered by other companies which
                  compete with our products.

         Because of these and other factors, our products may not achieve market
acceptance.  If our  products  do not  achieve  a  significant  level of  market
acceptance,  demand for our future  products will not develop as expected and it
is highly unlikely that we ever will become profitable.




                                       11
<PAGE>

OTHER COMPANIES COULD CREATE A TECHNOLOGY WHICH COMPETES EFFECTIVELY WITH OUR
ZNOSE(R) TECHNOLOGY, AND WE MAY BE UNABLE TO MAINTAIN OUR EXISTING, OR CAPTURE
ADDITIONAL, MARKET SHARE IN OUR MARKETS.

          Based upon our review of the  industry,  we are unaware of any company
today that  markets a technology  which is similar to our  zNose(R)  technology.
Nonetheless,  our  intended  markets  generally  are  dominated  by a very large
corporations  (or their  subsidiaries),  which have  greater  access to capital,
manpower,  technical expertise,  distribution  channels and other elements which
would  give  them a huge  competitive  advantage  over us were  they to begin to
compete directly against us. It is possible that these and other competitors may
implement new,  advanced  technologies  before we are able to,  allowing them to
provide more effective products at more competitive prices. Any number of future
technological developments could:

         o        adversely impact our competitive position;

         o        require write-downs of obsolete technology;

         o        require us to discontinue production of obsolete products
                  before we can recover any or all of our related research,
                  development and commercialization expenses; or

         o        require significant capital expenditures beyond those
                  currently contemplated.

         We  cannot  assure  investors  that we will  be  able  to  achieve  the
technological  advances to remain competitive and profitable,  that new products
and  services  will  be  developed  and   manufactured   on  schedule  or  on  a
cost-effective  basis,  that  anticipated  markets will exist or develop for new
products  or   services,   or  that  any   marketed   product  will  not  become
technologically obsolete.

WE DEPEND ON KEY PERSONNEL IN A COMPETITIVE MARKET FOR SKILLED EMPLOYEES, AND
FAILURE TO RETAIN AND ATTRACT QUALIFIED PERSONNEL COULD SUBSTANTIALLY HARM OUR
BUSINESS.

         Our  potential  for  success  depends  significantly  on our  executive
officers,  including,  Edward Staples,  our President;  Francis Chang,  our Vice
President,  Finance  and  Administration;  and Teong  Lim,  our Vice  President,
Corporate Development.  These individuals do not have employment agreements with
the Company. We do not carry key-man life insurance on any executive.  Given the
early stage of our product development and  commercialization  and our plans for
rapid  expansion,  the loss of the services of any  executive or the services of
any other key  employees  we may hire in the future  would  have a  substantial,
adverse  effect on our business.  We believe that our future success will depend
in large part on our  ability  to  attract  and  retain  highly  skilled  sales,
marketing  and  management  personnel.  If we are  unable to hire the  necessary
personnel,  the development of our business will likely be delayed or prevented.
Competition  for these  highly  skilled  employees is intense.  As a result,  we
cannot  assure you that we will be  successful in retaining our key personnel or
in attracting and retaining the personnel we require for expansion.



                                       12
<PAGE>

WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY AND MAY INFRINGE ON THE
INTELLECTUAL PROPERTY RIGHTS OF OTHERS.

         The protection of our intellectual property,  including our patents and
other  proprietary  rights,  is  important  to our success  and our  competitive
position.  Accordingly,  we devote substantial  resources to the maintenance and
protection of intellectual  property through various methods such as patents and
patent applications,  trademarks, copyrights, confidentiality and non-disclosure
agreements.  We also  rely  on  trade  secrets,  proprietary  methodologies  and
continuing  technological  innovation  to  remain  competitive.  We  have  taken
measures  to  protect  our trade  secrets  and  know-how,  including  the use of
confidentiality  agreements  with our  employees.  However,  it is possible that
these agreements may be breached and that the available  remedies for any breach
will not be sufficient to compensate us for damages incurred.

         We  currently  have four  patents in the United  States and  patents in
various  foreign  countries.  There can be no assurance  that the claims allowed
under  any  patents  held  by us will  be  sufficiently  broad  to  protect  our
technology against  competition from third parties with similar  technologies or
products.  Moreover, we cannot assure you that others will not assert rights in,
or  ownership  of,  patents and other  proprietary  rights we may  establish  or
acquire  or that we will be able to  successfully  resolve  such  conflicts.  In
addition,  we  cannot  assure  you that  any  patents  issued  to us will not be
challenged,  invalidated or  circumvented or that the rights granted under these
patents will provide a competitive  advantage to us. Moreover,  the laws of some
foreign countries do not protect intellectual property rights to the same extent
as the laws of the United States,  and we could experience various obstacles and
high costs in protecting our intellectual  property rights in foreign countries.
If we are unable to obtain or maintain these protections,  we may not be able to
prevent third parties from using our intellectual property.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

OUR STOCK PRICE IS SUBJECT TO EXTREME VOLATILITY.

         The trading  price of our common stock is likely to be highly  volatile
and could be subject to wide  fluctuations in response to factors such as actual
or  anticipated   variations  in  the  Company's  quarterly  operating  results,
announcements  of technological  innovations,  or new products by the Company or
its  competitors,   changes  in  financial  estimates  by  securities  analysts,
conditions  or trends in the analytic  instrumentation  markets,  changes in the
market valuations of other security-detection oriented companies,  announcements
by the  Company  or  its  competitors  of  significant  acquisitions,  strategic
partnerships, joint ventures or capital commitments,  additions or departures of
key personnel,  sales of common stock or other  securities of the Company in the
open market and other events or factors,  many of which are beyond the Company's
control.  Further,  the stock markets in general,  and the market for technology
companies have experienced extreme price and volume fluctuations that have often
been  unrelated  or  disproportionate  to  the  operating  performance  of  such
companies.  The  trading  prices  of many  technology  companies'  stocks do not
reflect valuations. There can be no assurance that trading prices and valuations
will be sustained.  These broad market and industry  factors may  materially and
adversely  affect  the  market  price of the  common  stock,  regardless  of the
Company's  operating  performance.  Market  fluctuations,  as  well  as  general


                                       13
<PAGE>

political and economic conditions such as recession or interest rate or currency
rate  fluctuations,  may also  adversely  affect the market  price of the common
stock.  In the past,  following  periods of  volatility in the market price of a
company's  securities,   securities   class-action  litigation  has  often  been
instituted against such company. Such litigation, if instituted, could result in
substantial costs and a diversion of management's attention and resources, which
would have a  material  adverse  effect on the  Company's  business,  results of
operations and financial condition.

THERE IS NO  ESTABLISHED  TRADING  MARKET  FOR OUR SHARES OF COMMON  STOCK.  THE
LIQUIDITY OF OUR COMMON STOCK WILL BE AFFECTED BY ITS LIMITED TRADING MARKET.

         Bid  and  ask  prices   for  our   common   stock  are  quoted  on  the
Over-the-Counter  Bulletin Board under the symbol  "ESNR.OB." There is currently
no  broadly  followed,  established  trading  market for our  common  stock.  An
established  trading  market for our shares may never develop or be  maintained.
Although  we intend,  as soon as is  practicable,  to  undertake  the process to
become listed on one of the national stock exchanges or with Nasdaq, there is no
assurance  as to when or if those  events will  occur.  Active  trading  markets
generally result in lower price  volatility and more efficient  execution of buy
and sell orders.  The absence of an active  trading market reduces the liquidity
of our  shares.  Prior to the  consummation  of the  merger,  we had no reported
trading  volume in our common stock.  Since then, we have had sporadic  reported
trading in our shares. As a result of this lack of trading activity,  the quoted
price  for our  common  stock  on the  Over-the-Counter  Bulletin  Board  is not
necessarily a reliable indicator of its fair market value.  Further, if we cease
to be quoted,  holders would find it more  difficult to dispose of, or to obtain
accurate  quotations as to the market value of, our common stock, and the market
value of our common stock would likely decline.

IF AND WHEN A TRADING MARKET FOR OUR COMMON STOCK DEVELOPS, BECAUSE WE ARE A
TECHNOLOGY COMPANY, WE EXPECT THAT THE TRADING PRICES WILL BE EXTREMELY
VOLATILE.

         The trading  prices of  technology  company  stocks in general  tend to
experience  extreme  price  fluctuations.  The  valuations  of  many  technology
companies without consistent product revenues or earnings, if any, are not based
on conventional valuation standards such as price to earnings and price to sales
ratios.  Any negative  change in the  public's  perception  of the  prospects of
technology  companies could depress our stock price regardless of our results of
operations if a trading  market for our stock  develops.  Other broad market and
industry factors may decrease the trading price of our common stock,  regardless
of our  performance.  Market  fluctuations,  as well as  general  political  and
economic  conditions  such as war,  recession or interest  rate or currency rate
fluctuations,  also may  decrease  the  trading  price of our common  stock.  In
addition,  our stock price could be subject to wide  fluctuations in response to
factors including, but not limited to, the following:

         o        announcements of new technological innovations or new products
                  by us or our competitors;

         o        conditions or trends in the sensor technology or chemical
                  detection industry;


                                       14
<PAGE>

         o        changes in the market valuations of other technology
                  companies;

         o        developments in domestic and international governmental policy
                  or regulations;

         o        announcements by us or our competitors of significant
                  acquisitions, strategic partnerships, joint ventures or
                  capital commitments;

         o        developments in patent or other proprietary rights held by us
                  or by others;

         o        loss or expiration of our intellectual property rights;

         o        lawsuits initiated by or against us;

         o        period-to-period fluctuations in our operating results;

         o        sales of our common stock or other securities in the open
                  market.

         In the past, shareholders have often instituted securities class action
litigation  after  periods  of  volatility  in the market  price of a  company's
securities. If a shareholder files a securities class action suit against us, we
would incur substantial legal fees and our management's  attention and resources
would be diverted from operating our business to respond to the litigation.

WE MAY RAISE ADDITIONAL CAPITAL THROUGH A SECURITIES OFFERING THAT COULD DILUTE
YOUR OWNERSHIP INTEREST

         We require  substantial  working  capital to fund our  business.  If we
raise  additional  funds  through  the  issuance  of equity,  equity-related  or
convertible  debt securities,  these securities may have rights,  preferences or
privileges  senior to those of the holders of our common stock.  The issuance of
additional  common  stock or  securities  convertible  into common  stock by our
management  will also have the  effect of  further  diluting  the  proportionate
equity interest and voting power of holders of our common stock.

         In  addition,  under  our  Articles  of  Incorporation,  the  Board  is
authorized to issue, without obtaining shareholder approval, shares of preferred
stock having the rights,  privileges  and designates as determined by the Board.
Therefore,  the Board  could  issue  shares of  preferred  stock that would have
preferential liquidation,  distribution, voting, dividend or other rights, which
would be superior to the rights of common stockholders.

A SIGNIFICANT NUMBER OF OUR SHARES ARE ELIGIBLE FOR SALE, AND THEIR SALE COULD
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.

         Sales of a significant number of shares of our common stock in the open
market could harm the market price of our common stock.  A reduced  market price
for our shares  could  make it more  difficult  to raise  funds  through  future
offerings  of common  stock.  Approximately  27 million  shares are eligible for


                                       15
<PAGE>

trading in the open market.  As additional shares become available for resale in
the  open  market,  including  new  shares  issued  upon  the  exercise  of  our
outstanding options,  warrants, and contractual obligations to issue shares, the
number of our publicly tradable shares will increase, which could decrease their
trading price. In addition,  some of our shares may be offered from time to time
in the open market  pursuant to Rule 144,  and these sales may have a depressive
effect  on the  market  for our  shares.  In  general,  a  person  who has  held
restricted  shares  for a period of one year  may,  upon  filing  with the SEC a
notification  on  Form  144  and  satisfying  certain  other  conditions  to the
application of Rule 144, sell into the market shares up to an amount equal to 1%
of the outstanding shares of common stock. These sales may be repeated once each
three  months.  In  addition,  any of the  restricted  shares  may be  sold by a
non-affiliate after they have been held for two years pursuant to Rule 144(k).

WE MAY BE SUBJECT TO THE SEC'S PENNY STOCK RULES.

         Broker-dealer  practices  in  connection  with  transactions  in "penny
stocks"  are  regulated  by  certain  rules  adopted  by the SEC.  Penny  stocks
generally  are equity  securities  with a price of less than  $5.00,  other than
securities  registered on certain national securities exchanges or quoted on the
Nasdaq  Stock  Market if current  price and volume  information  with respect to
transactions in such securities is provided by the exchange or system. The rules
require  that a  broker-dealer,  prior to a  transaction  in a penny  stock  not
otherwise exempt from the rules, deliver a standardized risk disclosure document
that  provides  information  about penny stocks and the risks in the penny stock
market.  The  broker-dealer  also must provide the customer with current bid and
offer quotations for the penny stock, the compensation of the  broker-dealer and
its   salesperson  in  connection  with  the  transaction  and  monthly  account
statements  showing the market value of each penny stock held in the  customer's
account. In addition, the rules generally require that prior to a transaction in
a penny stock, the broker-dealer must make a special written  determination that
the penny  stock is a suitable  investment  for the  purchaser  and  receive the
purchaser's written agreement to the transaction.  These disclosure requirements
may have the effect of reducing the liquidity of penny stocks. If our securities
become  subject to the penny stock rules,  holders of our shares of common stock
may find it more difficult to sell their securities.

WE HAVE NOT PAID DIVIDENDS IN THE PAST AND DO NOT EXPECT TO PAY DIVIDENDS IN THE
FUTURE. ANY RETURN ON INVESTMENT MAY BE LIMITED TO POTENTIAL FUTURE APPRECIATION
IN THE VALUE OF OUR STOCK.

         We have never paid cash  dividends  on our stock and do not  anticipate
paying cash  dividends on our stock in the  foreseeable  future.  The payment of
dividends  on our  shares,  if ever,  will  depend  on our  earnings,  financial
condition and other business and economic  factors  affecting us at such time as
the board of directors may consider  relevant.  If we do not pay dividends,  our
stock may be less valuable because a return on investment will only occur if and
to the extent  that our stock price  appreciates,  and if the price of our stock
does not appreciate, then there will be no return on investment.

OUR ANTI-TAKEOVER DEFENSE PROVISIONS MAY DETER POTENTIAL ACQUIRERS AND DEPRESS
OUR STOCK PRICE.



                                       16
<PAGE>

         Certain provisions of our articles of incorporation,  bylaws and Nevada
law, as well as certain agreements we have with our executives, could be used by
our incumbent  management to make it  substantially  more  difficult for a third
party to acquire control of us. These provisions include the following:

         o        we may issue preferred stock with rights senior to those of
                  our common stock;

         o        our Board of Directors has the exclusive right to fill
                  vacancies and set the number of directors;

         o        we require advance notice for nomination of directors by our
                  shareholders and for shareholder proposals.

         These provisions may discourage certain types of transactions involving
an actual or potential  change in control.  These  provisions may also limit our
shareholders'  ability to approve transactions that they may deem to be in their
best  interests and  discourage  transactions  in which our  shareholders  might
otherwise receive a premium for their shares over the then current market price.

SOME OF OUR EXISTING  SHAREHOLDERS  CAN EXERT  CONTROL OVER US, AND MAY NOT MAKE
DECISIONS THAT ARE IN THE BEST INTERESTS OF ALL SHAREHOLDERS.

         Our officers, directors  and  principal  shareholders  together control
approximately  42% of our  outstanding  common  stock.  Land &  General  Berhad,
through  its  wholly  owned  subsidiary,  L & G  Resources  (1994),  Inc.,  owns
approximately  18.3%  of  our  outstanding  common  stock.  As a  result,  these
shareholders,  if they act together,  will be able to exert a significant degree
of  influence  over  our  management  and  affairs  and over  matters  requiring
shareholder  approval,  including  the  election of  directors  and  approval of
significant corporate transactions. In addition, this concentration of ownership
may delay or prevent a change in control of us and might affect the market price
of  our  shares,  even  when  a  change  may be in  the  best  interests  of all
shareholders. Moreover, the interests of this concentration of ownership may not
always coincide with our interests or the interests of other shareholders,  and,
accordingly,  they could cause us to enter into transactions or agreements which
we would not otherwise consider.

PAST ACTIVITIES OF THE COMPANY AND ITS AFFILIATES MAY LEAD TO FUTURE LIABILITY
FOR US.

         Prior to the acquisition of ELP, we engaged in businesses  unrelated to
its current operations. As a result, liabilities of the prior business before to
the acquisition of ELP may have a material adverse effect on us.

ITEM 2.

DESCRIPTION OF PROPERTY

         We lease  12,500  square feet of office space at 1077  Business  Center
Circle, Newbury Park, California. The lease terminated on March 30, 2004 and our
current lease  arrangement  is on a  month-to-month  basis,  with 90 days notice
required for termination. The lease payments are $13,150 per month. The facility
serves as the company's headquarters and R & D and manufacturing facility.


                                       17
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

         We  are  not a  party  to any  material  legal  proceeding,  nor to the
knowledge of management,  are any legal proceedings  threatened against us. From
time to time, we may be involved in litigation relating to claims arising out of
operations in the normal course of business.

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

No  meetings  of security  holders  were held  during the fourth  quarter of our
fiscal year ended December 31, 2004.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock has traded on the OTC  Bulletin  Board  (OTCBB)  since
February 1, 2005 under the symbol  "ESNR".  Prior to February 1, 2005 our common
stock traded on the OTCBB under the symbol "BLUV". The range of high and low bid
prices per share for our common  stock for each  quarter  during the period from
January 1, 2004 through December 31, 2004, as published by bigcharts.com  and is
set forth below.

         The  quotations  merely reflect the prices at which  transactions  were
proposed,  and are not quarterly averages or do not necessarily represent actual
transactions.  Prices do not include retail markup, markdown, or commissions and
may not represent actual transactions.

                       QUARTERLY COMMON STOCK PRICE RANGES

           ----------------------- --------------------------------------
           QUARTER ENDED                           2004
           ----------------------- ------------------- ------------------
                                          HIGH                LOW
           ----------------------- ------------------- ------------------
           March 31, 2004               $ .01              $  .01
           ----------------------- ------------------- ------------------
           June 30, 2004                  .01                 .01
           ----------------------- ------------------- ------------------
           September 30, 2004             .01                 .01
           ----------------------- ------------------- ------------------
           December 31, 2004              .01                 .01
           ----------------------- ------------------- ------------------

         There were 55 record holders of our common stock as of April 14, 2005.
This number  does not  include an  indeterminate  number of  shareholders  whose
shares are held by brokers in street name.

         We have not paid dividends on our common stock since our inception. The
decision to pay dividends on common stock is within the  discretion of the Board
of Directors.  It is our current policy to retain any future earnings to finance
the  operations  and growth of our business.  Accordingly,  we do not anticipate
paying any dividends on common stock in the foreseeable future.



                                       18
<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

         We did not issue any unregistered securities during the last quarter of
the 2004 fiscal year. Issuances of unregistered securities made during the first
nine months of the 2004 fiscal year were  reported in the  quarterly  reports we
filed on Form 10-QSB.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         The Board of Directors has authorized the following equity compensation
plans:

               EQUITY COMPENSATION AND CONSULTANT PLAN INFORMATION

The following table illustrates,  as of December 31, 2004,  information relating
to all of our equity compensation plans:

<TABLE>
<CAPTION>
------------------------------- ---------------------------- ---------------------------- ----------------------------
                                Number of securities to be   Weighted average exercise    Number of securities
                                issued upon exercise of      price of outstanding         remaining available for
                                outstanding options,         options warrants and rights  future issuance under the
                                warrants and rights                                       equity compensation plan


Plan Category
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                                          <C>                          <C>                          <C>
Equity Compensation Plans                    0                            0                            0
approved by security holders
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans not                0                           $0                            0
approved by security holders
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>


ELECTRONIC SENSOR TECHNOLOGY, INC. 2005 STOCK INCENTIVE PLAN.

         In  2005,  the  Board  of  Directors   adopted  the  Electronic  Sensor
Technology,  Inc. 2005 Stock Incentive Plan (the "Incentive  Plan"). The purpose
of the Incentive Plan is to attract and retain the services of  experienced  and
knowledgeable individuals to serve as our employees,  consultants and directors.
On the date the Incentive Plan was adopted, the total number of shares of common
stock subject to it was  5,000,000.  The Incentive Plan is  administered  by the
Board of  Directors,  or any  Committee  that may be  authorized by the Board of
Directors,  so long as any such Committee is made up of Non-Employee  Directors,
as that term is defined in Rule  16(b)-3(b)  of the  Securities  Exchange Act of
1934.  The grant of an option under the  Incentive  Plan is  discretionary.  The
exercise price of an option must be the fair market value of the common stock on
the date of grant. An option grant may be subject to vesting conditions. Options
may be  exercised  in cash,  or with  shares of the common  stock of the Company
already  owned by the  person.  The term of an option  granted  pursuant  to the
Incentive Plan may not be more than 10 years.

                                       19
<PAGE>

         Persons  eligible for awards under the Incentive  Plan may receive,  if
they are eligible,  incentive  options to purchase  common stock. If a recipient
does not receive an incentive  option,  he or she will  receive a  non-qualified
stock  option.  The  exercise  price of an option  must be no less than the fair
market value of the common stock on the date of grant,  unless the  recipient of
an award  owns 10% or more of the  Company's  common  stock,  in which  case the
exercise  price of an  incentive  stock option must not be less than 110% of the
fair market value. An option grant may be subject to vesting conditions. Options
may be  exercised  in cash,  or with  shares of the common  stock of the Company
already  owned by the  recipient  of the  award.  The term of an option  granted
pursuant to the Incentive  Plan may not be more than five years if the option is
an incentive option granted to a recipient who owns 10% or more of the Company's
common  stock,  or 10 years  for all  other  recipients  and for  recipients  of
non-qualified stock options.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         The following  discussion  and analysis  should be read in  conjunction
with the financial  statements and notes thereto included elsewhere in this Form
10-KSB.  Except for the historical  information contained herein, the discussion
in this Form 10-KSB contains  certain  forward  looking  statements that involve
risks  and  uncertainties,   such  as  statements  of  our  plans,   objectives,
expectations and intentions.  The cautionary statements made in this Form 10-KSB
should be read as being  applicable to all related forward  statements  wherever
they appear in this Form 10-KSB. Our actual results could differ materially from
those discussed here.

HISTORY AND DEVELOPMENT OF THE COMPANY

         From inception until February 2005, we were a development stage company
in the business of acquiring, exploring and developing certain mining properties
known as The Thunder Bay Mining District in the province of Ontario,  Canada. On
February 1, 2005,  we completed  the Mergers,  acquiring  ownership of ELP after
which we terminated  our prior mining  business and assumed the  operations  and
business  of ELP of  developing,  manufacturing,  and  selling  vapor  detection
devices.

         Pursuant  to  the  Mergers,   we  assumed   substantially  all  of  the
liabilities  of ELP,  including  but not limited to, all  obligations  under the
East-West Bank loan documents.

      In  conjunction  with the  Mergers,  on  January  10,  2005,  shareholders
cancelled  54,279,147  shares of common stock (giving  effect to the January 11,
2005 stock dividend  discussed  below) of our common stock. On January 11, 2005,
the Board approved a 14.508328  stock  dividend such that there were  27,000,000
shares outstanding after the stock dividend.



                                       20
<PAGE>

         Following the Mergers,  in February 2005 we raised  $3,985,000  through
the sale of  3,985,000  units at a purchase  price of $1.00 per unit  before net
fees of  $163,292.  Each unit  consists  of one common  share and one warrant to
purchase  one common  share at an exercise  price of $1.00 for a period of three
years.

         The Mergers will be accounted  for as a  recapitalization  of Bluestone
with ELP as the accounting  acquirer (a "reverse  acquisition").  On this basis,
subsequent to the Mergers and going forward, the historical financial statements
of Bluestone presented prior to the Mergers on February 1, 2005 will be those of
ELP and the historical  shareholders' equity of Bluestone as of February 1, 2005
will be  retroactively  restated to reflect the  equivalent  number of shares of
Bluestone issued in the Mergers.

PLAN OF OPERATIONS

         As  a  result  of  the  Mergers  and  the  subsequent   termination  of
Bluestone's prior operations, our business plan has been altered to focus on the
product operations previously conducted by ELP.

         Following  the  Mergers,  our  revenues  are  expected  to  be  derived
principally from the sale of the zNose(R) products.  Total revenues are expected
to be primarily a function of the number of products sold.

         Our principal  expenses following the Mergers are expected to relate to
(1)  manufacturing  costs,  including  materials and labor costs,  (2) sales and
distribution, (3) research and development, (4) general and administration,  and
(5) employee compensation.

         Our  cost  of  sales  is  expected  to  consist   principally   of  (1)
manufacturing-related materials costs, (2) labor and facility costs allocable to
manufacturing, and (3) shipping and handling.

         Material costs are comprised  primarily of components  manufactured  by
our subcontractors, including circuit boards, detector heads and power supplies.
We do not have any agreements with our subcontractors or suppliers.

         Cost of  sales  is  expected  to vary  proportionately with the  level
of  products  sold.  Most of our sales are  expected to comprise of sales of our
zNose(R)  product.  Sales of  accessories  and training  service  constitute  an
additional portion of our revenue.

         Our sales and marketing  costs are expected to consist  principally  of
(1) commissions and discounts to  distributors,  OEM customers and outside sales
representatives  and (2) direct  advertising and marketing costs paid to outside
providers.

         Our research and development costs are expected to consist  principally
of  (1)  overhead  and  direct  costs  attributable  to  in-house  research  and
development  functions and (2) payments to third party  consultants for contract
research and development  services.  We intend to evaluate the establishment and
operation of an in-house research facility.



                                       21
<PAGE>

         Our financing costs relate  primarily to interest  payable with respect
to the  credit  facility  with East West Bank  assumed  in  connection  with the
Mergers.

         Our corporate overhead costs are expected to consist principally of (1)
payroll costs, (2) office rent, (3) utilities,  (4)  professional  fees, and (5)
general office expenses.

         We plan to continue, and expand our operations acquired pursuant to the
Mergers.  Expansion plans are expected to include (1) building an in-house sales
and marketing staff to facilitate  efforts to grow sales, (2) hiring  additional
technical  support  personnel  for  customer  service and product  support,  (3)
increasing R & D into new products, including our mini zNose(R) product, and (4)
possible acquisitions  of companies and assets to supplement and complement our
zNose(R) products.

LIQUIDITY AND CAPITAL RESOURCES

         At  December  31,  2004,  we had a cash  balance  of $225 and a deficit
accumulated  during the exploration stage of $237,440 compared to a cash balance
of $1,102 and deficit  accumulated  during the exploration  stage of $164,880 at
December 31, 2003.

         Net cash used in operating  activities  for the year ended December 31,
2003 was  $63,377,  resulting  primarily  from a net loss of $72,560 and gain on
debt settlement of $16,317, offset by donated services of $24,000 and changes in
operating assets and liabilities of totaling $1,500.

         At December 31, 2004, we had no long-term  liabilities and no liquidity
or capital resource requirements other than funding our operating losses.

         As a result of the Mergers,  as of February 1, 2005, we assumed certain
liabilities  and  obligations  of ELP that had, in conjunction  therewith,  been
assumed by Bluestone.

         Total  liabilities  assumed pursuant to the Mergers were  approximately
$2.2 million,  including  approximately  (1) $1.8 million owed under the line of
credit, (2) $212,000 of accounts payable and accrued expenses and (3) $35,000 of
other current liabilities.

         The  outstanding  loan for $1.8  million  with East  West Bank  accrues
interest at the prime rate as reported in the Wall Street  Journal plus one-half
point  (0.5%).  It has a  maturity  date  of  December  31,  2005.  The  loan is
collateralized by all assets of our Company. As part of such collateral, we have
also assigned a Certificate of Deposit of $900,000 to East West Bank.

         In  February  2005,  we raised  $3.985  million  from the sale of 3.985
million shares of common stock and warrants.

         In order to support  our  operations  and capital  commitments  through
December 31, 2005, we estimate that we will require $3.0 million from  operating
cash flow, infusions of additional equity or debt or other sources. We presently
have no  commitments  from third parties to provide such financing and there can


                                       22
<PAGE>

be no assurance that we will receive such financing.  If we are unable to secure
needed financing we may be unable to fully implement our planned  operations and
acquisitions, we may be required to curtail our operations in part or in whole.

OFF BALANCE SHEET ARRANGEMENTS

         We do not have any off-balance sheet arrangements.

ITEM 7. FINANCIAL STATEMENTS

         Reference is made to the financial statements, the reports thereon, the
notes  thereto,  and  supplementary  data  commencing  at page F-1 of this  Form
10-KSB, which financial  statements,  reports,  notes, and data are incorporated
herein by reference.



                                       23
<PAGE>


Electronic Sensor Technology, Inc.
(formerly Bluestone Ventures Inc.)
(A Development Stage Company)






                                                                   Index


Report of Independent Registered Public Accounting Firm..............F-1

Balance Sheets.......................................................F-2

Statements of Operations.............................................F-3

Statements of Cash Flows.............................................F-4

Statement of Stockholders' Equity (Deficit)..........................F-5

Notes to the Financial Statements....................................F-6



<PAGE>
              LETTER HEAD OF MANNING ELLIOTT CHARTERED ACCOUNTANTS


REPORT IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Electronic Sensor Technology, Inc. (formerly Bluestone Ventures Inc.)
(A Development Stage Company)

We have audited the accompanying balance sheets of Electronic Sensor Technology,
Inc.  (formerly  Bluestone  Ventures Inc.) as of December 31, 2004 and 2003, and
the related statements of operations,  cash flows and stockholders'  deficit for
the years then ended and  accumulated for the period from July 12, 2000 (Date of
Inception)  to  December  31,  2004.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Bluestone Ventures Inc. as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the year then  ended in  conformity  with  accounting  principles  generally
accepted in the United States.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 1 to the  financial
statements,  the Company has not generated any revenue since  inception and will
need additional financing to sustain operations. These factors raise substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans in regard to these  matters are also  discussed  in Note 1. The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.


/s/ "Manning Elliott"


CHARTERED ACCOUNTANTS

Vancouver, Canada

April 7, 2005

<PAGE>

Electronic Sensor Technology, Inc.
(formerly Bluestone Ventures Inc.)
(A Development Stage Company)
Balance Sheets
(expressed in U.S. dollars)

<TABLE>
<CAPTION>

                                                                                       December 31,     December 31,
                                                                                           2004            2003
                                                                                            $                $

ASSETS

Current Assets

<S>                                                                                             <C>         <C>
Cash                                                                                            225         1,102
--------------------------------------------------------------------------------------------------------------------

Total Current Assets                                                                            225         1,102

Deferred Transaction Costs (Note 2(l))                                                       21,398             -
--------------------------------------------------------------------------------------------------------------------

Total Assets                                                                                 21,623         1,102
--------------------------------------------------------------------------------------------------------------------


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

Accounts payable                                                                              9,000        26,317
Accrued liabilities                                                                          38,898        10,500
Due to related parties (Note 4)                                                              14,815        19,315
--------------------------------------------------------------------------------------------------------------------

Total Liabilities                                                                            62,713        56,132
--------------------------------------------------------------------------------------------------------------------

Contingency and Commitments (Notes 1 and 3)

Stockholders' Deficit

Preferred Stock, 50,000,000 shares authorized with a par value of  $0.001;
None issued                                                                                       -             -

Common Stock, 200,000,000 shares authorized with a par value of  $0.001;
Shares issued: 81,279,147 and 77,246,982 shares, respectively                                81,279        77,247

Common Stock Subscribed                                                                           -           155

Additional Paid In Capital                                                                   61,071         2,448

Donated Capital (Note 4(c))                                                                  54,000        30,000

Accumulated Deficit                                                                        (237,440)     (164,880)
--------------------------------------------------------------------------------------------------------------------

Total Stockholders' Deficit                                                                 (41,090)      (55,030)
--------------------------------------------------------------------------------------------------------------------

Total Liabilities and Stockholders' Deficit                                                  21,623         1,102
--------------------------------------------------------------------------------------------------------------------
</TABLE>

    (The accompanying notes are an integral part of the financial statements)

                                      F-1
<PAGE>


Electronic Sensor Technology, Inc.
(formerly Bluestone Ventures Inc.)
(A Development Stage Company)
Statements of Operations
(expressed in U.S. dollars)

<TABLE>
<CAPTION>
                                                                                                Accumulated From
                                                                Year              Year           July 12, 2000
                                                               Ended             Ended        (Date of Inception)
                                                            December 31,      December 31,      to December 31,
                                                                2004              2003                2004
                                                                 $                 $                   $

Revenue                                                               -                  -                 -
--------------------------------------------------------------------------------------------------------------------

Expenses

<S>                        <C>                                   <C>                <C>               <C>
Consulting services (Notes 4(c) and (d))                         41,000             26,500            74,500
General and administrative (Note 4(e))                            6,901              4,647            12,490
Mineral property expenditures (Note 3)                           25,000                  -            87,000
Professional fees                                                13,800             30,575            75,586
Transfer agent and filing fees                                    2,176              1,555             4,826
--------------------------------------------------------------------------------------------------------------------

Total Expenses                                                   88,877             63,277           254,402
--------------------------------------------------------------------------------------------------------------------

Net Loss Before Other Income                                    (88,877)           (63,277)         (254,402)

Other Income

Gain on settlement of debt (Note 6)                              16,317                  -            16,317
Interest                                                              -                  2               645
--------------------------------------------------------------------------------------------------------------------
Net Loss for the Year                                           (72,560)           (63,275)         (237,440)
=====================================================================================================================


Net Loss Per Share - Basic and Diluted                                -                  -
=====================================================================================================================


Weighted Average Shares Outstanding (Note 5(a))              80,607,000         77,247,000
=====================================================================================================================
</TABLE>
    (The accompanying notes are an integral part of the financial statements)

                                      F-2
<PAGE>




Electronic Sensor Technology, Inc.
(formerly Bluestone Ventures Inc.)
(A Development Stage Company)
Statements of Cash Flows
(expressed in U.S. dollars)

<TABLE>
<CAPTION>

                                                                                                 Accumulated From
                                                               Year                Year            July 12, 2000
                                                               Ended              Ended         (Date of Inception)
                                                           December 31,        December 31,       to December 31,
                                                               2004                2003                2004
                                                                 $                  $                    $

Cash Flows to Operating Activities
<S>                                                               <C>                <C>               <C>
Net loss for the year                                             (72,560)           (63,275)          (237,440)

Adjustments to reconcile net loss to net cash used in
   operating activities

Donated services                                                   24,000             24,000             54,000
   Gain on settlement of debt                                     (16,317)                 -            (16,317)
   Expenses settled with issuance of stock                              -                  -             25,000

Changes in operating assets and liabilities

Increase in accounts payable and accrued liabilities                6,000             21,204             42,817
Decrease (increase) in amounts due to related parties              (4,500)            13,815             14,815
--------------------------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities                             (63,377)            (4,256)          (117,125)
--------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities                                    -                  -                  -
--------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities

Subscriptions received for common stock                                 -              2,500              2,500
Issuance of common stock for cash                                  62,500                  -            114,850
--------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities                          62,500              2,500            117,350
--------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash                                          (877)            (1,756)               225

Cash - beginning of year                                            1,102              2,858                  -
--------------------------------------------------------------------------------------------------------------------
Cash - end of year                                                    225              1,102                225
====================================================================================================================
Supplemental Disclosures

Interest paid                                                           -                  -                  -
Income tax paid                                                         -                  -                  -
====================================================================================================================
Non-cash Investing and Financing Activities

Deferred transaction costs unpaid at year end                      21,398                  -             21,398
====================================================================================================================
</TABLE>

    (The accompanying notes are an integral part of the financial statements)

                                      F-3
<PAGE>

Electronic Sensor Technology, Inc.
(formerly Bluestone Ventures Inc.)
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
From July 12, 2000 (Date of Inception) to December 31, 2004
(expressed in U.S. dollars)

<TABLE>
<CAPTION>

                                          (Note 5(a))               Common       Additional
                                             Common                 Shares         Paid In    Donated     Accumulated
                                             Shares     Amount    Subscribed       Capital    Capital       Deficit       Total
                                               #           $       #        $         $          $             $            $
<S>                                         <C>          <C>                        <C>                                    <C>
Balance - July 12, 2000 (Date of
Inception)                                           -        -        -          -       -           -             -           -

Common stock issued for cash                74,145,316   74,145        -          - (41,545)          -             -      32,600
Common stock issued for mineral property     3,877,082    3,877        -          -  21,123           -             -      25,000
Net loss for the year                                -        -        -          -       -           -       (51,164)    (51,164)
----------------------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2000                 78,022,398   78,022        -          - (20,422)          -       (51,164)      6,436

Common stock issued for cash                 3,101,666    3,102        -          -  16,898           -             -      20,000
Net loss for the year                                -        -        -          -       -           -        (3,004)     (3,004)
----------------------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2001                 81,124,064   81,124        -          -  (3,524)          -       (54,168)     23,432

Common stock cancelled for cash             (3,877,082)  (3,877)       -          -   3,627           -             -        (250)
Donated services                                     -        -        -          -       -       6,000             -       6,000
Net loss for the year                                -        -        -          -       -           -       (47,437)    (47,437)
----------------------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2002                 77,246,982   77,247        -          -     103       6,000      (101,605)    (18,255)

Subscriptions received for common stock
received in cash                                     -        -  155,083        155   2,345           -             -       2,500
Donated services                                     -        -        -          -       -      24,000             -      24,000
Net loss for the year                                -        -        -          -       -           -       (63,275)    (63,275)
----------------------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2003                 77,246,982   77,247  155,083        155   2,448      30,000      (164,880)    (55,030)

   Stock subscription received                 155,083      155 (155,083)      (155)      -           -             -           -
   Common stock issued for cash              3,877,082    3,877        -          -  58,623           -             -      62,500
   Donated Services                                  -        -        -          -       -      24,000             -      24,000
   Net loss for the year                             -        -        -          -       -           -       (72,560)    (72,560)
----------------------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2004                 81,279,147   81,279        -          -  61,071      54,000      (237,440)    (41,090)
==================================================================================================================================
</TABLE>

    (The accompanying notes are an integral part of the financial statements)

                                      F-4
<PAGE>

1.       Nature of Operations and Continuance of Business

     The Company was  incorporated  in the State of Nevada,  U.S.A.  on July 12,
     2000,  under the name  Bluestone  Ventures  Inc. On January 31,  2005,  the
     Company changed its name to Electronic Sensor Technology,  Inc. In December
     2000,  the Company  acquired an option to purchase four mineral claim units
     situated in the Thunder Bay Mining  District,  in the  Province of Ontario,
     Canada. The Company's principal business plan was to acquire,  explore, and
     develop  mineral  properties  and ultimately to seek earnings by exploiting
     the mineral claims.  Pursuant to a Term Sheet,  dated December 2, 2004, the
     Company  entered  into an  Agreement  and Plan of  Merger  which  closed on
     January 31, 2005 (the  "Agreement").  On February 1, 2005,  pursuant to the
     Agreement,  the  Company  acquired  by way of  reverse  merger,  all of the
     partnership  interests in Electronic Sensor  Technology,  L.P.  ("EST"),  a
     California  limited  partnership.  EST  is  involved  in  the  development,
     manufacture,  and sale of vapor detection and analysis technology. Refer to
     Note 8. In connection  with the  acquisition of EST, the Company  adopted a
     new business plan which will commence upon the closing of the  transactions
     contemplated under the Agreement.  Under the new business plan, the Company
     will primarily be involved in the vapor  detection and analysis  technology
     business.  Accordingly,  the  Company  decided to  discontinue  its mineral
     exploration  efforts,  and the mineral  property  option  agreement will be
     allowed to lapse.  The Company is consequently a development  stage company
     as defined by Statement of Financial Accounting Standard ("SFAS") No. 7.

     At December  31,  2004,  the Company had a working  capital  deficiency  of
     $62,488 and has incurred losses of $237,440 since inception. The ability of
     the  Company  to emerge  from the  development  stage  with  respect to any
     planned  principal  business  activity  is  dependent  upon its  successful
     efforts to raise  additional  equity  financing and then attain  profitable
     operations.  These factors raise  substantial doubt regarding the Company's
     ability to continue as a going concern.

     The Company  filed an SB-2  Registration  Statement  with the United States
     Securities and Exchange Commission which was declared effective on June 19,
     2003.  On March 1, 2004,  the  Company  completed  a private  placement  of
     4,032,165  shares of common  stock at a purchase  price of $0.016 per share
     for total proceeds of $65,000.

     Management will seek additional  capital through a private placement of its
     common stock as discussed in Note 8. There is no guarantee that the Company
     will be able to complete the above objectives.


2.       Summary of Significant Accounting Policies

(a)      Basis of Presentation

         These   financial   statements  and  related  notes  are  presented  in
         accordance with accounting  principles generally accepted in the United
         States and are  expressed  in US dollars.  The Company has not produced
         any revenue from its original  business  plan as an  exploration  stage
         company.  Pursuant to the Agreement the Company  subsequently  became a
         development   stage  company  as  defined  by  Statement  of  Financial
         Accounting  Standard  ("SFAS")  No.  7  "Accounting  and  Reporting  by
         Development Stage Enterprises".

(b)      Use of Estimates

         The  preparation of financial  statements in conformity with accounting
         principles  generally accepted in the United States 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  periods.  Actual  results
         could differ from those estimates.

(c)      Cash and Cash Equivalents

         The Company considers all highly liquid  instruments with a maturity of
         three months or less at the time of issuance to be cash equivalents.

(d)      Foreign Currency Translation

         The Company's  functional  and reporting  currency is the United States
         dollar.   Monetary  assets  and  liabilities   denominated  in  foreign
         currencies  are  translated  in  accordance  with SFAS No. 52  "Foreign
         Currency Translation" using the exchange rate prevailing at the balance
         sheet date.  Gains and losses  arising on  translation or settlement of
         foreign currency  denominated  transactions or balances are included in
         the  determination  of  income.   Foreign  currency   transactions  are
         primarily  undertaken in Canadian dollars.  The Company has not, to the
         date  of  these   financials   statements,   entered  into   derivative
         instruments to offset the impact of foreign currency fluctuations.

                                      F-5
    (The accompanying notes are an integral part of the financial statements)

<PAGE>

2.       Summary of Significant Accounting Policies (continued)

(e)      Financial Instruments

         Financial instruments which include cash and cash equivalents, accounts
         payable, accrued liabilities, and due to related parties were estimated
         to approximate their carrying values due to the immediate or short-term
         maturity of these financial instruments.

(f)      Mineral Property Costs

         The Company has been in the  exploration  stage since its  formation in
         July 12, 2000,  and has not yet realized any revenues  from its planned
         operations.  It is primarily engaged in the acquisition and exploration
         of mining  properties.  Mineral  property  acquisition  and exploration
         costs are  expensed as  incurred.  When it has been  determined  that a
         mineral  property  can  be  developed   economically  as  a  result  of
         establishing  proven  and  probable  reserves,  the costs  incurred  to
         develop  such  property are  capitalized.  Such costs will be amortized
         using the  units-of-production  method over the  estimated  life of the
         probable reserve.

(g)      Stock-Based Compensation

         The  Company  has  adopted  SFAS No. 123  "Accounting  for Stock  Based
         Compensation" which requires that stock awards granted to employees and
         non-employees are recognized as compensation  expense based on the fair
         market  value  of the  goods or  services  received  whichever  is more
         reliably measurable.  The Company does not have a stock option plan and
         has not issued stock options since its inception.

(h)      Basic and Diluted Net Income (Loss) Per Share

          The Company  computes net income (loss) per share in  accordance  with
          SFAS No. 128, "Earnings per Share" which requires presentation of both
          basic and diluted  earnings  per share (EPS) on the face of the income
          statement.  Basic  EPS is  computed  by  dividing  net  income  (loss)
          available to common  shareholders  (numerator) by the weighted average
          number of shares outstanding  (denominator) during the period. Diluted
          EPS gives effect to all dilutive  potential common shares  outstanding
          during the period  including  stock options,  using the treasury stock
          method,  and  convertible  preferred  stock,  using  the  if-converted
          method.  In computing  diluted  EPS,  the average  stock price for the
          period is used in  determining  the  number of  shares  assumed  to be
          purchased from the exercise of stock options or warrants. As there are
          no potentially dilutive shares, the diluted net loss per share has not
          been calculated.

(i)      Comprehensive Loss

         SFAS No. 130, "Reporting  Comprehensive  Income," establishes standards
         for the reporting and display of comprehensive  loss and its components
         in the financial  statements.  As of December 31, 2004,  and 2003,  the
         Company has no items that represent  comprehensive loss and, therefore,
         has not  included a schedule  of  comprehensive  loss in the  financial
         statements.

(j)      Income Taxes

         The  Company  accounts  for  income  taxes  pursuant  to SFAS  No.  109
         "Accounting  for  Income  Taxes".  Under  SFAS No.  109 the  Company is
         required to compute tax asset benefits for net operating losses carried
         forward.  Potential  benefit  of net  operating  losses  have  not been
         recognized in these financial  statements because the Company cannot be
         assured it is more  likely than not it will  utilize the net  operating
         losses carried forward in future years.

(k)      Deferred Transaction Costs

         The Company  capitalized  legal costs incurred related to the Agreement
         and Plan of Merger that closed on January 31, 2005. These costs will be
         accounted for as acquisition costs. Refer to Note 8.

                                      F-6

    (The accompanying notes are an integral part of the financial statements)

<PAGE>

2.       Summary of Significant Accounting Policies (continued)

(l)      Recent Accounting Pronouncements

         In December 2004,  Financial  Accounting  Standards Board (FASB) issued
         SFAS No. 153,  "Exchanges of  Nonmonetary  Assets - An Amendment of APB
         Opinion No. 29".  The guidance in APB Opinion No. 29,  "Accounting  for
         Nonmonetary Transactions",  is based on the principle that exchanges of
         nonmonetary  assets  should be measured  based on the fair value of the
         assets  exchanged.  The  guidance in that  Opinion,  however,  included
         certain  exceptions to that principle.  SFAS No. 153 amends Opinion No.
         29 to eliminate  the  exception  for  nonmonetary  exchanges of similar
         productive  assets  and  replaces  it  with  a  general  exception  for
         exchanges of nonmonetary assets that do not have commercial  substance.
         A  nonmonetary  exchange  has  commercial  substance if the future cash
         flows of the entity are expected to change significantly as a result of
         the  exchange.  The  provisions  of  SFAS  No.  153 are  effective  for
         nonmonetary asset exchanges occurring in fiscal periods beginning after
         June 15, 2005. Early  application is permitted and companies must apply
         the  standard  prospectively.  The  adoption  of this  standard  is not
         expected  to  have a  material  effect  on  the  Company's  results  of
         operations or financial position.

         In December 2004, the FASB issued SFAS No. 123R, "Share Based Payment".
         SFAS 123R is a revision  of SFAS No. 123  "Accounting  for  Stock-Based
         Compensation", and supersedes APB Opinion No. 25, "Accounting for Stock
         Issued to Employees" and its related implementation guidance. SFAS 123R
         establishes  standards for the accounting for  transactions in which an
         entity exchanges its equity instruments for goods or services.  It also
         addresses  transactions  in  which  an  entity  incurs  liabilities  in
         exchange for goods or services  that are based on the fair value of the
         entity's  equity  instruments or that may be settled by the issuance of
         those equity instruments. SFAS 123R primarily focuses on accounting for
         transactions   in  which  an  entity  obtains   employee   services  in
         share-based  payment  transactions.  SFAS  123R  does  not  change  the
         accounting guidance for share-based  payment  transactions with parties
         other than  employees  provided  in SFAS 123 as  originally  issued and
         Emerging  Issues Task Force  Issue No.  96-18,  "Accounting  for Equity
         Instruments  That Are Issued to Other Than Employees for Acquiring,  or
         in  Conjunction  with Selling,  Goods or Services".  SFAS 123R does not
         address the accounting for employee share  ownership  plans,  which are
         subject to AICPA Statement of Position 93-6, "Employers' Accounting for
         Employee Stock Ownership Plans".  SFAS 123R requires a public entity to
         measure the cost of employee services received in exchange for an award
         of equity  instruments  based on the grant-date fair value of the award
         (with limited exceptions). That cost will be recognized over the period
         during which an employee is required to provide service in exchange for
         the award - the requisite  service period (usually the vesting period).
         SFAS 123R requires that the  compensation  cost relating to share-based
         payment transactions be recognized in financial  statements.  That cost
         will be  measured  based on the fair value of the  equity or  liability
         instruments  issued.  The scope of SFAS 123R  includes  a wide range of
         share-based   compensation   arrangements   including   share  options,
         restricted share plans,  performance-based  awards,  share appreciation
         rights, and employee share purchase plans.  Public entities (other than
         those filing as small business  issuers) will be required to apply SFAS
         123R as of the first  interim or annual  reporting  period  that begins
         after  June 15,  2005.  Public  entities  that  file as small  business
         issuers  will be  required  to apply SFAS 123R in the first  interim or
         annual  reporting  period that begins  after  December  15,  2005.  For
         nonpublic  entities,  SFAS 123R must be applied as of the  beginning of
         the first annual  reporting  period  beginning after December 15, 2005.
         The adoption of this standard is not expected to have a material effect
         on the Company's results of operations or financial position.


3.       Mineral Properties

     The Company  entered into an option  agreement  dated December 15, 2000, as
     subsequently  amended,  to acquire a 100%  interest in four  mineral  claim
     units  located in the Thunder Bay Mining  District,  Ontario,  Canada.  The
     Company issued  250,000  common shares with an aggregate  value of $25,000,
     and must pay $250,000 in various  stages in the following  manner:  $25,000
     upon  execution  of the  agreement  (paid);  an  additional  $25,000 by the
     earlier of March 31, 2004 and the date that the Company's  shares of common
     stock are quoted for  trading on the NASD OTC  Bulletin  Board  (paid);  an
     additional  $100,000 by June 1, 2005; and an additional $100,000 by June 1,
     2006.  The Company must also incur  exploration  and  development  costs of
     $100,000 in the  following  manner:  $10,000 by August 30, 2002 (paid);  no
     less than a further  $30,000 by August 30, 2005; and no less than a further
     $60,000 by August 30, 2006.  This  agreement is subject to a 2% net smelter
     return  ("NSR")  royalty.  One-half of this NSR royalty may be purchased at
     any time for $500,000. The Company may terminate the agreement at any time,
     without penalty, by providing thirty days written notice. The agreement may
     be  terminated  without  penalty by Mr.  Anderson  if, upon  providing  the
     Company  with  thirty  days  written  notice of default on any terms of the
     agreement,  the Company has not taken reasonable steps to cure the default.
     The Company decided to discontinue its mineral exploration efforts, and the
     mineral property agreement will be allowed to lapse. Refer to Note 8.

    (The accompanying notes are an integral part of the financial statements)

                                      F-7
<PAGE>



4.       Related Party Transactions/Balances

     (a) The amount of  $11,495  (2003 - $11,495)  due to the  President  of the
         Company is non-interest bearing, unsecured and due on demand.

     (b) The amount of $3,320 (2003 - $7,820) due to a company  controlled  by a
         relative  of the  President  of the  Company is  non-interest  bearing,
         unsecured and due on demand.

     (c) During the year,  the  Company  recognized  a total of $24,000  (2003 -
         $24,000) for donated services provided by directors and officers of the
         Company.

     (d) During the period,  the Company paid consulting fees of $17,000 (2003 -
         $2,000) to a relative of the  President of the  Company,  and a company
         controlled by a relative of the President of the Company.

     (e) The Company incurred rent expense to a company controlled by a relative
         of the  President  of the  Company  of $6,750  and $4,500 for the years
         ended December 31, 2004 and 2003, respectively.

5.       Common Stock

     (a) On January 11, 2005, the Company declared a stock dividend to effect
         a forward stock split of 14.508328 additional shares of common stock
         for each one  share  of  common  stock  outstanding.  All per  share
         amounts  have been  retroactively  adjusted  to reflect  the forward
         stock split.

     (b) On March 1, 2004, the Company issued  3,877,082  shares of common stock
         at a price of $0.016 per share for proceeds of $62,500.

     (c) On March 1, 2004 the Company issued 155,083 shares of common stock at a
         price of $0.016 per share for  proceeds of $2,500.  The  proceeds  were
         received in August, 2003.


6.       Gain on Settlement of Debt

     During the year ended December 31, 2004,  the Company  recognized a gain on
     settlement  of  debt  of  $16,317   related  to  legal  fees  owing  to  an
     unaffiliated creditor.


7.       Income Tax

     The Company has adopted the provisions of SFAS 109,  "Accounting for Income
     Taxes".  Pursuant  to SFAS 109 the Company is required to compute tax asset
     benefits for net operating losses carried forward. The potential benefit of
     net operating  losses has not been  recognized in the financial  statements
     because the Company  cannot be assured that it is more likely than not that
     it will utilize the net operating  losses carried  forward in future years.
     The Company has approximately  $158,000 of net operating loss carryforwards
     available to offset  taxable  income in future  years which expire  through
     fiscal  2024.  For the  periods  ended  December  31,  2004 and  2003,  the
     valuation  allowance  established against the deferred tax assets increased
     by $16,320 and $13,260 respectively.

     The components of the net deferred tax asset at December 31, 2004 and 2003,
     and the statutory tax rate,  the effective tax rate and the elected  amount
     of the valuation allowance are scheduled below:

                                                  2004                 2003
                                                   $                    $

Net Operating Loss Carryforward                 158,000              110,000

Statutory Tax Rate                                34%                  34%

Effective Tax Rate                                 -                    -

Deferred Tax Asset                               53,720               37,400

Valuation Allowance                             (53,720)             (37,400)
--------------------------------------------------------------------------------
Net Deferred Tax Asset                             -                    -
================================================================================

    (The accompanying notes are an integral part of the financial statements)

                                      F-8
<PAGE>

8.       Subsequent Event

     On  February  1, 2005,  under the terms of the  Agreement  which  closed on
     January 31, 2005, the Company  indirectly  acquired all of the  partnership
     interests in Electronic  Sensor  Technology,  L.P.  ("EST") for  20,200,000
     shares  of  common  stock  of the  Company  and  EST  became  an  indirect,
     wholly-owned  subsidiary of the Company.  The parties to the Agreement were
     the  Company,   L&G  Acquisition  Corp.  ("L&G   Acquisition"),   a  Nevada
     corporation,  Amerasia Acquisition Corp. ("Amerasia Acquisition"), a Nevada
     corporation,   Amerasia  Technology,   Inc.   ("Amerasia"),   a  California
     corporation  and  general  partner  of EST,  L&G  Sensor  Technology,  Inc.
     ("L&G"), a California corporation,  and Ameritech SDN.BHD ("Ameritech"),  a
     Malaysian corporation.

     The following  transactions  occurred in connection with or pursuant to the
Agreement:

(a)      On January 10,  2005,  the Company  incorporated  L&G  Acquisition  and
         Amerasia Acquisition under the laws of the State of Nevada.

(b)      On January 10, 2005, 54,279,147  split-adjusted shares previously owned
         by three directors were cancelled;

(c)      On January 11, 2005, the Company  declared  a  stock dividend to effect
         a forward  stock split of 14.508328  shares  of  common stock for each
         one share outstanding. All share amounts stated have been retroactively
         adjusted to reflect the forward stock split.

(d)      On January 12, 2005, Amerasia acquired a 4% partnership interest in EST
         from Ameritech, being all of Ameritech's interest in EST;

(e)      On  February  1,  2005,  Amerasia  Acquisition  merged  with  and  into
         Amerasia,  with Amerasia being the surviving  company.  Amerasia's only
         asset is a 55% partnership  interest in EST. The Amerasia  stockholders
         received   11,000,000   shares  of  common  stock  of  the  Company  as
         consideration for the merger;

(f)      On February 1, 2005, L&G Acquisition merged with and into L&G, with L&G
         being the  surviving  company.  L&G's only  asset is a 45%  partnership
         interest in EST.  The L&G  stockholders  received  9,000,000  shares of
         common stock of the Company as consideration for the merger;

(g)      On February  1, 2005,  the Company  completed  a private  placement  of
         3,985,000  units  at a  purchase  price of  $1.00  per  unit for  gross
         proceeds of $3,985,000 before issue costs. The Company incurred closing
         fees of $163,292.  Each unit  consists of one share of common stock and
         one warrant to purchase one share of common stock at an exercise  price
         of $1.00 per share for a period of three years.

(h)      On February 1, 2005,  the Company  exchanged  200,000 units for 200,000
         Class C limited  partnership  units of EST held by  certain  investors.
         Each unit  consists  of one share of common  stock and one  warrant  to
         purchase  one share of common  stock at an exercise  price of $1.00 per
         share for a period of three years.

(i)      On February 1, 2005, the Company assumed all EST debt owed to East West
         Bancorp,  Inc.  and the Company has  committed  to offer  $900,000 as a
         security interest until the debt is repaid in full.

(j)      At February 1, 2005, EST owed certain creditors  $2,783,471,  which was
         converted  into 1,391,736  units on closing.  Each unit consists of two
         shares of common  stock and one warrant to purchase one share of common
         stock  at an  exercise  price of $1.00  per  share  for a term of three
         years,  provided that the warrant is not exercisable  until the closing
         bid price of the Company's common stock is at least $1.50.

(k)      On January 31, 2005, holders of 969,500 options to acquire units of EST
         limited  partnership  interests (the "EST Options") exchanged their EST
         options  for stock  options  to acquire  shares of common  stock of the
         Company.  The  Company  stock  options  have the same  price per share,
         number of shares  and  vesting  period  as the EST  Options.  The stock
         options are  outstanding to acquire  260,000 shares at $0.01 per share,
         186,000  shares at $1.00 per  share,  and  523,500  shares at $1.05 per
         share. These options expire ten years after the closing date

    (The accompanying notes are an integral part of the financial statements)

                                      F-9

<PAGE>

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

None.

ITEM 8A.  CONTROLS AND PROCEDURES.

         We  carried  out an  evaluation,  under  the  supervision  and with the
participation of our management,  including our Chief Executive  Officer and our
Vice President,  Finance and Administration,  of the effectiveness of the design
and  operation of our  disclosure  controls and  procedures as of the end of the
period covered by this report.  The  evaluation  was undertaken in  consultation
with our accounting  personnel.  Based on that  evaluation,  the Chief Executive
Officer and Vice  President,  Finance  and  Administration,  concluded  that our
disclosure  controls and  procedures  are  effective to ensure that  information
required to be  disclosed  by us in the reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed,  summarized and reported
within the time periods  specified in the Securities  and Exchange  Commission's
rules and forms.

         There were no changes in our internal controls or in other factors that
could  significantly  affect internal  controls  subsequent to the date of their
evaluation.

ITEM 8B.  OTHER INFORMATION.

None.


                                       24
<PAGE>

                                    PART III

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

DIRECTORS AND EXECUTIVE OFFICERS PRIOR TO THE MERGERS

         The  following  table  sets forth the  names,  ages and  offices of the
executive  officers and directors of Bluestone  during 2004 and through the date
of the Mergers.

<TABLE>
<CAPTION>
<S>           <C>                          <C>                                        <C>

             NAME                          AGE                                       TITLE
--------------------------------     ----------------     ------------------------------------------------------------
Edward Wong                                41             President, Chief Executive Officer and Director
Randy White                                34             Secretary, Treasurer and principal accounting officer
Louis Guoguang Luo                         47             Director


         In conjunction with and pursuant to the terms of the Mergers, Mr. Wong,
Mr. White and Mr. Luo resigned as directors and/or officers of Bluestone at the
closing of the Mergers on February 1, 2005. At the same time, Mr. Staples, Mr.
Chang and Mr. Lim were appointed by the Bluestone shareholders to the positions
set forth below.

DIRECTORS AND EXECUTIVE OFFICERS FOLLOWING THE MERGERS AND PRESENTLY SERVING

         The  following  table  sets forth the  names,  ages and  offices of our
current  executive  officers and  directors,  each of whom was  appointed at, or
following, the Mergers.

             NAME                          AGE                                       TITLE
--------------------------------     ----------------     ------------------------------------------------------------
Edward Staples                             61             President and Director
James Frey                                 67             Chairman of the Board and Director
Francis Chang                              70             Vice President, Finance and Administration, and Director
Teong Lim                                  65             Vice President, Corporate Development, and Director
Mike Krishnan                              65             Director
</TABLE>

DR. EDWARD STAPLES

Edward Staples has served as our President and a director since the Mergers in
February 2005. Mr. Staples previously was the managing director of ELP from
February 1995 until the Mergers in February 2005. Dr. Staples received a B.S. in
Electrical Engineering from Loyola University in 1966, an M.S. in Electrical
Engineering in 1969 and a Ph.D. in Solid State Electronics in 1971 from Southern
Methodist University.

JAMES FREY

James Frey has been our Chairman and director of the Company since  February 21,
2005.  He served as the Chief  Executive  Officer of TASC Inc., a subsidiary  of
Litton/Northrup Grumman from June 1999 to March 2003. He also served as the Vice
President of Information  Technology at Litton from March 2001 to March 2002. He
is currently a director of SSG Precision  Optronics,  a  privately-held  optical
component  manufacturing  company.  Mr.  Frey  received  a  B.S.  in  Electrical
Engineering from Duke University in 1960.



                                       25
<PAGE>

FRANCIS CHANG

Francis Chang,  has been our Vice President,  Finance and  Administration  and a
director of the Company  since the  Mergers.  Prior to the  Mergers,  he was the
Chief  Financial  Officer of ELP since May 1995.  Mr.  Chang  received a B.A. in
Economics from National Taiwan  University in Taiwan in 1956 and an M.B.A.  from
Pepperdine University in 1978.

DR. TEONG LIM

Teong Lim has been our Vice  President,  Corporate  Development,  and a director
since  the  Mergers.  Prior to the  Mergers,  he was the  Manager  of  Corporate
Development of ELP since August 2000. Since 1997, Dr. Lim has been a director of
Crystal  Clear  Technology,  Sdn.,  a  privately-owned  Malaysian  company  that
manufactures  and markets a  high-contrast  liquid crystal display (LCD) product
line. Dr. Lim received a Ph.D in Electrical  Engineering from McGill  University
in 1968 and an M.B.A. from Pepperdine University in 1982.

MIKE KRISHNAN

Mike Krishnan has been a director of the Company since February 21, 2005. He has
been the President of L&G Resources (1994) Inc. from August 2003 to the present.
He served as the Managing Director of Land & General Berhad (L&G) from September
2001 to the present.  L&G is an  investment  holding  company with  subsidiaries
engaging in property development,  property management and education services in
Malaysia  and  Australia.  He also  served as the  executive  director  of Antah
Holdings Berhad from April 1990 to October 2000. Mr. Krishnan  received an A.M.P
from Harvard Business School in 1987.

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

While we believe that  members of our Board of  Directors  each have some of the
attributes  of  an  audit  committee  financial  expert,  no  single  individual
possesses all of the attributes; therefore, no one on our Board of Directors can
be deemed to be an audit  committee  financial  expert.  In forming our Board of
Directors,  we sought out  individuals who would be able to guide our operations
based on their business  experience,  both past and present, or their education.
Our business model is not complex and our accounting issues are straightforward.
Responsibility   for  our  operations  is   centralized   within  our  executive
management,  which is comprised  of three  persons.  We recognize  that having a
person who  possesses  all of the  attributes  of an audit  committee  financial
expert  would be a valuable  addition to our Board of  Directors,  however,  the
Company is not, at this time, able to compensate such a person therefore, we may
find it difficult to attract such a candidate.



                                       26
<PAGE>

BOARD MEETINGS

During the year ended  December 31, 2004,  the Board of Directors held no formal
meetings. No committees were in existence during 2004.


SECTION 16(A) COMPLIANCE

Section 16(a) of the Securities  Exchange Act requires our directors,  executive
officers  and persons who own more than 10% of our common  stock to file reports
of ownership  and changes in  ownership of our common stock with the  Securities
and Exchange Commission.  Directors, executive officers and persons who own more
than 10% of our common stock are required by Securities and Exchange  Commission
regulations to furnish to us copies of all Section 16(a) forms they file.

To our  knowledge,  based  solely  upon  review of the  copies  of such  reports
received or written  representations from the reporting persons, we believe that
during our 2004 fiscal year our  directors,  executive  officers and persons who
own more than 10% of our common  stock  complied  with all Section  16(a) filing
requirements.

CODE OF ETHICS

We have  adopted  a code of  ethics  that  applies  to our  principal  executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller,  or persons performing similar functions. Our code of ethics will be
provided  to any  person  without  charge,  upon  request.  Requests  should  be
addressed to Investor  Relations  Department,  c/o Electronic Sensor Technology,
Inc. 1077 Business Center Circle, Newbury Park, California 91320.

ITEM 10. EXECUTIVE COMPENSATION

During the period from January 1, 2002 through  December 31, 2004,  no salary or
any other  compensation was paid to Bluestone's  Chief Executive  Officer or any
officer for the services provided to us.

EMPLOYMENT CONTRACTS

We have no employment  agreements  with any of our employees but intend to enter
into employment agreements with key officers and employees.

COMPENSATION OF DIRECTORS

Commencing  April 2005,  each director who is not an employee is paid $2,500 per
meeting.  Mr.  Frey,  as the  chairman  of the board,  is also  provided  with a
business class airline ticket for meetings requiring more than two hours travel,
and  out-of-pocket  expenses.  Mr. Frey has been issued 125,000 shares of common
stock upon becoming a director and will receive another 125,000 shares after one
year of service.  He will also receive  options to purchase 50,000 shares of our
common  stock at fair  market  value  every six (6)  months for up to a total of
250,000 shares provided he is still  participating  as a board member at each of
such anniversary.



                                       27
<PAGE>

Edward  Staples,  Francis  Chang and  Teong Lim  received  options  to  purchase
100,000,  80,000 and 80,000 shares of the  Company's  common stock at a price of
$1.00 per share, respectively. The options expire in 2013.

OPTION GRANTS IN THE LAST FISCAL YEAR

During the fiscal year ended  December  31, 2004,  the Company  granted no stock
options to named executive officers and directors.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


         The  following  table sets  forth  information,  as of March 31,  2005,
regarding the beneficial  ownership of the Company's  common stock by any person
known  to  the  Company  to be the  beneficial  owner  of  more  than  5% of the
outstanding  common stock, by directors and certain executive  officers,  and by
all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>

                                                                    Amount   and  Nature  of    Percent of
                                                                    Beneficial  Ownership of     Class(2)
Name and Address(1)                                                 Common Stock
--------------------------------------------------------------------------------------------  -----------------
<S>                                                                       <C>                       <C>
     Edward Staples, President and Director                               4,212,544(3)              7.74%

     Francis Chang, Vice President, Finance and Administration,           3,933,160(4)(5)           7.24%
     and Director

     Teong Lim, Vice President, Corporate Marketing, and  Director        5,247,908(6)(7)           9.63%

     James Frey, Chairman and Director                                      125,000                  *

     Mike Krishnan, a Director                                            9,948,801(8)(9)          18.33%
     Land & General Berhad, 5% shareholder                                9,948,801(9)             18.33%
     All current directors and executive officers as a group               23,467,413              42.94%
     (5 persons)

</TABLE>

-------------------------
* Less than 1.0% of the outstanding shares

(1)      The address of each of the  following  individuals  is, c/o  Electronic
         Sensor  Technology,  Inc., 1077 Business  Center Circle,  Newbury Park,
         California 91320.

(2)      Based on an aggregate of 53,968,643 shares  outstanding as of March 31,
         2005. Where a named person holds options or warrants to purchase shares
         of common stock of the Company, the number of shares that may be issued
         under those  options or warrants  are added to the figure to  calculate
         the percentage held by that person.

(3)      Consists  of  100,000  options  at $1.00 per  share for ten years  from
         December  31,  2003 and  343,708  warrants at $1.00 per share for three
         years of March 31,  2005  exercisable  when stock  price is at or above
         $1.50 per share.

(4)      Includes  shares held by 3 Springs,  LLC, a limited  liability  company
         held solely by Mr. Chang.


                                       28
<PAGE>
(5)      Consists  of 80,000  options  at $1.00  per  share  for ten years  from
         December  31,  2003 and  257,247  warrants at $1.00 per share for three
         years from March 31, 2005  exercisable  when stock price is at or above
         $1.50 per share.

(6)      Includes shares held by TC Lim, LLC, a limited  liability  company held
         solely by Dr. Lim.

(7)      Consists  of 80,000  options  at $1.00  per  share  for ten years  from
         December  31,  2003 and  438,796  warrants at $1.00 per share for three
         years from March 31, 2005  exercisable  when stock price is at or above
         $1.50 per share.

(8)      Mr.  Krishnan  serves  as a  director of L & G Resources  (1994),  Inc.
         which holds 9,632,534 shares and  316,267  warrants  to  acquire shares
         exerciseable within 60 days of March 31, 2005.

(9)      Consists  of  9,632,534  shares  held by  L & G Resources  (1994), Inc.
         and 316,267 warrants to acquire shares exerciseable  within  60 days of
         March 31, 2005.

To our knowledge,  none of the Company's directors,  officers or affiliates,  or
any 5% or greater  shareholder  of the  Company,  or any  associate  or any such
directors,  officers or affiliates, is a party that is adverse to the Company in
any material legal proceeding.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.


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<PAGE>


<TABLE>
<CAPTION>
<S>        <C>            <C>

ITEM 13. EXHIBITS


         2.2            Agreement and Plan of Merger by and among the Registrant, Amerasia
                        Technology, Inc., Amerasia Acquisition Corp., L & G Sensor
                        Technology, Inc., and L & G Acquisition Corp. dated as of January
                        31, 2005 (2)

         3.1            Articles of Incorporation, as amended (1)

         3.2            Bylaws (1)

         4.1            Form of Warrant (2)

        10.1            2005 Stock Incentive Plan (3)

        10.2            Form of Stock Option Agreement (3)

        10.3            Form of Subscription Agreement between Registrant and certain
                        investor dated as of January 31, 2005 (2)

        10.4            Business Loan Agreement dated March 11, 2005 between Registrant
                        and East West Bank (3)

        10.5            Commercial Security Agreement dated March 11, 2005 between
                        Registrant and East West Bank (3)


        10.6            Original Equipment Manufacturer and Technical Cooperation
                        Agreement dated as of October 16, 2003 by and between the
                        Registrant and eScreen Sensor Solutions, Inc. (3)

         14             Code of Ethics (3)

         21             Subsidiaries of Electronic Sensor Technology, Inc. (3)

        31.1            Certification Pursuant to Rule 13a-14(a) and 15d-14(a) (4) of
                        Chief Executive Officer (3)

        31.2            Certification Pursuant to Rule 13a-14(a) and 15d-14(a) (4) of Vice
                        President, Finance and Administration (3)

        32.1            Certification Pursuant to Section 1350 of Title 18 of the United
                        States Code of Chief Executive Officer (3)

        32.2            Certification Pursuant to Section 1350 of Title 18 of the United
                        States Code of Vice President, Finance and Administration (3)
</TABLE>

(1) Previously  filed on April 15, 2004 on Form 10-KSB.
(2) Previously filed on February 7, 2005 on Form 8-K.
(3) Filed herewith

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

AUDIT FEES


                                       30
<PAGE>

The  aggregate  fees  billed for the fiscal  years ended  December  31, 2004 and
December  31,  2003  for  professional   services   rendered  by  our  principal
accountants  for  the  audit  of our  annual  financial  statements,  review  of
financial  statements  included  in our Form 10-QSB  filings and other  services
provided by the accountant in connection  with statutory and regulatory  filings
are  approximately  as follows:  Fiscal Year Ended  December 31,  2004:  $7,750;
Fiscal Year Ended December 31, 2003: $ 2,200.

ALL OTHER ACCOUNTANT FEES

The  aggregate  fees  billed for the fiscal  years ended  December  31, 2004 and
December  31, 2003 for other  professional  services  rendered by our  principal
accountants are  approximately as follows:  Fiscal Year Ended December 31, 2004:
$0; Fiscal Year Ended December 31, 2003: $ 0.

Our current principal accountants,  Manning Elliott, Chartered Accountants,  did
not render any invoices to us during the fiscal year ended  December 31, 2003 as
they were  retained  subsequent  to such  period.  Fees for the 2003 fiscal year
represent  amounts  that our former  principal  accountants,  Lancaster & David,
Chartered Accountants, billed for the services indicated.



                                       31
<PAGE>


                                   SIGNATURES


In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date:  April 14, 2005

                                      /S/ Edward Staples
                                      -------------------------
                                      Edward Staples, President

We, the  undersigned  officers and  directors of Electronic  Sensor  Technology,
Inc., do hereby constitute and appoint Edward Staples and Francis Chang and each
of them, our true and lawful  attorneys-in-fact and agents, each with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all  capacities,  to sign any and all amendments to this Report,  and to
file the  same,  with  exhibits  thereto,  and  other  documents  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorneys-in-fact  and agents,  and each of them, full power and authority to do
and perform  each and every act and thing  requisite  or necessary to be done in
and about the  premises,  as fully to all  intents  and  purposes as he might or
could do in  person,  hereby  ratifying  and  confirming  all that  each of said
attorneys-in-fact and agents, or his substitute or substitutes,  may lawfully do
or cause to be done by virtue hereof.

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
                SIGNATURE                   TITLE                                              DATE
<S>               <C>                       <C>                                                <C>

           /S/ Edward Staples              President and Director                             April 14, 2005
---------------------------------------    (Principal Executive Officer)
               Edward Staples

                                            Vice President, Finance and Administration, and
           /S/ Francis Chang                Director                                          April 14, 2005
---------------------------------------     (Principal Financial Officer and Accounting
               Francis Chang                Officer)


           /S/ James Frey                   Chairman and Director                             April 14, 2005
---------------------------------------
               James Frey

                                            Vice President, Corporate Development and
           /S/ Teong Lim                    Director                                          April 14, 2005
---------------------------------------
                 Teong Lim


           /S/ Mike Krishnan                Director                                          April 14, 2005
---------------------------------------
               Mike Krishnan

</TABLE>

                                       32